PPPs, crowdfunding, and the risk public agencies may need to take

Public-private-partnerships (PPPs) are one of those things that people hear about and understand generally, but may not really trust. There may be some good reason for that mistrust, given how PPPs have been used previously – where public assets have been privatized, only to drive value to the company and away from residents.

That’s why we were so excited to meet Brian and learn about how he is trying to flip the script on PPPs. Brian, through his company Infrashares, is making the financial benefits of PPPs directly available to communities. We did a quick interview with Brian to understand more. See below!

Where did the idea for InfraShares come from?

The idea for InfraShares came from my experience on a water/wastewater PPP in Southern California, where I saw how a lack of community engagement hindered the projects progress and the reliance of private equity funds increased the project’s cost of capital.  Investment crowdfunding can help mitigate both of these issues by simultaneously providing community ownership and a low cost of capital.

What actually is InfraShares?

InfraShares is a marketplace for project sponsors (private developers or public agencies) to offer investment opportunities to individuals seeking to invest in infrastructure assets.  InfraShares facilitates the offering campaigns and manages all the interactions between the project sponsors and the investors.

Has anyone used crowdfunding for infrastructure before?

No.  Investment crowdfunding has been used extensively for other assets like commercial real estate, but never for infrastructure.  Donation crowdfunding has been used for small projects, but isn’t realistic for major capital improvements.  There are also mini-bond programs that offer investors a lower threshold for buying municipal bonds, but this isn’t a new source of financing like investment crowdfunding, just a repacking of traditional muni finance.

What have been the biggest challenges so far?

The biggest challenge so far has been getting public agency decision makers to take the risk associated with any new financing mechanism.

Where do you see the biggest opportunity for InfraShares?

The biggest opportunity for InfraShares is in providing alternative financing for small to medium sized projects delivered through PPPs.  There is huge need for investment in these types of projects but they don’t attract institutional investment because of their size.

Who are your infrastructure heroes?

My infrastructure heroes include Megan Matson of Table Rock Capital and Bryant Jenkins of Sperry Capital, who are both leaders and innovators in infrastructure finance.

Favorite advice from mentor?

Megan Matson of Table Rock Capital would often say: “if you can’t say it, you can’t think it.” It took me a while to appreciate this advice, but eventually I understood the ability to articulate an idea is critical in infrastructure development.