BRITE companies utilize private equity
WARREN — Two portfolio companies of BRITE Energy Innovators are among the first startups in the U.S. to make use of a relatively new federal program to spur investment in low-income and distressed communities.
Warren-based Intwine Connect, an internet of things (IoT) hardware and software solutions provider; and Akron’s GeneratorWorks, which develops support applications for the healthcare industry; are using the Opportunity Zone funding to further deploy their technology solutions.
Federal lawmakers created the program in 2018 as a way to incentivize private investment in distressed communities by offering reduced and deferred capital gains taxes to investors. Investors must create private investment vehicles called “opportunity funds” and invest at least 90 percent of the capital from the funds in opportunity zones. They are encouraged to invest their capital gains tax savings back into the zones.
Investments in the zones are eligible to receive a 10-year federal tax break. In the Mahoning Valley, there are 15 such designated areas.
The investment in Intwine Connect was made through a group of northeast Ohio investors focusing on innovative energy technologies. With the money, Intwine was able to scale its team, positioning it to weather the crisis brought on by COVID-19. Founder and CEO Dave Martin said if Intwine pulls together additional funding from a planned future investment round, it could accelerate its growth and expedite the time to market for solutions being worked on.
GeneratorWorks has a portfolio of healthcare 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 us access to more capital funding than our portfolio might have gotten access to otherwise while also mitigating risk for investors,” Squires said.