A note from the Fund Manager -

A brief Backstory

In October of 2020, Carpathian Homes was founded via seed capital from the Visible Fund in response alongside our Catalyst, Doug Landro, in pursuit of empowering young Rroma men to learn a trade and fill a niche in the local marketplace in Uzhhorod, Ukraine. Doug had spent over two decades living and working in Ukraine where he met his wife, Marina and raised their three children. The Landros work over more than 25 years had resulted in innumerable local partnerships and an intimate understanding of local needs and assets. Construction skills were in demand and Rroma men were underemployed and there was real potential in getting these men sustainably employed to bridge the cultural divide that has been long-lasting between ethnic Ukrainian and the local Rroma people. Fast forward to February 24, 2022 (now 600 days ago), and the Russian invasion of Ukraine changed everything. Our team’s efforts to build homes pivoted overnight to caring for internally displaced people (IDPs). Throughout 2022, by providing 550 beds across 11 facilities, our team and their local partners tirelessly cared for over 30,000 Ukrainians by providing food, shelter and spiritual care. Some of those IDPs remained in the area, others went on to become refugees across Europe, and others returned to fight or rebuild from the rubble that was once their homes. Our prior aspirations for Carpathian Homes went on permanent hold and over $1,000,000 was provided by the One Collective family of partners and supporters for the benevolent aid of victims of war in Uzhhorod.

Nearing the one year mark since the war began, the numbers of IDPs had waned significantly and it became evident to our team that Ukrainians were far more interested in rebuilding than remaining in temporary shelters. An unprecedented level of demand for housing crept up and the local team realized that Carpathian Homes was needed for a purpose far greater than originally foreseen.

FROM RELIEF TO REBUILD

Homes originally designed as affordable mountain get-aways in the foothills of the Carpathian Mountains, now poised as an obvious solution to efficient, permanent housing for Ukrainians looking to rebuild in regions of the country proven to be safe, including Uzhhorod. Carpathian Homes broke ground on a neighborhood of 18 homes called Veliky Lazy that would serve as both a model home community for this style of home as well as a better short-term sheltering option for women and children. In Ukraine, the most common residential construction method utilizes concrete blocks. The Veliky Lazy project partnered with Borkholder Building & Supply out of Indiana to showcase a post-frame, all-wood construction that solves many of the problems currently impeding rebuilding efforts across Ukraine. Affordable, quick to build, environmentally friendly, and utilizing locally-available materials, this building method would streamline rebuilding efforts by a factor of a lot. The problem is, there are few working age men remaining in these areas of the country to put to work, there is little-to-no know how for this framing method, lumber is in short supply, and very few parts of the country are poised for immediate rebuilding efforts.

CARPATHIAN HOMES 2.0

We are setting out to address these obvious limitations by taking a picks-and-shovels approach. By acquiring a small lumber and truss manufacturing processing facility owned by our on-the-ground partner, Dima Golub, we plan to scale that operation out across three major regions in the country: Apostolove, Uzhhorod, and Kharkiv. These facilities will be operated by crews who both produce the framing materials in the plants and also go out and assemble the framing materials on customer lots. This business will operate as an independent arm of Carpathian Homes, called STUD Framed Homes. STUD will solve two major concerns we currently face about Ukrainians being able to rebuild at even a fraction of the rate they’ll need to; lumber supply and framing skills. We will create a model that serves a few major cities and are fully prepared to giving that model away to the right people looking to do the same in other parts of the country in years ahead. Earnings generated by STUD will pass through to Carpathian Homes to build long-term rental housing that will be held by Carpathian Homes for the foreseeable future.

FUNDING MODEL

As a Visible-Fund-structured venture, all funding provided will be set up as a recoverable grant, and will recycle either via revenue-based financing or asset-based financing. We anticipate it will take $1.5m to acquire and grow the 3 lumber facilities as well as build out the remaining model-home community in Veliky Lazy. The financial projections confirm that this is a feasible sum to still be recycled within a 10 year timeline while still throwing off enough cash to build up to 80 longterm rental units using retained earnings. We anticipate that the estimated enterprise value of the venture could grow to roughly 10x the initial investment in that same ten year period by using a simple calculation of future assets plus a multiple of future earnings. The owners of both STUD Framed Homes and Carpathian Homes will be Ukrainian. The funds recycled will empower our future efforts to expand One Collective’s footprint across the region.

BRING PEOPLE TOGETHER AND GIVE IT ALL AWAY

We recognize that our own efforts to rebuild across such a vast expanse of wreckage will hardly be enough. We are committed to giving all we can and where we see our own efforts really being a critical part of the long term solution is if we can build a model that others can borrow and replicate in the communities they care for across Ukraine. Our intention is to build the model in 3 cities but then give it away in countless more. We are counting on the global missions community, foreign government aid, the Church, and the international business community to all rally around our Ukrainian brothers and sisters and we believe our model will allow them to deploy resources more quickly and effectively. Our role as conveners in the global sense is what makes our approach to holistic development scalable beyond our own means.

IMPACT

Responding to the immediate humanitarian needs over these past 2 years has been the obvious choice to focus our attention on, but our commitment to holistic, longterm, sustainable development was never far off in the back of our minds. The hundreds of thousands of dollars we poured into short-term relief efforts impacted the lives of tens of thousands of displaced and distraught individuals. Now, as we turn the page from relief efforts to rebuilding alongside the Ukrainian people, we recognize the road ahead is a long one. Over 11 million Ukrainians remain displaced both internally and across most of Europe and their return to a broken country will be fraught with immense hardship. We plan to be there for the long road. Our plans with Carpathian Homes will allow for the construction of 1800+ homes which will immediately house over 5000 individuals. But we all know how much more a home really means, especially in hard times like those ahead. Getting the international community to borrow and replicate this model could catalyze 10x or even 100x the impact what we can do on our own through Carpathian Homes.

- Brandon Weidman (Fund Manager)