In this episode, Hall is joined by Brian Phillips of The Pearl Fund, an early-stage VC fund specializing in Opportunity Zone (OZ) investments. Brian's background in computer science led to numerous jobs with tech startups. Through these experiences, he developed an interest in entrepreneurship non-profits. Ultimately, he ended up starting a fund to take advantage of the Opportunity Zone laws that promote funding of business in low-income census tracks.

Brian explains the ins and outs of Opportunity Zone investing, how to do it, and why it can be so advantageous for the investor. He also explains why meeting the Opportunity Zone requirement can give startups a leg up when it comes to securing funding. While OZ investing is currently dominated by real estate, The Pearl Fund is part of a small but growing trend of funds focusing on startups. Additionally, Brian details many of the requirements that startups and investors must meet to be OZ qualified. Finally, he highlights some of the sectors that fit best with the OZ asset class.

Many investors look for traction in a startup to gauge their progress.

Traction stated as a single number on a pitch deck can be hard to judge as sufficient for an investment.

Many investors tell the startup “nice traction, but we’d like to see more.”

Instead of traction look for momentum.

Momentum demonstrates things are continuing to progress and move forward. Sales, team, product, fundraise are the core four to look at.

Investors look at these four because they represent the results of the startup’s work and not that of the market’s progression.

Momentum must be shown over time in numerous updates by email, phone, or in person.

It takes four touches before an investor gets a sense that there is momentum and it will continue.

Startups should always have some engagement with customers ongoing- such as alpha testing, beta customers, MVP customers, etc so as to have something to talk about with investors.

For startups pursuing the enterprise sale show your momentum through the sales funnel with your large customers. It typically follows the model of interest, qualification, trial negotiations, pilot test, full product launch, ongoing support.

Show how prospects are moving through the funnel and customers are upgrading and expanding seats.

It’s the continuing forward progression that counts.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!