The Three Best Capital Sources for OZ Deals, with Hall Labs

Dave Kunz
Dave Kunz

What are the three different classes of investors that are the most likely capital sources for Opportunity Zone funds or deals? And what are some tips for approaching and pitching to them?

Dave Kunz is managing partner and general manager of Hall Venture Partners. Will Walker is a private equity veteran and advisor to Hall Labs and HVP.

Click the play button below to listen to my conversation with Dave and Will.

Episode Highlights

Will Walker
Will Walker
  • The three capital sources that are typically available for Qualified Opportunity Fund issuers and Opportunity Zone deal sponsors who are raising capital: high net worth investors, angel investors, and family offices.
  • Why venture capital and institutional investors haven’t been good capital sources for most Opportunity Zone deals.
  • The psychology behind finding and approaching the different types of Opportunity Zone investors, and why it’s important to consider how capital gains get generated.
  • Tips for how to prepare to pitch to anchor investors (or lead investors).
  • Mistakes to avoid when pitching to your ideal investor.
  • Questions to ask your potential investors when you are in the room pitching to them.
  • The importance of getting to know the lead investor of an angel group.

Featured on This Episode

Industry Spotlight: Hall Venture Partners

Hall Venture Partners

Hall Venture Partners provides capital to grow patent-protected technology companies in the Utah region. With a 60-year track record, Hall Venture Partners is located at a state-of-the-art campus in Provo, Utah alongside Hall Labs and its team of innovators. Hall Venture Partners was established to address the growing demand by investors for curated opportunities in early growth technology companies.

Learn more about Hall Venture Partners:

About the Opportunity Zones Podcast

Hosted by 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. Do you have an opportunity zone deal or fund that you’re raising capital for? If so, today’s episode is for you.

Joining me on the podcast today are Dave Kunz and Will Walker. Dave is managing partner and general manager of Hall Labs, a family office based in Provo, Utah. And Will is a private equity veteran and advisor to Hall Labs. They joined us from opposite sides of the country. Today, Dave is coming to us from New York. And Will joins us from Laguna Beach, California. Dave and Will, great to have you guys on the show. Welcome.

Dave: Thanks, Jimmy. I appreciate it.

Will: Yeah, Jimmy, good to hear from you.

Jimmy: Thank you both. Thank you both for joining me today. So, you know, Dave, we’ve been talking back and forth for a little while. And you’ve identified for me three sources of capital that are available for opportunity zone fundraising. Can you briefly list and briefly describe those three different sources of capital that exists for OZ funds and deals to go after?

Dave: Yeah. It’s an interesting question, Jimmy, because, you know, the landscape, I think, when we originally approached and kinda thought through what our strategy was gonna be, you know, it looked a little bit wider than it ended up with. So, you know, you mentioned three. And, you know, we can kinda talk through those as being, you know, high-net-worth, angel investors, and really family offices. But, you know, in thinking through kind of our strategy as a team, you know, we had thought there’d be more institutional and venture capital interest.

But the reality is, is when you kinda think through the incentives that were structured through the OZ plan, they really don’t apply to those two sources of income. So, you know, which leaves us with those three that we spoke about. So that’s kind of where we are today. And we’re talking to all of them as we get out there and continue to market Hall Ventures.

Jimmy: So if we had done this episode a year or two ago, it might’ve been titled “The Five Different Sources of Capital,” but you’ve narrowed that down to three. So maybe we can talk a little bit about, first of all, eliminating those first two. Can you go into more detail as to why not venture capital and why not institutional? And then we’ll dive into the three main ones that are working.

Dave: You know, I think you just have to look at those, you know, as what they do and what benefits, you know, could potentially be available. And what it comes down to is, you know, if what you do is your core business and where you’re generating gains from is your core business, it’s reported as regular income, not a capital gain. So that’s not to say that there are people that work within the venture capital community, or people that work within hedge funds, or other institutional or asset managers that would have events that would draw a capital gain. But as a whole, as a group, I wouldn’t be marketing towards venture capital firms, or hedge funds, or asset managers, so to say.

