Austin, TX – The idea is simple but execution has been hard: helping local investors invest in local entrepreneurs to revive local communities, all across the U.S.
Ross Baird, the founder of Village Capital, has formed Blueprint Local to assemble the pieces for such local entrepreneurial revivals. Today he is launching Blueprint Texas, the first in a planned series of geographically focused investment funds of $50 to $100 million each – large enough to attract capital, but local enough invest in to drive meaningful impact.
Blueprint Texas aims to invest in clusters of real estate projects and operating businesses to promote inclusive economic growth in the Austin-San Antonio corridor. Blueprint Local has teamed with Admiral Capital, the $1.4 billion real estate and private equity firm co-founded by former San Antonio Spurs star David Robinson, and Brown Advisory, a wealth manager with more than $70 billion in assets under management. Also on board: Access Ventures and Rethink Community.
“The average person with wealth in a community doesn’t have meaningful ways to invest their wealth in the community,” Baird, who is stepping back from his day-to-day role at Village Capital, told ImpactAlpha. Baird co-founded in 2009 and built it from a small accelerator program into a global venture capital firm that has made more than 100 investments. “We need to connect asset management and community engagement.” [Allie Burns is the new CEO of Village Capital, moving up from managing director. Baird will remain on Village Capital’s board as he launches Blueprint Local].
Low-income neighborhoods need multiple flavors of capital in order to create thriving communities with jobs, housing and services for current residents and growing revenues for local business owners. Blueprint Local is building a replicable model to help investors intentionally place capital into communities in ways that build wealth for employees, communities and local suppliers, as well as entrepreneurs and investors.
Specifically, that means clustered investments in ecosystems of real estate and operating businesses that serve community needs and create local jobs. The firm is exploring models in which, for example, it eventually sells real estate holdings to community-resident shopowners, who have been tenants in one of the portfolio’s developments.
Blueprint Texas is structured as an “Opportunity Fund” to take advantage of capital-gains tax breaks that are available to investors in funds that invest in designated low-income neighborhoods. Future Blueprint Local funds may or may not be in Opportunity Zones as well.
Baird has a track record of finding hidden value in overlooked entrepreneurs solving big economic and environmental challenges. With Blueprint Local, Baird is making a similar bet on overlooked cities. In all but a few cities, investors have little of their capital invested locally. Instead, they ship their capital to a few superstar clusters of startup activity, which quickly become overvalued. That leaves hometown cities where capital isn’t pooling comparatively undervalued.
Investors are saying, “I want my money to have an impact locally,” says Baird. When they realize the market does not value their city the way they do, they are saying, “I can make make alpha returns investing to improve my community.”
With its partners, Blueprint Local aims to help investors take advantage of such opportunities. Brown Advisory has strong ties to families and local institutions in Baltimore, Durham and other markets, in addition to Austin. Rethink Community, which invests in physical infrastructure for education, healthcare, housing, and workforce, is on board as an operating partner to lead real estate deals.
Investing in place
Also on board as a founding partner is Access Ventures, which has pioneered a neighborhood investment approach in Louisville’s Shelby Park neighborhood that is the basis of Blueprint’s investment and impact theses. Access Ventures has bought and restored a dozen commercial properties and redeveloped 14 vacant residential units into affordable housing in one of Louisville’s poorest neighborhoods. It has invested $2.4 million investment over four years, in co-working spaces, bakeries, local tech companies and more, and has created more 200 jobs.
Such “place-based” and community investment models are taking off across the country. The new Opportunity Zone legislation, which promises big tax incentives for long-term equity investments in low-income communities, has fueled interest in strategies able to identify and deploy capital to projects that not only deliver returns, but create impact and wealth in distressed neighborhoods.
Alice Paik of Brown Advisory says Blueprint Local can create “a template for economic prosperity that can be replicated, but not through a homogenous approach.” She said family and institutional clients want more access to local investment opportunities that have meaningful impact.
“Putting a shovel in the ground on a project in a low-income neighborhood could be high-risk,” Paik, who lives in Austin, told ImpactAlpha. “If you pair that with good companies to move into the building and partner with community efforts to create jobs…it’s that collection of ideas that need to come through in some of these funds to reduce risk and have impact.”
Blueprint Texas is targeting clustered investments in real estate and operating businesses in three to five nodes in Austin and San Antonio. In San Antonio, where the full downtown has been designated an Opportunity Zone, Blueprint Texas will look to jump-start economic activity with investments in urban infill, affordable housing and office space. Clustered investments may focus on the city’s historic Hemisfair Park redevelopment effort.
In Austin, where hypergrowth already has arrived, Blueprint’s investment strategy will be to protect neighborhoods, like East Austin, from the worst effects of gentrification with investments that may include community health, including in clinics and healthcare companies, affordable housing and businesses that create local jobs.
“This isn’t a one-off real estate project in Austin,” David Robinson Jr., who leads Admiral’s social impact investing, told ImpactAlpha. “We’re in it for 10 years and we’re incentivized to see community growth.” Robinson Jr. is Blueprint Texas’ initial deal lead and now spending about 80% of his time on the project.
Baird says he has has traveled to 50 cities in the past nine months to speak with residents, entrepreneurs and investors. He says about 20 are excited about his blueprint for local investment funds.