Tax-Advantaged Investing Spurs Growth Funding Opportunities For Entrepreneurs

&l;span&g;The challenge for growth-stage companies is never ending. Even after you surmount the challenges of getting a company through concept, early stage and into revenue, the even bigger challenge that slows many great companies is the need to find sufficient and attractive funding for optimal growth. &l;/span&g;

&l;span&g;&l;/span&g;&l;span&g;A great concept&a;mdash;Opportunity Zone Investing&a;mdash;has traditionally been strongest for Real Estate investments, where the chance to defer capital gains tax by holding a longer-term position in properties has caused investor interest and commitment to rise.&l;/span&g;

&l;a href=&q;; target=&q;_blank&q;&g;&l;img class=&q;size-medium wp-image-7934&q; src=&q;×188.jpg?width=960&q; alt=&q;&q; data-height=&q;188&q; data-width=&q;300&q;&g;&l;/a&g; Hall VP&s;s portfolio targets include companies such as Vanderhall, who&s;s Edison model ranked in the 2018 Top 10 Tech Cars

&l;span&g;&l;/span&g;&l;span&g;But what many entrepreneurs (and investors) outside of RE are not yet aware of is that the Tax Cuts and Jobs Act of 2017 may sweeten your ability to get growth stage funding as well. Since that Act&a;rsquo;s inception, the U.S. Treasury has established 8,700 Opportunity Zones (OZs), covering portions of all 50 states. An analyst named Matt Grierson has done some &l;a href=&q;; target=&q;_blank&q;&g;extensive analysis&l;/a&g;on the areas of the U.S. where OZs fare the best. I was delighted to learn about a month ago that Provo, UT is one of the top three on the list. &l;/span&g;

&l;span&g;&l;/span&g;&l;span&g;One of the reasons for this is the location of Hall Labs and the Hall Family Office. This innovation lab and incubator is headed by Managing Director Michael Hall, an innovation leader who is carrying forward the 64-year legacy of his father, Managing Director David R. Hall, a serial entrepreneur and inventor who holds more than 450 patents (with 400 more in process). &l;/span&g;

&l;span&g;&l;/span&g;&l;span&g;Hall Labs and the Hall Family Office have incubated and funded dozens of companies within the incubator and its surrounding ecosystem, resulting in exits of more than $450 million and an average return on investment of 2.5X so far.&a;nbsp;&l;/span&g;&l;span&g;Out of this has emerged the new Hall Venture Partners (HVP) and its first tax-advantaged fund, Hall Opportunity Fund 1, which has formally opened for business in an announcement last week. &l;/span&g;

&l;span&g;&l;/span&g;&l;span&g;The new fund includes David Hall as a managing partner, joined by Derek Weber, an individual I have gotten to know well within the Silicon Slopes region. Weber &l;/span&g;&l;span&g;has held leadership roles with General&l;/span&g;&l;span&g;&a;#8239;&l;/span&g;&l;span&g;Electric, The Carlyle Group and&l;/span&g;&l;span&g;&a;#8239;&l;/span&g;&l;span&g;Saxon Weber Group and, participating in more&l;/span&g;&l;span&g;&a;#8239;&l;/span&g;&l;span&g;than $6B of transactions across public and&l;/span&g;&l;span&g;&a;#8239;&l;/span&g;&l;span&g;private markets.&a;#8239;Like me, he has founded&l;/span&g;&l;span&g;&a;#8239;&l;/span&g;&l;span&g;and advised several&l;/span&g;&l;span&g;&a;#8239;&l;/span&g;&l;span&g;technology companies. As a fun side note, he has served as a U.S. CEO Trade Delegate&l;/span&g;&l;span&g;&a;#8239;under Secretary of&l;/span&g;&l;span&g;&a;#8239;&l;/span&g;&l;span&g;Commerce Wilbur Ross since 2017.&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;

&l;span&g;Additionally, the fund&a;rsquo;s partners include David Kunz, a&l;/span&g;n experienced&a;#8239;investor, who&a;rsquo;s held senior leadership positions in multiple prior organizations. He&a;rsquo;s led the generation of more than $125M in&a;#8239;revenue and raised more than&a;#8239;$80M in equity capital.