But there are a lot of benefits of working with these other three. And some of those institutions like RIAs and wealth managers, although their firm hasn’t been a source, those individuals have been an incredible source of referring us to people that do have capital gains and have participated as investors.

Jimmy: You know, the clients that they have access to and the network they have access to can be invaluable, of course.

Dave: Absolutely.

Jimmy: Well, let’s dive in now to those three sources of capital that exists for OZ funds and deals to go after. You identified them as high-net-worth, angel investors, and family offices. Could you go into a little bit of the psychology behind approaching each one? I’m curious, what are the motives behind how each one of those different investor types act? And basically what are some tips for approaching each one as an OZ deal sponsor or fund issuer?

Dave: That’s a great question. And I think the first thing is creating a strategy about, you know, how do you find them? And, you know, there’s a little bit of art, a little bit of science. And they’re each different. So as I think about, you know, the ultra high-net-worth universe, I think people have different qualifications for what would be considered a high-net-worth person. But the reality is, is all participants within opportunity zone funds and investments need to be accredited investors.

And I think everyone knows, you know, what qualifies and the qualifications of an accredited investor. But happy to go into that if that’s something you’d like me to touch on. But as far as the high-net-worth where we’ve found the best sources of identifying those people with capital gains is thinking about what actually generates the capital gain. And like we said earlier, those tax advisors, wealth managers, RIAs, real estate agents, believe it or not, art advisors, art became something that is no longer possible to use 1031 as a like for like exchange. So this was really able to fill a hole where there was no source of a tax incentive when you receive the capital gain on the sale of that asset.

And the other one that we found that was pretty interesting is farmers. Large farms that are selling cattle, poultry, and things of that nature, actually generate monthly capital gains. So those are just some of the interesting ones that we’ve been able to find that kind of fall within that ultra high-net-worth universe. And then as I think about angels, the nice thing about the angel universe is they’ve actually gotten wildly cooperative and extremely structured over kind of the last five years.

And, you know, we’ve seen them by geography, angel groups by their alumni of universities, former colleagues, and, you know, they tend to be former startup founders themselves, which I really like. And because they understand the early stage companies and kind of the process that it goes through with those early stage companies, they are very helpful through the process. But, you know, I’ve seen them do everything from coordinate pitch days to their members, to structuring different funds to take advantage of aggregating capital on their side. So that angel community, you know, to me, it is almost becoming more institutionalized every day.

And then lastly, the elusive family office and the multifamily office. And I think lots of folks have, you know, tried to crack the family office universe. And it’s just one that, you know, you really have to leverage your relationships well. So that works on the service provider side also. So working with those wealth managers and people that have provided services to families. But the reality is, is the trend that family offices have wanted to do more direct deals, and that has increased dramatically.

So I have seen families wanna participate more, not only just in the fund side but on the direct deal side, because they have their own opportunity zone fund themselves that they’re managing. And we’re fortunate enough to be able to offer both products to the investor community. So that kinda puts together the universe. But, you know, happy to answer any additional questions on either of the three.

Jimmy: No, that’s great. So those three again are high-net-worth, angel investors, and family offices. And you’re intimately familiar with the third one because you worked for a family office yourself. Getting back to your point about accredited investors. I did just wanna clarify on that. What an accredited investor is, is a person who has an annual income exceeding $200,000 for the last couple of years, $300,000 of filing jointly, or has a net worth exceeding $1 million. I believe there may be one or two other exceptions to that rule as well?

Dave: The one exception in there, Jimmy, is that if you are someone who is licensed, federally licensed within the investment universe, so if you hold a federal license, then you qualify as an exception because they’re assuming at that point that you are a professional investor.

