Table of Contents

Introduction        3

Mission & Vision        3

Mission        3

Vision        3

The Challenge        4

Micro        4

Macro        4

Executive Summary and Organizational Structure        4

Organizational Structure        5

Seed Eco-Home Product & Solution        5

Market & Competitive Analysis        11

Market Trends        11

Market Sizing        12

Takeaways & Potential Avenues for OSE        16

SWOT Analysis        16

PESTLE Analysis        16

Key Markets & Customer Personas        17

Customer Segments and Priorities Chart        17

Individual homeowners        18

Mass Housing Organizations        18

Operating Model & Financials        19

Marketing Strategy        22

Finances & Seeking Capital        25

Financing sources        26

Donations        26

Equity Investments        27

Valuation        28

Next Steps        31

Introduction

Open-Source Ecology is tackling two ambitious challenges with the Seed Eco-Home: Employment and housing shortages. To achieve its ambitions, OSE must first prove that its model can deliver the benefits promised. The following business plan is the first step in the process that will allow OSE to realize its larger goals, generate consistent revenue, and expand its impact.

Process Flow:

Mission & Vision

Mission

Open Source Ecology seeks to create open source blueprints that will allow anyone to make machines that will allow for self-sufficient economies. With the Seed Eco-Home in particular, we seek to create a replicable business model that provides safe, sustainable, affordable housing to consumers and the opportunity to achieve financial self-sufficiency to builder-entrepreneurs. 

Vision

We envision a world in which communities are thriving in a sustainable, collaborative, just economy that values innovation and sharing.

The Challenge

Micro 

Home construction in the US is slow and expensive, putting the dream of home ownership beyond the reach of many families. Simultaneously, secure jobs that pay a sufficient amount to allow individuals to buy a home are highly competitive. Graduates of both trade schools and four-year colleges are increasingly finding their education insufficient to secure a decent job.

Macro 

Our economy is not working for a large swath of the population. We now have unprecedented ability to generate collective abundance, but our current economic structure produces concentrations of wealth and power and leaves many people in dependent positions with limited control over their own lives. The high cost of housing necessitates regular pay for most people to stay under a roof, but the current labor market offers unequal opportunity to generate wages sufficient to achieve any degree of autonomy from that system. 

Executive Summary and Organizational Structure

Executive Summary

Open Source Ecology (OSE) exists to build an economy of collaborative abundance through open-sourced hardware. OSE views hardware including machines, tools, and buildings, as the key to unlocking global prosperity for all. Marcin Jakubowski, after receiving his PhD in fusion physics, founded OSE in 2003 on a Missouri farm with the creation of the Global Village Construction Set (GVCS): a collection of open-source blueprints for building the fifty basic machines necessary to start a civilization. Since then, OSE has grown their focus to address the housing crisis by designing the Seed Eco-Home: a 1,000 sqft home based on easily constructed modules designed to be swarm-built by 24 people in five days for $100,000. 

This home design addresses the shortcomings of the U.S. housing market: it is fast to build, affordable, easily repairable and expandable, energy efficient, and designed with renewable energy in mind. Jon Miller, MBA, has now joined the OSE team bringing expertise in building meaningful veteran employment This product is being intentionally created with the purpose of creating a Department of Labor-approved apprenticeship program, accomplishing the simultaneous goals of funding the further development of the GVCS as well as training individuals to start their own businesses building Seed Eco-Homes under the open-source collaborative model. 

Organizational Structure

This chart provides a cohesive vision of how each of OSE’s open-source product lines fit into the broader organizational structure, how they relate to each other, and what function they serve.

Seed Eco-Home Product & Solution

The following description of the Seed Eco-Home is intended to allow potential customers, entrepreneurs, and fans to understand the product in its entirety, including what amenities and services are included in the $100,000 price point. This section is intended to also function as a standalone description that can be integrated into websites or other informational documents. The table following the description allows for a more granular breakdown of amenities, and should be updated by OSE to ensure accuracy.

Market & Competitive Analysis

The Seed Eco-Home is a competitive solution for both individual home owners and multi-home developers. Within each group, potential customers can be further segmented based on their motivations, resources, and priorities. In this section we will explore the market and competitive landscape for the Seed Eco-Home in the US. 

