Building on promises to diversify its development team, a Seaport life sciences project led by Related Beal is turning to crowdfunding.
The Boston Real Estate Inclusionary Fund, which is run by prominent Black developers Richard Taylor, Darryl Settles and Kirk Sykes and is partnering on the 22 Drydock Ave. project, placed an offering on the crowdfunding site Small Change for a portion of its equity stake with a $3.75M goal.
A rendering of the 22 Drydock project in the Seaport, designed by SGA.
The 344K SF project landed a full-building pre-lease with Vertex Pharmaceuticals in May 2022. The building is the third phase at Related Beal’s Innovation Square campus.
BIG Equity Investors LLC co-founder Dale Burnett, whose firm is a partner in BREIF and made its own investment in the 22 Drydock project, said the fund chose to put the offering on Small Change because it makes it easier for smaller, less experienced investors to get involved.
“It’s important for minorities and women to have a stake in the development of the skyline in the cities with which they pay taxes, right?” Burnett said. “Minorities and women have historically been disenfranchised from that.
“Our partnership with Small Change is about just making the solution more elegant and efficient to get capital opportunities out to people of color who are not used to investing in things like this.”
The offering, which requires investors to put in at least $50K each and looks to raise between $1.5M and $3.75M, marks one of the largest ever on Small Change. The crowdfunding site, founded in 2016, aims to pair investors with developers working on projects that will improve the cities they are in.
“Their goal was really to find a way to be able to offer a Class-A investment opportunity to their community, to Black investors,” Small Change CEO Eve Picker said of the 22 Drydock team. “That is really the primary goal behind this offering.”
Earlier this week, New York-based Basis Investment Group announced it would partner with Related Beal on the $416M life sciences development. With this new partnership, the development team comprises nearly 50% minority and women-owned business enterprise participation.
The offering is only open to accredited investors, something that Picker said was the only option because of the way the ownership entity was structured. The investors will be investing in a share of the limited partner equity rather than with the project’s main sponsor, Related Beal.
Picker said the offerings on Small Change usually fall under regulation crowdfunding, which she said was the Securities and Exchange Commission’s “first attempt to really democratize investment.” That offering type permits any investor over the age of 18 to invest.
“This is probably our biggest disappointment and BREIF’s disappointment as well,” Picker said of the accredited investor requirement.
Related Beal won the rights to develop the city-owned site in 2022 after promising to bring in more investors of color. Other partners include Black-owned contractors such as Janey Construction and Dream Collaborative.
Burnett said the project is scheduled to close on its construction loan and break ground in the next 30 days, but Related has begun site work and demolition.
The project had raised $700K in crowdfunding as of Wednesday afternoon from eight investors. Picker said the pace has been strong for an offering that hasn’t been actively marketed.
“I actually think that’s great,” Picker said. “It takes awhile for people to review all the documents and feel comfortable with an investment, as I think it should. It’s not like making a $100 donation on Kickstarter. It’s a much more serious business.”
CORRECTION, APRIL 4, 9:50 A.M. ET: A previous version of this story misstated the affiliate of Basis Investment Group that Dale Burnett co-founded. This story has been updated.