Of particular interest to the Opportunity Zone conversation is the fourth managing partner, Matt VanDyck. Matt is a CPA with experience&a;#8239;in fund-raising, tax strategy, &a;#8239;M&a;amp;A, and the growth of early&a;#8239;stage&a;#8239;companies (and the prior CFO for Hall Labs) who is rising quickly as a voice of authority on Opportunity Zone Investing outside of RE.

&l;span&g;Collectively, the team has announced the opening of Hall&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;Opportunity Fund 1&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;to invest in&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;early growth companies&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;based in Utah, with an eye towards the particular advantages of the OZ rules and the benefits the newest tax rules provide to investors.&a;nbsp;&l;/span&g;&l;span&g;The newest tax legislation (as of this posting in March, 2019) &l;/span&g;&l;span&g;allows&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;deferral of capital gains,&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;original gain reductions&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;of&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;10-15%,&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;and&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;permanent deferrals&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;on any gains realized within&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;a qualified fund.&a;nbsp;&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;

&l;span&g;&l;/span&g;&l;span&g;In this case the opportunity is extra compelling in that the Hall Labs and Family program has spent the prior 64 years honing its strengths in the areas that will allow investors to choose from ideally-positioned portfolio targets for meeting the strict requirements for OZ benefits.&a;nbsp;&l;/span&g;&l;span&g;The team is quick to note that the OZ potential is far from the only reason for investors to give their program and the Provo, Utah region a serious look.&a;nbsp;&l;/span&g;&l;span&g;For the fund they are bringing forward potential portfolio candidates that meet a high set of criteria: &l;/span&g;

&l;ul&g;&l;li&g;&l;span&g;&a;nbsp;&l;/span&g;Annual revenue of more than $1M&l;/li&g; &l;li&g;&l;span&g;&l;/span&g;&l;span&g;A commercial product &l;/span&g;&l;/li&g; &l;li&g;&l;span&g;&l;/span&g;&l;span&g;High value Intellectual Property&l;/span&g;&l;/li&g; &l;li&g;&l;span&g;&l;/span&g;&l;span&g;Market acceptance&l;/span&g;&l;/li&g; &l;li&g;&l;span&g;&l;/span&g;&l;span&g;A ready and dedicated team&l;/span&g;&l;/li&g; &l;li&g;&l;span&g;&l;/span&g;&l;span&g;A dedicated location within the OZ designated space&l;/span&g;&l;/li&g; &l;li&g;&l;span&g;&l;/span&g;&l;span&g;A 2-5 window for exit&l;/span&g;&l;/li&g; &l;/ul&g;&l;span&g;&l;/span&g;&l;span&g;The target companies are fun ones, such as the three-wheel specialty vehicle manufacturer Vanderhall, whose speedster models look like a space rocket, and is incredibly fun to drive. IoT is the priority for Medic.Life, and The HVP team is quick to note that &l;/span&g;&l;span&g;the opportunity zone&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;potential for investors is coming forward as a new and added&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;avenue&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;&l;span&g;for potential returns, but far from the core of the equation for propelling growth companies.&l;/span&g;

What this means for founders is the presence of more interest and more investment than existed before as the full benefits of OZ investing are known. This is a great opportunity for everyone currently looking to obtain growth capital from a venture fund. Check the area where you are located (or plan to locate) carefully for the potential of meeting the criteria for an Opportunity Zone fund.

For investors, the new opportunities are extremely attractive although they also come with a note of caution. For anyone wanting to participate in an OZ investment it is vital to proceed with &l;span&g;education and care. In all, however, and regardless of the U.S. location, the new OZ rules are looking to be a tremendous new horizon for communities, for investors and for the U.S. and world economy at large.&a;nbsp;&l;/span&g;&l;span&g;&a;nbsp;&l;/span&g;







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