Market Trends

Following a macro-analysis, the following trends seem to be shaping the US housing market:  

1. Increasing housing costs, which, in the US, have been a dramatic 30% uptick in the last 24 months, in part caused by increasing cost of production 

2. Growing desire to build sustainable homes, as seen by recent research conducted in the US showcasing more than 84% of residents deeming sustainability to be an important factor for their homes & 75% of real estate investors looking to invest in property with a sustainability focus.                  

3. Increasing deurbanization rates amongst Americans which were strengthened

throughout the COVID-19 pandemic

+

Market Sizing 

While market trends emphasize a positive trend for players in this market, understanding the market potential is crucial. The following statistics help get a better understanding of the opportunity: 

• Global market for prefabricated housing expected to reach 153.7bn by 2026 CAGR 6.5% 
• US prefabricated market expected to reach 21.2Bn by end of 2022 (18.3% of global market share)
• 21 million people live in 7 million homes in the USA are manufactured or prefabricated
• 7.5% of all single-family homes are manufactured or prefabricated 
• 15% of rural and 3% of urban houses are prefabricated 
• 50% of the manufactured housing is in rural areas

Furthermore, research shows that within the USA, the South & South-Eastern region of the country showcase a stronger historical demand which could be indicative of an interesting market to pursue.

The above showcases a strong potential to deliver single family, prefabricated housing in rural areas of the USA, thus validating market demand for the Seed Eco-Home. 

As a result of the increasing demand, companies have entered the housing market attempting to deliver a better suited solution for the consumer. Broadly speaking, competitors in the space can be grouped into the following categories:                                            

• Tiny Homes: Part of an architectural and social movement which advocates living with less, in the form of downsizing living spaces & simplifying housing. These units are meant for no more than 2 people with the average size being approximately 225sqf and can be built in very little time. 

Product: Tiny Home

Price: $45,000

Size: 250sqf.

Speed: 6 weeks

Market Positioning: Small & Cheap Ideal for couples

• Accessory Dwelling Units (ADU): Defined as being smaller, independent residential dwelling unit located on the same lot as a stand-alone single-family home. These tend to be used as extra living space, office space, or rental spaces, and can vary greatly in size. go from being relatively small to a significant sizes. 

Product: Modern ADU’s of different sizes 

Price: $200,000 +

Size: 340-610sqf.

Speed: 4-5 months

Market Positioning: Modern Home Extensions

• Prefabricated houses: Highly personalizable, prefabs are built in a factory and shipped in pieces to be assembled onsite, prefab homes are significantly cheaper and more sustainable than stick-frame housing, while still maintaining a very high standard of quality. Prefab homes range in size and can take months to build and install.

Product: Prefabricated homes 

Price: $290,000 - $340,000

Size: 1100-1700sqf.

Speed: 8-20months

Market Positioning: Highly customizable & sustainable 

For the customer profiles explored, the options are therefore limited and not particularly flexible: 

                         
As shown in the diagram above, OSE compares favorably to competitors, and offers a more expansive product than the only product that can match its cost or build time. OSE’s competitive advantage can be summarized in the following positioning statement:

“For sustainability conscious family home seekers, OSE’s Seed Eco-Home is a modular, prefabricated 1,000 square foot home that can be built in less than 5 days. Unlike current market offerings, the Seed Eco-Home has the benefits of a prefabricated home, at comparable build time and lower price per square foot of a tiny-home.”

Takeaways & Potential Avenues for OSE

SWOT Analysis

Strengths: Unique product positioning which delivers unique benefits to the end user, which hasn’t been addressed by other market competitors

Weaknesses: The viability of the Seed Eco-Home still needs to be fully tested with a client to gain traction and credibility 

Opportunities: Partnering with an NGO to test viability of product potentially at loss to establish OSE in the market

Threats: Sustainable 3D-printed homes are starting to enter the market, offering a logistically easy, low-cost, modular solution which requires little to no labor and can be built in just a matter of days, potentially undercutting the prefabricated home market in the near future. 

