Raising Opportunity Zone Capital for Business Investment, with Len Mills

Leonard Mills

For business owners, what are some tips for approaching investors and raising Opportunity Zone capital?

Len Mills is CEO of Verte OZ, a venture capital Opportunity Zone fund launched in September 2019 that invests in high-growth disruptive businesses.

Click the play button below to listen to my conversation with Len.

Episode Highlights

  • The characteristics that make the Verte OZ Fund unique among Opportunity Zone funds.
  • The mutual compatibility of 1) developing an entrepreneurial ecosystem; 2) creating social impact; and 3) providing attractive returns to investors.
  • Leveraging state and local economic development agencies and universities for deal flow and information.
  • Why some degree of reporting at the fund level is essential.
  • Some of the biggest challenges to managing a small business Opportunity Zone fund.
  • Ideas for business owners looking to approach investors and raise OZ capital, and why adaptability is an essential trait. Len’s biggest advice: get out there early.
  • Ideas for dealing with the required holding periods to achieve the Opportunity Zone incentives with a venture capital fund.
  • The implications of profit dividends and asset sale distributions to investors from a Qualified Opportunity Fund.
  • Why 2020 and 2021 may be big years for capital raising.
  • The importance of leveraging Opportunity Zone investments in small business with community foundation capital.

Featured on This Episode

Industry Spotlight: Verte OZ

Verte OZ

Launched in September 2019 by Len Mills, the Verte OZ Fund focuses on high-growth, disruptive businesses in sectors with enormous upside potential, including logistics, biotech, and the carbon economy.

Learn more about Verte OZ:

About the Opportunity Zones Podcast

Hosted by OpportunityDb.com founder Jimmy Atkinson, the Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in opportunity zones.

Show Transcript

Jimmy: Welcome to the Opportunity Zones Podcast. I’m your host, Jimmy Atkinson. And joining me on the show today is the CEO of Verte OZ, Len Mills. Len joins us from his office in College Park, Maryland. Len, welcome to the show.

Len: Hello, great to be here.

Jimmy: Thanks for coming on, Len, it’s good to hear from you. So, the Verte OZ is not just another plain vanilla real estate fund, there’s a somewhat unique angle to it, can you tell us a little bit more about it and what makes it unique?

Len: Yeah. Sure. So, as you point out, it’s not a real estate fund, explicitly, in fact, it’s focused, 100%, on operating businesses. It’s a multi-asset fund, we want to build a diversified portfolio. We also we’re trying to appeal to a fairly wide investor base, is interested clearly in investors with taxable capital gains, but also, we’re interested in investors that may come from taxable accounts, as well as, you know, tax deferred accounts like IRA, and things like that. So, it’s a barely diversified fund, that’s the intent, both in terms of the types of investments, multi asset, not real estate, but also in terms of the investors. So, it’s probably unique in that aspect, I don’t know exactly what all the other funds are doing, but I think that is somewhat unique.

Jimmy: And tell us a little bit more about the fund itself, and what you’re trying to accomplish with it, the goals that you have for it.

Len: Yeah. So, it’s operating businesses, that’s the first goal, and these would be typically small start-up businesses, at least, initially, you might think of them as venture capital. The goal was, again, to build up a diversified portfolio. And the broad objectives of the fund are threefold, one is to develop this entrepreneurial ecosystem, both within the fund, but even with other companies outside the fund. We’re also very clearly interested in the social impact, and that’s one of our primary objectives. And we’re also very cognizant, and one of the objectives is around providing attractive returns to investors. And we don’t think we have to compromise on any of those objectives, we think they’re all mutually compatible, and that’s the broad strategies with respect to the fund. We’re also… What we’re finding is some unique partnerships that we think are quite valuable to this effort. One set of partnerships is, obviously, with the local state and local economic development. And agencies, we get a lot good information, a lot of good deal flow from them. We also, as part of the strategies, and given that we’re primarily interested in relatively high-growth companies, early stage high-growth companies, we have a number of semi-formal partnerships, if you will, with respect to different universities across the country. And so, that’s been another angle that we particularly like as part of the fund strategy.

Jimmy: Talk to me about that social impact objective, how do you do that exactly? How do you practically try to achieve that?