Jimmy: Very good. And the reason for that is because the way that these funds are set up is that they have to file for an exemption with the SEC under Regulation D, oftentimes either Rule 506B or 506C, I don’t wanna get in the weeds too much there…actually, I did a podcast episode on that with Clem Turner awhile back where we really go in the weeds on that. So I would encourage you to check out that episode if you have any more questions about that point. But let’s not harp on that too long. But suffice it to say, that’s why a lotta these funds or all the funds that are raising capital from third-party investors have to require that their investors are accredited.

Will, I wanted to bring you in here. Could you go into your background a little bit for a moment, and then answer this question for me. How should people who are looking to raise capital for an opportunity zone fund or an OZ deal, how should they prepare to pitch to anchor investors or lead investors whether it’s a family office or an angel group? What are some tips? What should be included in their pitch deck? And just generally, what should they be looking to do when they’re pitching to different investor groups?

Will: Thanks, Jimmy. You know, I’ve been structuring…raising capital, and structuring deals, and advising companies for over 24 years. And I really wanna talk about how to prepare, you know, when you are meeting or going to propose to an anchor investor, lead investor, whether it be a family office, whether it be an angel group, you know. I work with all of what you guys have outlined so far today, and covet them all, but at the same time, it comes down to, you know, being prepared and having the right questions, and comments, and that type of thing to make sure, you know, you’re offering a clear and concise overview what your company or project does, and why it should be interesting, why it would eventually lead to a large exit, which of course, is what most of the professional money, we like to call the professional money or smart money, is looking for.

But I also wanna stress before I get too much into my segment here, you know, how important it is to take the time, prepare and find the right lead investor or anchor investor. So whether it be with a fund, or a family office, or any of those, it’s so important when you’re approaching other, you know, LPs or other investors of any class, to have that lead or anchor investor in tow already committed. And of course, the bigger the percentage, the more impact it’s going to have when you’re looking for, you know, other capital and other strategic partners, capital partners.

So just the mindset alone, you know, some of the things…what does your company do? I mean, some are basic. But you wanna have it really down when you are having your audience with these investor classes, like what does your company do? What’s unique about your company? What big problem are you solving? How big is the market opportunity? You know, where are you headquartered? You know, sometimes, it can go into a conversation there. You know, we work with a lot of people that are in areas that are very hot right now, like Jimmy is, with Texas and others. But how big can the company get?

And then you really wanna get into market, you know? You wanna paint a clear picture that the market opportunity is meaningful, and large, and growing, of course, and you’ll, you know, get questions like what’s the actual addressable market? You know, what percentage of the market do you plan to go over? What period of time to capture? You know, just some basic stuff. But at the same time, you wanna have it prepared. You wanna understand who you’re speaking with, what their appetite is. I always like to, if possible, find out their other investments, of course, their strategy with some of their other investments and other people that are involved. If it’s an angel group, again, I wanna throw in that I work with a lotta different universities, UCLA, UCI, MIT, you name it, because they all have very fertile, potent angel groups that, you know, are pretty approachable.

But once again, an ounce of preparation is worth a pound of cure, and it definitely works in your favor here because you do wanna have it interesting, you do wanna have it clear, and concise, and ready to go. So I hope that helps somewhat. I mean, there’s more that I’d love to add. But, you know, I’m looking forward to having this continue on, Jimmy, as a special series possibly with your help. But that’s kind of my opening salvo here. So I’ll turn it back to you and Dave.

Dave: I think, you know, just to kinda echo some of the things that Will have said, I think the most important thing is don’t practice on your best investors. And so what I mean by that is I think we all know, or as part of our strategy, have identified who would be an ideal investor for us. And unfortunately, I see all too often, people get so excited that that’s the first call they make, that’s the first meeting that they set. And a lot of this is learning as you go.

So, you know, get a few of these pitches underneath your belt, and like Will said, prepare, understand, and do as much work as you can on them before, whether it’s PitchBook, Crunchbase, or other resources, and get your pitch really tight. Because there are plenty of investors out there that will push hard during that first meeting. And you wanna make sure that you know the answers to everything that you’re explaining, and be able to back up those assumptions.