PESTLE Analysis

Political Risk: There is low political risk in the Seed-Eco Home (Financing; Tax Credits & Grants at state, local & federal) 

Economic Risk: While a set $100,000 price-point makes this an attractive proposition, increasing costs of raw materials, especially in connection with ongoing supply-chain shocks, might have a negative impact on OSE’s margins. In the adverse situation where housing costs decrease, it is unclear if consumers will flock to alternatives like prefabricated homes or be more attracted to traditional builds.

Socio-Cultural Risk: While there is a positive trend towards alternative housing options, parallel lessons can be learned from Tata’s “world cheapest vehicle,” and ensure that customers are not socially concerned about owning a cheap home or a house that is traditionally associated with being developed for NGOs.

Technological Risk: 3D Printers as previously outlined can be a significant threat to the model in the mid-term future, nonetheless it could also be treated as an opportunity worth exploring 

Legal Risk: Local Regulations account for different building measures & requirements; it is important for OSE to ensure the modularity of the Seed Eco-Home allows for sufficient flexibility to adapt in accordance to the build location without sacrificing the 5-day build period

Environmental Risk: As a sustainable solution, environmental concerns remain limited. Nonetheless, OSE should highlight the positive environmental impact of their offering, in addition to the build itself, it is important to show that living in the house is sustainable. 

Key Markets & Customer Personas

To develop the Seed Edo-Home’s customer personas, the team conducted inverviews with OSE supporters, housing nonprofts, real estate investors, developers and real estate experts within the Yale community. The interviews helped us identify the value the Seed Eco-Home could bring to different customer groups. Based on our interviews, we have laid out profiles on each customer segment highlighting their priorities and challenges OSE is likely to face when selling the Seed Eco-Home.

Customer Segments and Priorities Chart

Key: green= high priority, yellow = medium priority, white = low priority/ highly variable

Individual homeowners 

Off-grid dreamers 

Description: This customer persona includes those who want to realize OSE’s mission of creating a sustainable and self-sufficient environment. This persona is attracted to the Seed Eco-Home for its modular design, lower carbon footprint, and for the freedom that it represents. 

Priorities: This persona values the Seed Eco-Home’s low cost, durability, quick build and sustainable design. The biggest priority for the customer is the ideological alignment with OSE. 

Challenges: There is limited information to accurately size this demographic. The ideals represented by off-grid dreamers are not always compatible with the wealth needed to buy land and build a house. 

Rural Landowners 

Description: Landowners possess the space necessary to build a Seed Eco-Home without acquiring new property. Individuals fitting this description include rural landowners and farmers. This target customer may want to build a first home, expand existing dwelling space, or create opportunities for hosting others.

Priorities: This customer persona values the low cheap price of the product as well as the easy, speedy and durable build. 

Challenges: The customer segment is not ideologically bound to the Seed Eco-Home product. 

Mass Housing Organizations

Urban housing nonprofits 

Description: Nonprofit organizations dedicated to addressing the housing crisis in the US. These nonprofits either build or support the development of affordable housing projects. (e.g. Institutions include Habitat for Humanity).                                                     

Priorities: This customer persona is more interested in a scalable product that can be replicated and built at a low cost, and that will maintain its value with low maintenance costs cheap cost and at a fast rate. Depending on their operating model, speed of construction may or may not be as critical as adaptability. Since nonprofits are also mission oriented, the ideological alignment with OSE is also incredibly important. 

Challenges: Customer segment will require additional validation since non-profits will require the building of multiple units at once. Nonprofits can build housing projects with OSE which will include multiple homes, and the organization needs to think through logistics on how to best handle multi-home builds. OSE needs to be prepared to handle those demands. 

Government housing initiatives

Description: This customer segment includes government public housing authorities. There are multiple housing authorities in Missouri that the company can initially target ranging from the county level and city level in Kansas City and Saint Louis. 

Priorities: Government housing authorities are most interested in building inexpensive and scalable housing units. The units need to be durable as they are public investments. 

Challenges: Funding from the government is reliant on political support. In addition, public investments are also subject to public scrutiny. OSE will have to make sure the product is sufficiently validated by engineers, construction experts, regulators and the market.

Construction entrepreneurs

Description: This customer segment includes both OSE graduates and real estate developers, including those that are keen on having affordable housing units in their portfolio to take advantage of affordable housing government incentives. 