Len: Yeah. That’s one of the very interesting aspects of this Opportunity Zone program. You know, there’s no formal reporting requirements, we do expect some formality to come out of that. Well, what we’re doing now is, we’re closely following the impact investing frameworks that are already out there, that would include the U.S. Impact Investing Alliance, the rec center, and there’s a number of these that pre-existed, actually, before the Opportunity Zone concepts, we’re following those general frameworks. Those frameworks really operate at the fund level and the fund reporting level. So, we plan to adhere to those principles and even some of the reporting templates that have come out at that fund level. And then at the community level, which has really given our business orientation, is really focused about what the local businesses are doing in their respective communities. And for that, we’ve started using… There’s a number of scorecards that are out there that we like, and we think those scorecards, they ask very detailed questions, then we help the business answer these questions. But if the questions are about employment, affordable housing, that’s not really extremely relevant in what we’re doing, environment, health conditions, and fostering all of those dimensions.

So, there’s a series of pointed questions, and, you know, we sit across the table, we work through them. If you asked, practically, how do we do that? We work on it. And with a small business, this is, actually, one of the challenges. They’re not used to that, and they have enough on their mind. However, by virtue of them being located in an Opportunity Zone, or planning to move into a start-up, or move into an Opportunity Zone, they’re generally aware, and it’s actually a pretty interesting and fruitful exercise working with them individually. So, it’s a lot of, I’ll call it, grassroots measurements, and awareness about what the objectives are. Going back to the state and local economic development groups, you know, they often have community-based objectives, and we try to work that into that same conversation.

Jimmy: Well, that’s good. I think that some level of measurement and reporting, although not required by law, or required by treasury, at least, not yet, it’s gonna prove to be important, at least, in terms of public perception of the program. I think the public, the taxpayers, Congress is gonna wanna see how this incentive is actually being used, and if it’s living up to the congressional promises that were made, congressional intent. So, good on you for doing some degree of measurement there.

Len: Yeah. We agree wholeheartedly. And it’s not just that other people might expect it or require it, we fundamentally believe it’s an important aspect to the program. And we when we talk to investors, we point that out, and that’s a point of emphasis for us.

Jimmy: Well, that’s good. Len, I wanna back up for a minute here and get a little bit of your personal background story. And, more to the point, how did you first learn about Opportunity Zones? And how did that lead you to develop this Verte OZ product?

Len: Well, you see, euphemistically, they call me experienced, so I’ve had a long path here. And I’ve always been an investment manager or a portfolio manager throughout my career, and most of the places along the way had some aspect to public policy embedded in that same investment. Now, these were all for-profit investments, however, they had some aspect. And then in April of 2019 is when…And I was kind of watching the Opportunity Zones, but then in April this year, they were real estate, I said I’m, kind of, into the venture capital. But in April, when they came out with the second set of proposed rules, and there was a lot of business focus, you know, and while there’s still some uncertain elements, there was enough certainty in it, and I said, “Okay, this is good, we can go forward with this Opportunity Zone concept applied to small businesses or venture capital.” Fast forward, you know, three or four months to get the fund documents, and a lot of legal aspects, and get the auditors lined up, get everything, kind of, lined up, we literally just opened the fund to investors early in September. So, it’s been about a month that we’ve been open. And that’s how we got here, and that’s where we are, and we’re looking forward to ramping this up.

Jimmy: Well, good. That’s great. And, yeah, quite a bit of experience there, as you mentioned, at the outset. It sounds like you’ve done a lot throughout your career, and now you’re doing some venture capital OZ investing, I think that’s great. So, being a business fund now, Verte OZ, what are some of the biggest challenges for you?

