Montrose’s coworking space has been a first — now a second — when it comes to netting opportunity zone funding.
Proximity Space Inc. first won such funding last August, after the Colorado Office of Economic Development and International Trade (OEDIT) named it the first company to successfully place an opportunity zone investment.
The latest win came last week, when Proximity Space was given new funding from the CORI Innovation Fund to help the coworking business’ network.
“It’s a pretty neat step for Proximity to not only get their investment but their first investment,” CEO Josh Freed said.
The CORI Innovation Fund initiative is a qualified opportunity zone fund that invests in high-growth technology companies supporting job creation and revenue generation in rural communities. The Center on Rural Innovation launched this initiative in September 2019.
These CORI funds will go toward the extension of Proximity’s network.
The Proximity network has a national footprint and contains several coworking spaces located in rural areas in addition to recovering economies poised to support the growth of new businesses and entrepreneurs, Freed said.
Proximity’s Montrose location is on one of three different board areas, or census tracts, in Montrose County. Those three were part of 126 tracts in Colorado that in April 2018 won the U.S. Department of Treasury certification as Colorado opportunity zones.
The zones, in essence, allow investors to reinvest taxable income on capital gains into an opportunity fund.
Proximity’s headquarters and primary operations are based in Montrose and Grand Junction and were designated as opportunity zones under the 2017 Federal Tax Cut and Jobs Act. Opportunity zones offer tax incentives for investors to fund investments in low-income areas throughout the U.S.
The initial wave of investments in opportunity zones, both in Colorado and nationwide, has mostly targeted real estate developments. However, guidelines issued in April 2019 provided information on how businesses can qualify for opportunity zone investment as well.
“We are impressed with Proximity’s business growth, their mission supporting the coworking space industry and the potential of the Proximity Network to reach freelancers and small businesses across the country,” CORI Innovation Fund managing partner Jay Bockhaus said in a press release.
Freed said he believes opportunity zone investment will be key in the future. On the business side, it brings an utterly different type of capital to companies, but on a “patient” basis, he added.
“It doesn’t force companies to grow companies really fast … and hope to survive,” Freed said.
He added opportunity zones also don’t make businesses feel compelled to sell. Instead, those funds are going into investments that will be around over 10 years later, Freed said.
“That’s really a different type of capital for a company to take on when the motivations are aligned for a long-term sustainable, job-creating growth,” he said.
That is why innovations such as CORI’s will help Montrose for years to come, said Freed.
He said CORI representatives visited Montrose recently and they acknowledged that the area has potential as “a tech hub.”
“CORI is making it feasible for entrepreneurship to thrive in rural areas. It’s really outstanding,” Freed said.
Andrew Kiser is the Montrose Daily Press sports and business writer.