The Capacity Builder

A key note here – The reason most local market makers establish their deal pipelines is because they are also Capital Aggregators and want a pipeline of deals to help fund. If you are considering this critical pipeline aggregation role, please also read our section on Capital Aggregators to see whether you – or another local entity – needs to be responsible for funding these opportunities once they are organized. 

Real Estate

If you want to start building a pipeline, you’ll need to start by identifying all the deals (beyond the ones you came up with as an Opportunity Sponsor) that need capital. Try the following groups as potential deal sources:

• Community development corporations (list available from the National Alliance of Community Economic Development Associations).
• Local development community – represented by anything from a specific local group focused on commercial development to the members of your local commercial realtors association. 
• Local planning, zoning, and economic development officials (they will normally have a list of all “active” real estate deals from which you can identify the most impactful deals, then contact sponsors to see if they want to be included on the pipeline list). 
• State / local nonprofits with focus on placemaking or economic development (e.g., Main Street groups).
• CDFIs (CDFI Fund Locator), New Markets Tax Credit-granting “community development entities” (CDEs), development finance agencies, and other local impact-oriented capital providers (who may be willing to work with you to help them bring additional capital into the deals in their respective pipelines).

Operating Businesses

If you want to start building a pipeline here, we suggest the following: 

• Reach out to your office of technology transfer (and offices of tech transfer from other local institutions) to identify what your commercialization process looks like and how many companies are currently leveraging your institution’s research. 
• Reach out to your local business incubators and accelerators to ask which companies they feel might present the strongest potential for positive impact and have an upcoming need to raise capital. 
• Work with your office of alumni affairs to determine whether you have alumni founders or alumni in key leadership positions at growth businesses, either locally or regionally. As a value-add service to that alumni group, consider adding those businesses to your list (once you’ve verified their legitimacy).
• Once you have these lists, go back and check their headquarters addresses to see if they fall into an Opportunity Zone, NMTC-eligible area or qualify for other incentives (like SBIC investment). This step is particularly important for Capital Aggregators, as it will give you a framework for some potential angles of approach on aggregating capital. 
• If you have identified a substantial number of operating businesses you’d like to support, it might make sense to start a targeted outreach campaign to identify their needs beyond just investment – from the marketing materials and preferred vendor relationships you’d create as a Local Anchor to the possibility of a venture fund (perhaps even backed by alumni equity) you’d assemble as a Capital Aggregator.

Once you have your real estate / operating business investment opportunities identified, you’ll need to collect enough information about them to pass along to interested third parties. The easiest way to do so is by using an online portal like The Opportunity Exchange, which can aggregate all your opportunities and present them in a standardized format, with easy prompts to collect the information investors are typically looking for.

How You Can Help

Universities have the capacity to produce demand studies themselves or purchase them from third parties, if they are so inclined. 

Specific Action Items: 

• Tailor your demand study efforts to what you have identified as your priorities – or to the needs of the projects you’ve identified through local market making. The most common types of demand studies needed are:
  • Housing (single family, multi-family, etc.)
  • Grocery
  • Senior Housing 
  • Business incubation / entrepreneurship (locals applying for federal grants to build new business incubators have such a study as a requirement before getting a grant).
  • Broadband (typically around estimated “take rates,” e.g. how many people and businesses are likely to acquire new broadband access at a given price point if available).
  • Retail / Food and Beverage (particularly in the “downtown revitalization” context).
• Use your team to identify the appropriate school, department, or professor on campus that has the capacity to produce market demand or feasibility studies. Then, contact them to determine if they’d be willing to do so for the projects you have decided to help. A couple of motivators for their participation are: 
  • Teaching Mission – their involvement would serve as a case study for their students / facilitate student learning objectives
  • Financial Stability – they can help the institution get paid
• In some cases, you’ll need to contract out because you don’t have the right personnel in house to perform the analysis. Covering these costs on behalf of a project can make or break a deal, and is a great way to help accelerate a project that your institution has prioritized.

How You Can Help

• Get the appropriate professionals from your institution – from your real estate school, your business school, or your small business development office –  engaged to help. 
• Engage your business school and graduate students in helping to develop pro formas, market segmentation strategies, and business plans for particular operating businesses. 
• Engage your real estate program (if applicable) to ask for help identifying market segments to tackle and building out a leasing or tenant attraction strategy. 
• For real estate deals, engage your architecture and engineering programs to help verify the costs included in your pro forma and business plan. 
• Depending on the industry, your university may have a specific department or school that has relevant expertise to provide around a business’ addressable market or solution it offers (e.g., a chemistry department might have insight into a drug’s potential market scope or effectiveness). If so, get them engaged.

How You Can Help

This “ecosystem building” function pairs well with being a Community Convener – if you have taken the time to thoroughly map the local community development landscape, you should leverage those connections to help get deals off the ground.

• Create an “ecosystem map” that lists out the people with whom you have relationships that fall somewhere in the Ecosystem Diagram above. In particular, focus on contacts with developers, property managers, and entrepreneurs (whether local or alumni) that could drive a potential real estate project idea, manage a project, or commercialize some university research. 
• If a particular investment opportunity does not yet have its full team in place, leverage the pro forma you helped created and the market information you collected to convince those on your ecosystem map that this project merits their attention. 
• If an opportunity already has a team in place, work your network of connections to make sure that team is as strong – and representative – as possible. For example – at Opportunity Alabama, we are working to diversify the local real estate scene by introducing existing general contractors to diverse subcontractors that have capacity, but have not had access to large CRE deals before. We are leveraging our technical assistance to deals in order to get these teams hired on job sites, giving them the experience they need to compete for larger deals independently down the road. Building that list of minority subcontractors is the critical first step in this process – and one that your institution may want to engage in if no one else locally has done so.

How You Can Help

• Engage your marketing department – and potential student interns – to help develop quality branding packages for real estate projects and operating businesses. While your students may already be helping provide materials to local businesses through capstone classes, few schools have made the jump to assisting with community marketing materials. We’ve found the Accelerator for America guide to Creating a Community Prospectus to be the most helpful by far – and their list of prospectuses that show other city’s projects and engagement efforts provides ample best practices material. 
• Engage the appropriate parties at your institution in crafting the narrative around why your community will be a better place ten years from now. This goes hand in hand with being a Community Convener, and is a natural outgrowth of that role. 
• Engage your School of Architecture, Engineering, or Design to create renderings for real estate projects. 
• Leverage your marketing department and students to turn the materials collected into more digestible pieces for investors, using graphics and other visuals where possible.

How You Can Help

Your institution may have access to both the internal network (law school professors, experts on capital stacking, etc.) and external partners to help firm up deal structures. For example, you could consider the following: 

• Provide free or reduced-price access to commercializable research for companies that want to leverage it to make an impact.
• Leverage law students, accounting students and faculty to provide free advice to help get through permitting, form businesses, help build complex capital stacks, or resolve legal and regulatory challenges. 
• Advocate on behalf of community-oriented projects at local zoning, planning, and other commission hearings.