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NXNEi Wrap Up: Can Crowdfunding Save Detroit?
Loveland founder Jerry Paffendorf makes a case for three "terrifying" and out-of-the-box ideas that could dramatically change Detroit — funded digitally and directly by the people

Futurist and enrepreneur Jerry Paffendorf addresses the audience during his presentation at NXNEi. Photo by Andrija Dimitrijevic
Jerry Paffendorf knows a thing or two about crowdfunding.
His startup LOVELAND Technologies was one of the first ever to be funded by Kickstarter. His idea was to sell virtual inches of Detroit real estate for a dollar each to create “microhoods” — parks and garden spaces spread across Detroit and mirrored online. Essentially it is a virtual version of an entire city. “Inchvestors” can log in and communicate within the map itself, meet new neighbours and make plans for the space. The idea has since been moved from inches to city scale with a full-blown virtual city map complete with advanced data about Detroit properties — including detailed information pertaining to auctions. It’s a gamified way to look at property ownership and it has become, to Paffendorf’s surprise, a quasi-government in itself.

“Everything you’ve heard about Detroit is true,” Paffendorf said.

Population decline is a huge issue in Detroit. A city that once housed two million in 1960 now has a population of 700,000. Paffendorf said 90,000 structures — houses, buildings, factories and land — sit empty in Detroit right now. Every year there is a foreclosure auction selling thousands of properties at $500 price tags. Last year, 6,000 properties went unclaimed. This year, that number is expected to increase.

Paffendorf’s NXNE Interactive talk Living In The Map — Adventures In Making Detroit A User-Friendly City centered around three “terrifying” but innovative proposed ideas that could leave a big impact on a distraught city.  

“Don’t think my user strategies are the best, because this story is still being written,” he said.

1) The Greenhouse Effect

One of Paffendorf’s projects is the Imagination Station, a donated property of land featuring two houses that Paffendorf was tasked with reinvigorating for community use. The property became hubs for housing artists and creatives, but a new idea put forth by an “architectural fetishist” friend proposed turning the land into a crowdfunded urban terrarium. How? By covering the buildings and the surrounding land with a giant four-storey greenhouse.

The greenhouse would encapsulate the houses, which upon being enclosed no longer need to be kept up to standard meaning they can become historical pieces of property and thus preserved. The greenhouse could become a year-round community centre for people to house community events such as art parties. Apparently there is no law for the size of a greenhouse; the city just doesn’t expect anyone to build something of such a large scale.

“People enjoy the environment we’ve created around these houses. The idea would be to make the space clean, active and within the framing preserve the houses.”

2) Crowdfunding property ownership

Paffendorf started thinking about these unclaimed auction properties and wanted to find a more lateral way to deal with them.

Enter No Property Left Behind. Paffendorf’s idea is to generate a pool of $2.5 million in crowdfunding, enough to buy 5,000 unclaimed properties. The idea would be to generate a script that would bid on these properties automatically within the final minute of auction and accrue properties until the pool of money ran out. The crowdfunded group would essentially become the largest landowner in the city of Detroit, which would give them an opportunity to immediately open these properties back up and make them available to original owners and individuals. They could create a simple application form with guidelines that would favour the locals.

Paffendorf is in the process of looking into the laws involved in potentially doing this. He doesn’t want to go to jail accidentally.

3) Crowdfunded credit unions

Credit unions are good for cities, Paffendorf said, but he had a terrible time finding one in Detroit. Then suddenly he thought, what if there was a bank that operated like Kickstarter?  What if a bank was a peer-to-peer social network that could provide small loans and donations to people — something rather impossible in traditional banking, especially for people with poor credit ratings.

“There’s a real opportunity to build financial institutions where crowdfunding is essentially the bank,” he said. “You could see that John down the street needs $500 to fix something. Cut out the middle man and the other people in the bank could help you out. Let people choose to move that inside the bank.”

Paffendorf is an urban genius with insane ideas. Learn more about what else he’s doing — including user-generated tour apps — here.  


Sheena Lyonnais is Toronto Standard’s tech and business editor. You can follow her on Twitter at @SheenaLyonnais.

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