Len: Well, there’s some challenges in, as I alluded to, there’s definitely some challenges in managing the fund. One set of challenges there is, you know, you want these companies to be successful, but there’s gonna be companies that, you know, may end up being not successful, and that’s the nature of small businesses, that’s understood. So, that presents a particular set of challenges. The other set of challenges, I think, with respect to small businesses in particular, on their side is, there’s not a tremendous, in the general scheme, there’s not a tremendous amount of awareness. Now, I think, by virtue of this particular podcast, I imagine some of the…everyone here is probably aware of Opportunity Zones on this podcast. But as a general matter, there’s not that much awareness, especially amongst small businesses. And this includes small businesses that are already in Opportunity Zones, they just don’t know they’re in one, or they’re considering moving, and the Opportunity Zone thing is not the first thing that they think about. And then when they hear about it, and when we start talking about it, they have a lot on their mind, right? They’re getting their business started, they have enough worries about that, they’re clearly looking for capital, which…that’s how we, sort of, meet each other. But their initial reaction is a bit, like, “Oh, this is gonna be extra work.” And it is, but what we try to do is mentor them through that, guide them through that process, and actually shoulder some of that burden.

We talked about the reporting requirements earlier, and, you know, we’ve got a framework and a process around that that we think will ease that. And it’s really interesting, actually, when you sit across the table and you start talking about those questions that I mentioned earlier, a light bulb goes off and says, “Hey, you’re right.” You know, “We are in an Opportunity Zone, and in many cases, this is why we’re moving here.” They just didn’t piece it together. So, again, one of the challenges is, really, about education that we find, you know, on the ground, just getting the awareness out there, and, you know, making people aware of the Opportunity Zones from an opportunity perspective, because it is gonna break out, and totally, that’s what these small businesses are looking for. But there’s also opportunities to making a real impact. And I think, even though it’s a challenge, most of the small business owners really latch onto that once they are aware of it.

Jimmy: Right. Yeah. That’s a thing that keeps coming up on this podcast, interestingly enough, from all angles too, is the theme of education. We’re coming up on the 2-year anniversary of the Tax Cuts and Jobs Act being enacted into law by President Trump, but it still feels like it’s early in the game in terms of getting people up to speed on what this incentive is and what it can do, there’s a lot of education that’s needed. If you’re listening to this podcast, and you are, clearly, good for you, you’re kind of ahead of the game there, especially if you’re a business owner or an entrepreneur, seeking Opportunity Zone capital, you’re aware of this program, at least somewhat, or you wouldn’t be listening. So, Len, for those listeners, for that segment of our audience who may be an entrepreneur or a business owner, and maybe they’re in an Opportunity Zone, or they’re considering moving into an Opportunity Zone, or starting up a new business in an Opportunity Zone, and they’re looking for some OZ capital, what is your advice to them? What are some best practices that they should follow for getting in front of investors and fund sponsors like yourself, and raising capital?

Len: Well, there’s lots of advice about how to approach investors, and much of that advise is, make sure everything’s polished and buttoned down, and if you go on the internet, you’ll read things like that, make sure your pitch deck is perfect. I actually find that it’s beneficial to start early and often with investors. Now, investors, you know, you have to have some thick skin there because a lot of investors will, sort of, give you the cold shoulder. But you should approach them anyway, and you should…the ones that are willing to talk, and we’re one of those, I’ll point that out, a little plug. You know, don’t worry too much about having the perfect deck, don’t worry about having all your financials perfect, these are all projections anyway, than having all your financials in perfect order. I think, for us, it’s actually much more important that we understand the people, no matter what business plan people come with, it’s pretty much certain that, as the business unfolds, that business plans are gonna change.

So, adaptability of the people, the management, or the founders, the owners, adaptability and being able to demonstrate that adaptability and being able to execute under changing circumstances. You don’t know exactly what the market is, exactly what, you know, a manufacturing process, or whatever it may be, is gonna end up because, again, these are early stage companies. So, essentially, it’s as important to demonstrate your capability to adapt. And the only way to really do that is, as I mentioned earlier, talk early and often. And it’s okay if you change your mind, and you say, “You know what, we thought about that the last time we talked, I don’t know, a month ago, or three weeks ago, now we’re doing this.” There’s no shame in that, in fact, that’s to be expected. So, my biggest advice is, get out there early, and don’t worry too much about having everything buttoned up. I think that’s a little counter to what you might see on the internet and some of that advice, or talking to people, but that kind of advice is typically for, I would say, more mature companies, or companies that are going to Silicon Valley investors, or that vehicle. I think at this grassroots level where we’re dealing with very local entrepreneurs, it’s okay to be local, and it’s okay to be friendly, and it’s okay to adapt as you go along, we actually encourage that.

