Hi, I’m Pitichoke, the new Director of Business Development at Neighborly. I previously worked for Goldman Sachs as a senior analyst in the Private Equity Group and recently graduated with a Masters in Public Policy from the Harvard Kennedy School. I am excited to be part of the Neighborly team for three reasons:
- * Neighborly can help cities save billions of dollars*
Last year, municipalities raised $403 billion in bond issuances to fund projects such as schools and parks. About 1% of those funds are spent on fees paid to bankers and lawyers, known in the industry as “cost of issuance”. Put simply, over $4 billion was diverted away from the communities the bonds were intended to serve and into the hands of middlemen.
To take one local example, state and local governments in California spent more than $630 million on the cost of issuance in 2015. That could have paid for 9,000 teachers’ salaries, 4,000 affordable housing units, or 47,000 scholarships for college.
Neighborly wants to help cities save their precious resources and maximize their returns on community projects that matter.
How? Technology is a big part of the answer. Fourteen years ago when I first came to America, I remember having to buy my plane tickets through a travel agent, who of course, charged an expensive commission. Now, with the advent of direct-to-consumer platforms like Expedia, I can just go online and purchase a plane ticket from any airline directly.
Similarly, Neighborly’s bond issuance platform leverages simple to use technology so that city administrators can go online to issue their bonds through a series of simple steps.
- * Neighborly will democratize access to municipal bonds for everyday investors*
Since 1989, the direct household ownership of municipal bonds has decreased from 3.5% to less than 1%. Meanwhile, the ownership of municipal bonds by the wealthiest in our society has increased significantly.
Why aren’t the 99% investing? There are two main barriers: high denominations and access to a brokerage account.
Unlike treasury bonds or corporate bonds, municipal bonds are issued in denominations of $5,000. In a country where an average household makes $50,000 pre-tax, a municipal bond isn’t affordable, and a single bond would likely be a large chunk of a household’s total portfolio, which isn’t advisable.
To invest in new issuance, individual investors also need a brokerage account. These brokerage accounts charge additional fees. To make matters worse, brokers don’t have access to all municipal issuances, so you may need accounts with several institutions.
At Neighborly, we believe that buying municipal bonds should be as easy as buying a plane ticket. Simple, clear instructions, accessible price points and complete price transparency.
- * Neighborly is a team of people who care*
My time at the Harvard Kennedy School (HKS) was phenomenal. I was surrounded by intelligent people. It’s not the intellectualism I miss, though, but rather the fact that everyone I met at HKS was motivated by a burning desire to do the right thing, to make an impact, and to leave this place better for the next generation. People who think more than themselves. And to be honest, I was worried I might lose some of that by moving to Silicon Valley.
However, having been at Neighborly for three months now, I realize that I am among some of the smartest and most passionate people who care. Everyone here at Neighborly is neighborly. People are mission-driven from bottom up, from interns to the CEO. I think I have found a place I can call home.