Why you should care
Because Jase Wilson is changing how cities get built.
At 3 a.m. on a weeknight, most people are fast asleep. But Jase Wilson is not most people. When his alarm clock hits 3, he’s out of bed in a flash, for a 40-minute guided meditation, a power nap and then 30 minutes of interval training before heading to San Francisco’s Union Square to work on his municipal bonds startup. All this on an empty stomach because he follows an intermittent fasting diet, and he likely won’t eat before midday. “This job has required me to optimize as much as I can,” he says. “To be present and valuable, I include all the little hacks I can do to enhance mental clarity throughout the day.” Considering his work involves wading through the murky waters of fintech and city bureaucracy, he needs all the help he can get.
Here’s the deal. It’s likely that you — or someone you know — complains regularly about that pothole in your street or the lack of good schools in your district. But doing something about it is an onerous process that requires petitioning the council, wrangling budgets and more. Municipal (muni) bonds are one way that people can take back ownership of their cities. They’re a trillion-dollar market, with interest payments generally exempt from federal taxes, and super low default rates. But getting your hands on these bonds — if you’re not in the 1 percent — is tricky, often obfuscated by legalese and provisions. Wilson’s objective is to democratize access to these bonds and simplify investing in your local community. Enter Neighborly, the startup he co-founded in 2012 to provide a modern twist on municipal bonds — a registered broker that helps users fund everything from schools to fire trucks.
He’s breaking the staid fintech mold, bringing a dash of Silicon Valley to an industry dating back to the 1800s.
“I love cities,” says Wilson, 35. “It’s people getting together and building something greater than the sum of the parts.” And for him, it’s personal. Wilson grew up in Maryville, Missouri, population 12,000, and describes himself as an “introvert from a broken home” who found refuge in local parks, there thanks to investment from the city. He pursued a Bachelor of Arts in urban planning and design at the University of Missouri, followed by a master’s in city development at MIT. Accessibility for all has been a sticking point for him: His first company, Luminopolis, provided open-source software for cities. His interest in the muni market sprang from a conversation with trader Patrick Hosty, when they realized that a swath of people had no understanding of a municipal bond, in part because it did not apply to them. Together they founded Neighborly.
“That used to be something that was part of civic life,” Wilson says, referencing landmarks such as the Golden Gate Bridge that were funded with muni bonds. But in contrast to the majority of muni brokers who won’t accept less than a $25,000 entry point, Neighborly starts at around $1,000 — a low-cost point of entry to attract diverse populations. Wilson’s dream is to scale so the cost drops even lower, say $100 for a bond. With current offerings in more than 10 states, the potential for growth is limitless, hence investment in Neighborly to the tune of $30 million from the likes of 8VC and Emerson Collective. Current projects you can sign up for include San Francisco County transportation bonds and the Los Angeles wastewater system. The platform excludes funding for services seen as harmful, such as private prisons or tobacco plants, and while Wilson doesn’t dictate how people spend their money, clean energy, broadband and education feature heavily on the site.
To start, Neighborly ran on a civic-minded Kickstarter format, before it evolved into the muni bond marketplace — necessary, as there was no way to raise sufficient funds on a pure donation-based model. Getting cities on board took a lot of persuasion, and Wilson’s goal is to get every state to use Neighborly for bond offerings. Dressed in a baseball cap and a logo hoodie, he’s breaking the staid fintech mold, bringing a dash of Silicon Valley to an industry dating back to the 1800s. “Market adoption is hard because incumbents dominate, and they don’t want any new offerings,” he says.
Dean Myerow, portfolio manager at Las Olas Wealth Management of NatAlliance Securities, agrees. “Wall Street public finance underwriting is a capital-intensive niche ruled by the likes of Morgan Stanley [et al.], and upending their firm grip on the marketplace will be the challenge,” he says. Myerow also has concerns about whether the platform is robust enough to handle billion-dollar deals. However, he views their millennial reach as a big coup — in 2017, Neighborly was awarded Deal of the Year by Bond Buyer for its work in Cambridge, Massachusetts, where 30 percent of participants were under 40 years old. “Most bond buyers are retirees,” Myerow says. “This platform highlights the possibility of young, socially responsible investors being able to affect change with their investing portfolios.”
In November 2017, Wilson expanded with Neighborly Investments, a platform for bigger fish that includes extra data and AI sifting, and among his design goals is allowing people to purchase bonds with cryptocurrency. On Feb. 7, he announced a partnership with the UC Berkeley Blockchain Lab to develop a first-of-its-kind tokenized municipal bond to address pressing community issues such as homelessness and housing costs.
But building what’s essentially a civic-minded stock market is not without its problems. For one, just because you have the cash doesn’t mean the underwriters will agree, and then there are regulations that can cripple a fledgling company. “I’m always excited to see disruption with regards to data and information transparency,” says Alisande Heriyanto, the Corcoran Group’s director of technical support and services. “I personally like learning about these types of projects and opportunities to invest in, instead of these types of bond investments being shrouded in mystery.” But she cautions that transparency can trigger pushback from people wary of change.
For now, Wilson’s full speed ahead. Last year he says Neighborly did $121 million in volume, 20 percent more than estimated. This year he’s hoping for $1 billion — and the possibility of breaking into muni markets in other countries. To keep his focus, besides meditation and fasting, he’s reading books that relate. Recently, he reread John Steinbeck’s The Grapes of Wrath. “There’s the swirling clouds of the Dust Bowl,” he says. “I came from there [in a] very different set of circumstances.”
Editor’s note: Emerson Collective, mentioned above as an investor in Neighborly, has also invested in OZY.