Jimmy: Yeah. It sounds like it’s okay to reach out for ideas, too. I mean, maybe you’re a business owner and you may have one idea in mind, and you don’t have it perfect yet, you wanna go to the investors and see what they… The investors may have some good ideas for you too sometimes.

Len: Right. And that goes back to one of our objectives, which is this entrepreneurial ecosystem, we wanna encourage that. And there’s a lot of incubators and accelerators that are out there, and they’re also trying to encourage that, that reaching out, that development, and it’s the same spirit here on the fund side.

Jimmy: In that regard, you actually don’t want everything to be too figured out, and too perfect, and too rigid, you wanna get out there early enough so that you can demonstrate your propensity for some flexibility and some potential changes down the road. I think that’s good advice. So, Len, you touched upon this a little bit a couple minutes ago already, but why don’t you just talk about the unpredictability of, I guess, these two concepts that are, kind of, in contrast with each other. One being, the required holding period to achieve the OZ incentive, you know, the 10-year holding period, and then the unpredictability of holding periods when it comes to venture capital investing, can you talk a little bit more about that and how you handle that?

Len: Yeah. So, this is another one of the challenges, not so much the challenges for the individual businesses, but this is definitely a challenge at the fund level. And the way we think about it is, and this is where some of my experience actually is helpful, the way, at least, I think about it is, it’s a big asset liability management problem. What we end up… If we execute on this plan, we’ll end up with a whole bunch, 30 or so, small assets, small positions. Meanwhile, we have some, technically, they’re not liabilities, but some considerations that we need to think about on the investors side simultaneously, and those considerations are about, well, first of all, the 10-year hold. We are very clear with our investors that this is a long-term investment, that’s the nature of the program, that’s the nature of the tax incentives, but we always have to bear in mind that there is some time that the investors will want their money back, and more. So, you know, we wanna keep that in mind as we’re thinking about this asset liability management problem that I referred to before. And, of course, there’s also, how do you handle distributions, and what’s income, and what’s capital gains, and, you know, is that gonna be a triggering events for the referral, and all kinds of things like that. So, it’s a very, very complex problem.

So, how do we deal with it? We deal with it in a few ways, one way is… Bear with me, I was, kind of, dropping to some statistical lingo here, is what I would call the law of large numbers. So, we’re gonna have a large portfolio, you know, relatively small positions, but large in number of assets, as I mentioned earlier, 30 companies. And while we cannot exactly predict how each company will exit, or what the timing of that is exactly, we spend a lot of time thinking about that for each individual company, and, you know, the hope is that, when we analyze it, we’ll get it mostly right, or mostly close, on average, in the… It can be some distribution, some unpredictability around that, but we’ll hopefully get it right across all these firms. And that’s basically the principle of a diversified portfolio. And the other thing we’re doing on the timing, in particular, if you think about venture capital, you know, people talk about seven, eight years as, sort of, an expected exit, especially an early-stage company, which is what we’ll initially be doing. We’re gonna tilt the portfolio to be a little bit longer than that in recognition of the 10-year hold, again, on average. And then what will happen over time as we manage the folio is, and we do get some exits, we will naturally shorten up, that will probably take bigger investments then, like bigger investments then, but then also shorten up that expected life. So, towards the end, you know, it may be that we want an exit in three or five years, and that’s what we’ll, sort of, engineer. And then there’s challenges within what that means to the investor. So, that’s inside the fund, all of that discussion’s inside fund.

The other thing about unpredictability that I didn’t mention inside the fund is, with venture capital or small businesses, it’s unfortunate, but true, that many of these small businesses will fail. And failure in venture capital kind of means one of two things, one is a traditional business failure where they literally go out of business, you know, and that happens, hopefully, not too frequently. But from a venture capital perspective, another failure is if you don’t make any money, and you get your money back, that would be…in the venture capital world, that’s considered failure as well. But then you hope, in that distributional sense, to get a third, or some fraction, of companies that do well, and some of them…everybody here is impressed about these really big one. But many, many companies do well, not all, but many do well, and the idea is to, again, by virtue of having a diversified portfolio, is to spread out that risk. Unlike a single asset fund, you know, we’re multi-assets, so we are spreading out that risk. Now, on the investor side, those exits, you know, can cause, and we’re very clear about this with the investors, you know, that may the result in some dividend income, we’re organized as a C-corp, some dividend income flowing through to the investors before the 10-year hold. And that’s, kind of, a tale. I’ve talked about the mean of the distribution. If everything goes according to the average, then we’re fine.