Priorities: This customer segment is interested in making a profit on their housing investments. They will be particularly interested in costs and the speed of construction. They are also likely to be interested in the design of the units so they may better sell or rent the units to customers. 

Challenges: The main objective of this customer segment is profits, and the product will need to be sufficiently validated to prove that it can be profitable for the euntrepenuers. Developers will need to know that the housing projects will be eligible for federal and local affordable housing tax incentives. They also need to have a clear understanding of the costs and their potential margins. Real estate developers will require additional customization to the product to attract more home buyers and renters. More information will need to be provided regarding the customization of the builds. It is important to have the product sufficiently validated by targeting individual home owners and nonprofits before approaching large-scale project developers. Highlighting successful builds with other customer segments will give developers  the security to invest in large scale projects with OSE.

Operating Model & Financials

Open Source Ecology needs to finalize expected costs of construction including a finalized bill of materials and list of included amenities in the final Seed Eco-Home to create a more realistic expectation of profit potential and cash flow. If Open Source Ecology or builder-entrepreneurs anticipate offering complete service packages including handling permitting, building foundation, or connecting to public water, sewer, and grid, then the cost and expense of those services also need to be priced out and included. 

In order to determine whether an Eco-Home construction business could be profitable at the given price point of $100,000 per home, financial projections must not just account for the cost of building homes, but for the entire cost of running a business. This expanded definition will include administrative tasks such as fielding inquiries from potential clients, recruiting and hiring contract labor, etc, as well as labor that may not be currently included in build time: such as site inspection, planning, buying and transporting construction materials, etc. If workers are not independent contractors, this will also include payroll taxes. Below, is a simplified version of what this might look like:

Financial Model for Revenue Forecast and Discounted Cash Flow Valuation

Although eventually OSE would like to use new construction sites as training grounds for apprentices and builder-entrepreneurs, the business will likely have to begin by hiring contract labor. Retaining good workers by providing regular employment will help decrease the cost of recruiting and will increase the efficiency of new builds. We therefore recommend that in its early stages, OSE should try to optimize its crew size to keep all of its builders employed rather than trying to hire 24 people to optimize for a quick build time.

For example, if OSE knows that it will only have 1 build per month for the first year, it may reduce its crew size to 8-12 people, so that building takes 10-15 days, thus allowing all employed workers to earn enough that they do not have to seek alternative employment. Once demand for the Seed Eco-Home grows beyond 2 or 3 per month, then it will be more practicable to have a full crew of 24 builders.

Although the construction of the Eco-Home can be quite rapid, the process from receiving an inquiry to completion can take months depending on the details of customization requests, the speed with which permits and inspections can be obtained, and the size of the construction crew.

Note that many inquiries will likely never materialize into a purchase order, so the time and expense required in marketing, outreach, and correspondence with potential customers who never materialize into paying clients must also be accounted for in the final cost of running an Eco-Home construction business.

Marketing Strategy

Marketing is an important element of any business, and can play a crucial role in determining market positioning and sales. 

As explored in the competitive analysis, the Seed-EcoHome has unique attributes which should be leveraged and highlighted in any marketing campaign for the Seed Eco-Home. In order to adequately capitalise on that, the positioning statement should serve as a guide for any marketing campaign engaged in:

“For sustainability conscious family home seekers, OSE’s Seed-EcoHome is a modular, prefabricated 1,000 square foot home that can be built in less than 5 days. Unlike current market offerings, the Seed Eco-Home has the benefits of a prefabricated home, at the cost and build time of a tiny-home.” 

Landing Page & Website

• Most successful competitors in the space have a clear landing page, highlighting their product features, costs, build time availability & more
• Compared to a lengthy & complex wiki to navigate, a landing page is an easy way to educate and inform potential customers 
• In addition, it has the effect of strengthening credibility & trust for consumers 
• Low-cost and easy to implement 

In-bound marketing strategies

• In-bound marketing is an easy way to attract highly qualified consumers who already have an interest for your product, at marginal cost. 
• Creating a blog with desirable titles, optimised for SEO purposes will attract both individuals and mass builders to the website. It is important these highlight the key attributes of the Seed Eco-Home and are aligned with the positioning statement. 
• Potential ideas “How to build a family house in 5 days” ; “How we built the biggest and cheapest house, for under $100k” ; “Why sustainability matters in prefabricated homes” etc. 
• This can be an addition to the website; is low cost and easily implementable. There should be a focus on SEO titles which requires additional research + emphasis on short and digestible blog.  