Jimmy: That’s great. Those are great tips on how to pitch from both of you. So thank you for providing those insights. Is there a different approach that you should take with these three different capital sources? Is there a different way you should pitch to high-net-worths versus how you pitch to angel investors or angel groups, versus how you should pitch to family offices?

Dave: Well, I think, you know, the big thing is, is just understanding people’s expectations. So the nice thing about OZ investments that’s different from anything else is the timeline has been created for us. So we don’t have to worry about answering those questions about fund life or, you know, how long you need to…you know, how long do you expect before you get an exit here. But it is a little bit different. And part of it is knowing if you are presenting to a couple individuals or if you’re presenting to a room. And so that’s definitely a question that I would ask, Jimmy, when you’re setting your appointment.

And because I’ll often find when I’m going to pitch angels that I’ve thought that I was meeting with 1 or 2, and there’s been situations where I’ve walked into a room of 30. And not that that entirely changes your pitch, it’s just one of those things that you wanna make sure you’re prepared for in terms of having materials, and you know, mentally prepared as well when you’re ready to present.

And then I would say, you know, on the ultra high-net-worth side, at least within OZ, everyone is looking for the same thing. And I think, you know, you have to pitch the fundamentals of your offering and let the opportunity zone incentives be the tailwind or, you know, the cherry on top because without these being solid investments, the incentives themselves don’t matter. And, you know, lastly, I think the biggest one and the biggest change is probably the family office side. And not that all investors don’t have the ability to do this, but it’s asking that question too. And we’d be more than just a check. And so helping those underlying businesses based upon domain expertise that sits at the family office level or that investor level to assist in the accelerating the growth, finding additional investors for the fund, don’t be scared to ask those questions because most investors will appreciate it.

Will: I’ll just jump in there real quick too, Jimmy. That’s a really good point, Dave. I also wanted to say, you know, to kinda re-example that, what Dave is saying here, is treat every proposal that you’re gonna go into, every meeting you’re gonna go into, it’s a dating situation, yes, but think of it as a marriage because certainly in OZ format, you’re gonna be, you know, married or together for 10 years. So it’s really important that you, you know, turn them into…the interviewee, turns into the interviewer, so to speak, as you, you know, tell them about your project, and what’s the key points, and management teams, and exits, and all of that, but also to interview them, and make sure there’s a fit there, and make sure…because they really will appreciate it, especially from the family office standpoint and some of the more professional money, you know, that I deal with on a regular basis, they really wanna understand. They’re in for the long haul. You really wanna get to make sure there is a true fit with their strategy, investment outlook, some of their charters, whatever it is. And certainly with individuals, you know, high-net-worth, accredited individuals as well, they really appreciate it. And it cements that relationship that much faster, and trust factor, and confidence factor. So it’s well worth, you know, thinking about and appreciating.

Jimmy: That’s great. That makes perfect sense. So if you are an OZ fund manager or a deal sponsor, and you’re pitching to someone, you want to be able to have them interview you, of course, you’re pitching your deal to them, but you’re also interviewing them is what I’m hearing from you. So what are some questions that those people should be asking their investors or potential investors when they’re in the room pitching to them?

Dave: I think style is important. So, you know, like Will said, do as much research as you can. But ask them about, you know, some of their historical investments and what they look for. In addition to themselves, I would ask about what the process is for evaluating investments there. Is there anyone else involved in that process other than the person or the people that you’re speaking to? I would ask about timelines. Because you wanna be able to manage the process to the best of your ability. And that will just show your investor that, you know, you appreciate their time and respect their time, but, you know, you’re a professional investor as well.

To the extent that you can articulate that if you are putting capital into your own funds, you know, I would definitely speak to that because alignment is extremely important to all investors. And it was important for us as we were putting our fund together that, you know, we were not only GPs but LPs in the fund as well. I think it just changes your relationship. And, you know, speaking to someone as a partner rather than just someone who’s managing their money is a very different conversation.