There’s two types of tail events, one is the fund that’s terribly bad, there are no capital gains. Obviously, we don’t like to talk about that, but in some sense, we don’t worry about that. On the success side, if we have some exorbitant returns, you know, and given the way that law is currently written, there may be some changes here, but given the way the law is currently written, that may result in current income to the investors depending on what type of gain it is. And it may be bad from a tax perspective, but that event would be good from an investment perspective. You’d still get a nice return if you had this really unusual event, and people got paid, even if they had to pay the taxes, that was probably an okay outcome.

Jimmy: It’s a good problem to have, right?

Len: It’s a good problem to have, that’s a good way to phrase it. And so, we’re very… When we talk to the investor, we also, you know, make them aware that we may be making distributions that are taxable to them, and that is a good problem to have. And our overall goal is to stretch this out, as I mentioned earlier.

Jimmy: And what happens in the case of, I’m not talking about dividend income here, I’m talking about, one of these businesses within the fund exits after a handful of years, before the 10-year mark, and you have… What do you end up doing with the cash from that exit? Do you distribute it? Or do you reinvest it? What does it mean for the investor?

Len: In the early years we would reinvest the initial investment, you know, we would reinvest. Again, we may end up having to create some income in the form of dividends if it’s excess. We do plan to, for many, many years, plan to reinvest the entire proceeds. It depends on whether we can find investments to plough back into, but again, it’s a good problem to have, we may end up having to have some distributions before then. But our general principle is to reinvest up to year seven, or thereabouts, and then we’ll park some money in cash, and start to think about the longer term exits in year 10 with the possibility of some extensions out to year 12.

Jimmy: Gotcha. I think that makes sense. So, if one of these businesses inside of the fund, let’s say, sells, and you have a $10 million gain event from the sale within the fund, you’re saying you could reinvest that $10 million gain within the fund, and that wouldn’t affect the holding period of the investors at the investor level? Or you could distribute that as income to the investors, but then would that be taxed as ordinary income, or would it be considered as capital gain to the investor?

Len: No. I think that would be treated as ordinary income.

Jimmy: Okay. So, then that would be taxable and they would not be able to roll that over into a new OZ investment because it would just be ordinary income?

Len: Yeah.

Jimmy: Okay.

Len: I think there’s some… Yes. I mean, that’s the way we’re currently planning it. I do think they may get some more…this is one area that I think may get some more clarity, I don’t know how soon, because I think the natural thing to do would actually allow that to be rolled inside the fund. But…

Jimmy: If there’s an investment that you can identify within the country, right?

Len: Yeah. So, this is an uncertain area right now, and so, you asked me how we’re gonna deal with it. I mean, we’re just gonna have to deal with it as it unfolds over time, I don’t know how else to phrase it.

Jimmy: And I think that’s an acceptable answer because I think you’re still waiting on a little bit more clarity from the IRS, also, on this issue. And it depends what you’re able to identify at that point in time, what the economy’s doing, what…it depends on a lot of factors, I understand that.

Len: Yeah. Yeah. But I like the way you’ve phrased it actually, it’s a good problem to have.

Jimmy: Right. Yeah. I don’t mean to grill you too much about this because if one of your investments within the fund has a big exit and creates a sizeable return for your investors, that’s great, we’re just talking about the problem of paying taxes now, which is, we don’t want to let that tail wag the dog too much.

Len: Exactly. There’s a little bit too much focus on the tax angling, in my opinion. I mean, I think tax angle is definitely a big incentive. However, you know, if there are taxes that are paid on successes, both at the community level and at the investor level, again, that’s a good problem to have. So, that’s the way we’re positioned.