Videos

• To date, videos seem to be for more internal purposes, recording conversations that benefit the organisation but not necessarily inform an end user. 
• If tailored and adequately addressed, videos are an easily digestible marketing strategy that can gain traction by a large audience with little effort. 
• Videos offer the opportunity to showcase the Seed Eco-Home as a product allowing potential customers to virtually visit the house as well as showcasing the impressive speed of build
• Consider leveraging various social media outlets to generate the greatest impact and reach
• Likely to need to hire an intern or part-time worker to be solely dedicated to the video marketing strategy, and therefore will incur some costs although a lot can be done simply through a smartphone. 

Online Community

OSE has already created an impressive online community and following. However, its reach can be further expanded and the online community leveraged by creating more accessible content tailored to audience interests and posting it in places where new people are likely to encounter it. 

Reaching out to popular online channels such as established youtubers and blogs that already have a significant following and asking for coverage could be one way of expanding interest. 

Once a community is engaged (either following OSE youtube channel or subscribed to their blog), creating regular updates that are exciting and tailored to the audience can help to retain interest. Although this may seem laborious, this network of interest may yield big payoffs in terms of generating interest in buying Eco-Homes, becoming builder-entrepreneurs, volunteering, or donating money.

Networking & Conventions

• Important aspect of building a brand name and market presence 
• Attending conventions establishes a certain level of professionalism, as well as a unique opportunity to meet an array of potential customers who otherwise might not be aware of your product
• Networking & attending conventions allows OSE to understand and remain atop of market trends, while also receiving critical feedback so that the Seed Eco-Home can continuously deliver to market needs 

Finances & Seeking Capital

OSE needs to secure capital in order to fund the capital expenditures and marketing costs necessary to get the Seed Eco-Home business up and running. OSE’s financing need as of March 2022 is provided below: 

The above suggests a $770,000 financing need, though we would recommend securing an additional runway of $30,000 to adjust for expenses not accounted for.

Financing sources 

Donations 

Due to its status as a nonprofit, the company can continue to secure funding from donations it receives from its supporters. Marketing efforts need to prioritize donation requests where appropriate. In addition to seeking donations from supporters, OSE can also secure financing from larger philanthropic organizations that already donate to nonprofits seeking to provide affordable housing. Below are some organizations that might be sources of donations. 

• Surdna Foundation 

• Supports social justice reform, healthy environments, inclusive economies, and thriving cultures across the United States
• Funds available for organizations focused on sustainability, inclusive economies and affordable housing 

• Hall Family Foundation 

• Dedicated to building prosperous communities in the Kansas City area 

• Silicon Valley Social Ventures Fund 

• Funds organizations seeking to alleviate the affordable housing shortage 

• Airbnb Community Fund 

• The AirBnB Community Fund is the philanthropic extension of the Airbnb company and focuses its grantmaking on community development efforts and the needs of refugees, asylum seekers, relief workers and disaster evacuees.

• Ally Charitable Foundation 

• The Ally Charitable Foundation has named housing as a grantmaking area of interest, but detailed information about grantmaking in this area is not yet available.

• Ben and Jerry’s Foundation 

• The Ben & Jerry’s Foundation is devoted to supporting grassroots efforts for activism and change. Access to affordable housing is a component of its economic justice initiative.

• Berger Charitable Foundation 

• The Berger Foundation’s grants for community development prioritize programs that support disaster and homeless relief, natural resource conservation, and community resilience. 

• The Arthur M. Blank Family Foundation

• Atlanta based philanthropy which is involved in House ALT, a cross-sector stakeholder group that created a housing affordability action plan for the city of Atlanta

• Ford Foundation

• Funded affordable housing projects in Denver Colorado. Its grants for urban development strongly prioritize affordable housing for renters.  

