Two Brite Startups Get Opportunity Zone Funds
WARREN, Ohio – Two Brite Energy Innovators portfolio companies have received funding through the new federal Opportunity Zone program, Brite reported Monday.
The two companies – Warren-based Intwine Connect and GeneratorWorks in Akron – are among the first startups in the nation to make use of Opportunity Zone funds, Brite said in the news release announcing the funding.
Intwine Connect, an Internet of Things hardware and software solutions provider, used the funds to increase staff and operations, a Brite spokesman said. GeneratorWorks, which develops health-care support applications, distributed the funds among its companies in varying capacities, generally to expand software deployment.
Brite and company representatives declined to say how much the companies received.
The purpose of the federal program, established as part of the Tax Cut and Jobs Act in late 2017, is to direct capital into distressed neighborhoods by creating a tax incentive for investors to target unrealized capital gains into eligible projects in disinvested communities. Investments in these zones are eligible to receive a 10-year federal tax break.
Brite is in one of four census tracts in the city that is designated as an Opportunity Zone.
“These two investments have helped us and our counsel Ted Theofrastous on cracking the code on how to meaningfully invest in operating companies utilizing Opportunity Zone financing,” Brite CEO Rick Stockburger said. “This means that if there are investors with capital gains we can help match them to fast growing investment opportunities in the energy space, putting your tax dollars to work to save the world and create jobs in Warren, Ohio.”
The investment in Intwine Connect was made through a group of Northeast Ohio investors focusing on innovative energy technologies. With the funding, Intwine was able to scale its team, positioning the startup to weather the crisis brought on by COVID-19, with the added effect of motivating their team.
Founder and CEO Dave Martin said it has “positioned them well to enter new markets that see a need brought on by COVID-19.” Martin added that if Intwine pulls together additional funding from a planned future investment round, it could accelerate their growth and expedite the time to market for solutions they are currently working on.
A strategic partner as well as a Brite portfolio company, GeneratorWorks has a portfolio of health-care solution companies it supports under its GeneratorWorks Fund. CEO and Founder Blake Squires assembled a team of investors to invest in this fund before distributing money among its portfolio companies.
Setting up the fund gave GeneratorWorks access to more capital funding than its portfolio might have accessed otherwise while at the same time mitigating risk for investors, he said.
Copyright 2023 The Business Journal, Youngstown, Ohio.