Jimmy: Yup. I agree with you 100%. More about your fund specifically now. Maybe it’s a little bit too early to be asking you these types of questions, I know you guys just launched this thing back in September, but what is your target raise, and how much do you expect to deploy by the end of the year?

Len: Yeah. So, we’re targeting $50 million, in terms of the end of the year, you know, I would hope…This is really a multi-year program also, I think we’ll get probably around 10 or 20, would be my expectation. We have a little bit that we’ve already gotten in, and we already actually, deployed. So, we’re on pace, I guess, for that end-year goal, $10 million to $20 million, the $50 million target, and we’ll probably have to bump up our price next year, but the $50 million target would be a longer-term goal, probably. I don’t think everything’s gonna happen in 2019, I think the extra five percentage points in the step-up is some incentive, but it’s not a huge incentive, and I think people don’t wanna rush, at least, that’s my experience so far, and so, that’s a consequence, this is also… It’s not just 2019, I think 2020 is gonna matter too.

Jimmy: I agree with you 100%. I think there is some sense of urgency here at the end of 2019, because the story is, you know, this is your last year to obtain the full tax benefit of this incentive. But I think you’re absolutely right, you’re missing out on five percentage points of step-up if you missed the end of this year. At the end of the day, it’s, kind of, small potatoes when you think about how big the tax benefit could be on the back end, being able to eliminate capital gains.

Len: Yeah. It’s really the backend.

Jimmy: Exactly. Exactly. So, you know, 2021, you’ve got another 24 months to get that 10% basis step up still, and even when that goes away, honestly, I mean, being able to defer the taxes out till 2026 is still a good benefit, and that backend exclusion, yeah, you’re with me there, that’s the real big one, and that’s sticking around for another seven years still.

Len: And I think that’s especially true in the venture capital space, it’s mostly the backend that will help you get that gain. Yeah. So, that’s why we do it, as you pointed out, I mentioned 2020, but, you know, we’re approaching this as a…and we also talked a little bit about, you’ve capped the line of the investors and the investments at the same time, that’s another aspect, the legislation, properly, at the fund level. And so, as a consequence of that, I just feel it’s gonna be much more of a gradual process, find some investors, find some investments, and it’s gonna span… It would not surprise me, in your example, yeah, if we go out to 2021 or 2022, even in our fund. You know, we do have some consideration to the early investors, so we wouldn’t go out forever, that’s not the way we’re set up, we do wanna start to have some exits. However, you know, I do view this, at least in the early years here, it’s a traditional, multi-year investment ramp, and in this case, investors ramp because, again, the alignment of the two. So, whether it’s 2021 or 2020, you know, I don’t know all of that yet, that will unfold over time, but I certainly don’t think it’s a 2019-only phenomenon.

Jimmy: I agree. I agree 100%. Makes perfect sense. You mentioned a few minutes ago that, you know, despite how young your fund is, how you just launched it a few weeks back, you’ve already succeeded in raising some capital in and deploying some capitals. Can you tell me some of the businesses that you have invested in to date, or that you’re getting a close on closing deals with?

Len: Yeah. So there’s two, one’s closed and one’s imminent. I don’t know exactly when this is gonna air, but I’ll talk about those. The first one when they closed just this week, so it’s all, again, fairly fresh. It’s a very interesting setup companies, actually, that are involved in Opportunity Zones on Native American lands, they’re called tribal lands. And what’s really unique about those is that, those tribal communities are basically sovereign nations. And so, they have their own set of laws, they are in Opportunity Zones, but they have their own set of laws, and that creates some really interesting investment opportunities. And these are, clearly, gonna bring jobs and a lot of community benefits as well.

So, one set of businesses is around, sort of, a technical thing, with respect to climate change, which is around what are called carbon offsets. What they’re able to do is, by scientifically managing the forest that you may have, you can engineer the maturity of the trees, and grasslands, and things, to take in more carbon dioxide, and then as you take in more, you can sell those offsets to people that need those offsets. And there’s a growing need for these offsets because there’s this general trend, worldwide, particularly in some areas, to reduce carbon emissions. And so, these aren’t technically reducing them, but it does give economic incentives, as you produce these carbon offsets, you can then sell them to other people, basically. And the other is around logistics. Many of these tribal lands are very strategically located for particular types of supply logistics, and that generates a lot of jobs. So, that’s another interesting business dimension on that particular set of investments.