• Gates Family Foundation

• Has invested over $175 million in building affordable housing

Equity Investments

Equity Investments bear additional risk for the organization than grants and donations. They dilute the ownership of the firm, and investors expect a market rate return on the funds they provide. If donations do not cover OSE’s current or future financing needs, equity investments into the Seed Eco-Home line of OSE could be a financing option. 

At early stages of a business, financing from angel investors may be the best path source of investments lower than $1 million. Angel investors are typically individuals who invest in very early-stage companies and typically do not have operational voting rights in the company. Since angel investors are typically former entrepreneurs or experts in the fields in which they invest, they can also provide valuable advice to startups. When searching for angel investors, it is important that OSE seeks funding from investors that have knowledge in housing and construction. Networking is the key to finding angel investors and there are databases that allow investors and startups to find each other. These include SeedInvest, AngelList and Gust. 

After the product has proven profitable, OSE can seek early-stage venture capital investments to secure financing for capital expenditures, cover larger marketing campaigns and hire additional staff. Given OSE's commitment to its mission to create sustainable economies of abundance with its open source model, we recommend the organization seek funding from impact investing funds which seek to invest in businesses that generate positive impacts in addition to financial returns. Below is a list of early-stage impact investing funds focusing on home construction and sustainable hardware startups: 

• Third Sphere ​

• Early-stage fund focused on urban development and sustainable impact
• Investor in Builders Patch, an online tool built for property developers to manage their deals and raise construction finance

• Piva ​

• Piva is a venture capital firm that primarily invests in disruptive energy and industrial startups
• Investor in Boston Metal, a provider of industrial-scale, metals production solutions

• DBL Partners​

• Early-stage VC fund focusing on sustainable investments
• Investor in Pallet, a social purpose company that manufactures rapid-response shelter products

• VoLo Earth

• VoLo Earth Ventures is an early-stage investor in sustainable technologies
• Investor in Nth Cycle, a metal processing technology company

• 2150

• Fund interested in early-stage companies providing solutions to make urban environments more efficient and sustainable
• CarbonCure provides technologies to reduce CO2 emissions while improving operations and economics

• Astanor

• Early-stage investor focusing on agriculture and regenerative economies
• Investor in Monarch Tractor, an electric tractor company

• Building Ventures

• Building Ventures invests in companies that are providing sustainable solutions for the building and construction industries
• Investor in Build Robotics, a provider or construction machines

• Greensoil

• Early-stage investor in companies creating sustainable impacts in the building and real estate industries
• Investor in Miru, a company developing electrochromic windows that help homes reduce emissions and climate control costs

• Avesta Capital

• Investor focusing on economic development and green buildings
• Investor in Boxpower, a provider of rural microgrid technologies

Valuation

To secure equity investments, OSE must determine the proper valuation for the Seed Eco-Home business. The valuation is necessary to properly negotiate the ownership of the business line with potential equity investors.

We conducted a discounted cash flow model using information provided by OSE, information on public home construction companies, as well as our own assumptions. Based on our calculations, the Seed Eco-Home business line should be worth $4.4 million. We laid out projections of future revenues, and expenses and discounted the cash flows based on comparable company equity betas. Since the product has not yet launched, it is difficult to determine accurate costs and revenues for the business. It is important that OSE reevaluates the assumptions we laid out as more information on the costs of the product becomes available.

Next Steps

Based on our industry analysis, we believe that it is possible to make - construction a viable business. However, it likely includes more costs and challenges than are currently being accounted for, including marketing, coordination, and client communication.  A more realistic framework can only emerge by successfully completing a pilot project. Note that a realistic pilot project will not merely be the construction of a single home, but is the successful establishment of a business that can run for a duration of time with the advertising, outreach, and overhead costs, and payroll taxes  included in the final profit calculations.

Although defining the value of a home is complicated and subjective, some key considerations are cost, durability, sustainability, and comfort. While cost can be precisely quantified, values like sustainability, durability, and comfort may require external evaluation, testimonials, and certifications to make customers feel comfortable in their purchase.

Below is an analysis of what OSE needs to prove in order to be an attractive option for builder-entrepreneurs, and for potential homebuyers.

Certifications

These external certifications are options that will provide customers more security and peace of mind and help OSE to ensure that it is delivering on its values.