So other questions I would ask is just making sure that they understand the types of investments that they’re making and clarifying, you know, that they know the differences between investing in Opportunity Zone real estate versus Qualified Opportunity Zone Businesses because there are a bunch of rules that differentiate the two. And understand if someone has a fund that they’re running themselves versus committing capital to a fund. I have found on more than one occasion, people trying to make a fund investment through their own qualified opportunity zone fund, and that is unfortunately something that you can’t do.

Jimmy: That’s a big no-no. That’s a good point there, Dave. Unfortunately, it’s against the regulations to have a fund of funds or invest a fund into another fund, like you mentioned. It would have to come in at that QOZB or project level. That’s a good point there as well. So that’s a great question to ask.

Dave: And it doesn’t mean you can’t have both. Because you can. It’s just that the investment that is going into the fund cannot be capital coming out of the opportunity zone funds that that particular person is managing themselves.

Jimmy: Correct. Correct.

Dave: Jimmy, I’d also throw in there too, those are really good points, Dave, what percentage of your funds does this represent? You know, don’t be scared or timid about asking, you know, especially if it’s a, you know, high-net-worth retail person or even an angel because usually, there is a lead angel…even in an angel group, there’s usually, you know, a lead investor or someone who does the due diligence for the group, that type of thing. So learn who they are. And, you know, make sure that you’re asking all, you know, the money questions I call it too. And that’s part of strategy and things that I like to go through, you know, on a call with these groups.

So, you know, remember also, like I say, for the length, this 10-year OZ investor of any class that’s with you or you’re interviewing, you’re interviewing them as much as they’re interviewing you with, you really wanna consider that because they can also, you know, have participation in future rounds, they’ve helped with syndication, bringing in other investors, that type of thing. And then, you know, there’s capital calls, there’s all sorts of scenarios where you would wanna have that, you know, good communication, good understanding, good relationship, trust factor, all of the above, to move those things forward, and, you know, take positive advantage for them, and for yourself, and project.

Jimmy: Well said, Will.

Dave: Yeah, I would just say lastly, the one thing that I hadn’t touched on, which I think is important too, is making sure that you articulate your team, and the expertise that lies within your team, and the experience that you have together, as well as any track record within the particular asset class that you’re dealing with. Because, you know, as an angel myself and someone who makes investments as well, especially within early stage companies, as well as early stage real estate, and ground-up real estate, their ability to execute really is probably one of the most important things that you wanna take a look at. So I know that that’s the lens that I’m being evaluated through as well.

Jimmy: All great points. Thank you both for the insight that you’ve given us today. I hope that this episode has been valuable for the listeners out there, especially those who are looking to find investors and raise capital in the opportunity zone space. Gentlemen, before we sign off today, can you tell our listeners where they can go to learn more about each of you?

Dave: I’d be happy to do that.

Will: Sure, Jimmy, thanks. I’m happy to do that too. We’ll, [email protected] is my email. And, you know, I’d welcome all your listeners to a strategy call with myself and Dave. You know, through that, please reach out and, you know, set my calendar. I’d love to, you know, have that strategy call. So it’s [email protected]. Over to you, Dave.

Dave: Great. Thanks, Will. To echo Will and, you know, Jimmy, first off, thank you for having us today. Always great to be on the show and get an opportunity to speak to others within the opportunity zone space. But it’s [email protected]. And in addition to that, my cell phone is 508-561-7717. And as Jimmy pointed out, that’s a Boston phone number. But, you know, still, I’m living in New York. So happy to take a phone call or an email from anyone. You can also find us on the website at

Jimmy: Fantastic. Well, thank you both. And for our listeners out there today, I will have show notes on the Opportunity Zones Database website for today’s episode. You can find those show notes at, and there, you will find links to all of the resources that Dave, Will, and I discussed on today’s show. And I’ll be sure to link out to both of their email addresses, and I’ll get Dave’s cell phone number on there as well. Gentlemen, thank you both for joining me. Appreciate it.

Will: Great, Jimmy. Thanks for having us.

Dave: Jimmy, thanks. It was a pleasure as always.