The other investment we’re doing is a more traditional… I should point out, one of the other strategies that we look for that’s been very helpful with the economic development agencies that I mentioned before. Oftentimes, there’s some kind of public money that’s effectively being able to leverage the investment, and that’s certainly the case with… It’s more foundational, the money, but on the other hand, it’s still the same principle about being able to leverage the investments, again, because everyone has this community benefit aspect in mind, or concern in mind. And the other one’s a more traditional biotech company. Can’t go into too many details about that, but there is…well, I mentioned there is some economic incentives to sort of leverage our investment, that one as well. And, you know, that one’s fairly close.

Jimmy: Good. It sounds like you guys are off to a good start already. And what types of businesses are in your pipeline that you’re looking at? I know you are targeting about 30 companies that you wanna fund with, but, you know, what types of business are you looking at? What types of industries are these businesses in? Are there specific locations you’re targeting?

Len: We’re trying not to be too specific right now, we think that some of that specificity may develop over time as we develop this ecosystem. I will say though that we’re looking for growth, and the growth in businesses comes from either one of two things, one is just a growing macro trend of some type. It could be co-working, or it could be any sort of broad, macro-economic trend that you see, and that’s generating the growth, and there’s people that have certain advantages in that. And the other one is, you know, in existing markets, some type of disruption that we would look for, some kind of disrupter, typically, that would involve a lot of intellectual property of some type. And so we spend a lot of time on those dimensions, and they tend to be, sort of, you know, not traditional technology, but more technology adopters, is the way that these disruptions typically happen. And we had another fund before this, and that was, you know, the general strategy, sort of, technology adopters that we call them. That could be applied to lots of different industries, it could be FinTech, AgTech, you know, all the techs. And given our expertise, and given, sort of, the investor appetite as it develops, I imagine that’s gonna be the mandate that naturally grows over time. We do wanna be cognizant of the investor interest too.

So, it’s actually kind of…in some sense, it’s nice to have to walk those sides of the street with the investors and the investments, and you’re kind of in the middle as a matchmaker. So, we’re a little bit of a blank sheet of paper, and we’re gonna let that evolve over time. At the moment, except for the two that I mentioned, we have no specific geographies in mind, we have no specific industries in mind, except for the general principles around the growth communities and the entrepreneurial ecosystem, and I think the combination of those three will, sort of, naturally guide to where the portfolio ends up.

Jimmy: Yeah, that makes sense. And it, kind of, gets back to your earlier comments on advice for entrepreneurs or business owners seeking capital, “Do you wanna stay flexible?” And it sounds like you guys are doing just that. Well, Len, thanks for joining me today, I appreciate your time. Before we go, can you tell our listeners where they can go to learn more about you and Verte OZ?

Len: Okay. Great. Yeah. So, the website is www.verteoz.com, that’ll get you started. We have a LinkedIn account, our LinkedIn business called Verte OZ as well, you can look us up there and follow us. And both of those access have all of our contact information. So, if you get that far, please feel free to reach out, and reach out most directly, and we’ll get back to you, and eager to hear from you.

Jimmy: Perfect. And for our listeners out there today, I’ll have show notes for this episode on the Opportunity Zones database website. You can find those show notes at opportunitydb.com/podcast, and you’ll find links to all of the resources that Len and I discussed on today’s show, and I’ll be sure to link to verteoz.com, and to the Verte OZ LinkedIn page. Len, again, thank you for the time today, thanks for coming on the show, it was great chatting with you.

Len: Thank you, Jimmy.

Jimmy Atkinson

Jimmy Atkinson

Hi, I'm Jimmy Atkinson... I founded OpportunityDb in August 2018. I'm a veteran Internet entrepreneur with a background in economics and Web marketing. I previously founded ETFdb.com. These days, I am passionate about impact investing and tax-advantaged investment opportunities. At the crossroads of these two ideals is the opportunity zones program, a place-based tax policy intended to economically transform some of the poorest areas of the United States with new real estate and business development.

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