OppZo Secures $260M Debt and Equity Funding to Help Government-Focused SMBs

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The Miami-based startup aims to connect small businesses to public and private funding opportunities with the ultimate goal of creating jobs.

By Riley Kaminer

Globally, government procurement is worth more than $10 trillion each year. This represents a huge opportunity for small and medium-sized businesses. In the United States alone, our federal government has reserved 23% of all contracts for SMEs.

One of the main obstacles preventing SMEs from taking advantage of these lucrative opportunities is access to capital. But Miami-based startup OppZo can help. The fintech provides between $100,000 and $1 million in financing for SMEs, with rates as low as 8% and without personal guarantees. To accomplish this mission, they developed an AI-powered service platform.

OppZo announced this week that it has raised $260 million to continue its efforts. $5 million of these funds are equity financing, while the remaining $255 million is debt financing. This round was led by Arcadia Funds.

“We built OppZo with one mission in mind: to help build thriving communities,” Warren Reed, co-founder and CEO of OppZo, said in a statement.

“Every business owner should have access to capital on fair and affordable terms,” Reed continued. “We understand first-hand the impacts of funding disparity and deliver the optimal solution to the market.” Prior to founding OppZo, Reed worked at the US Treasury Department and as an executive at JPMorgan.

Through this fundraising, OppZo efficiently provides capital from institutional investors to SMEs. On the other hand, they offer institutional investors a new impact asset class that bears what they describe as “an attractive risk-adjusted return that has a positive and lasting social and economic impact on funded communities.”

Despite the long sales cycle associated with government contracts, government contracts are widely known to be more reliable in the long run. Federal contracts also have the potential to increase small business equity at scale – something the current presidential administration has pointed out. This fundraising comes at the right time, with a rapid increase in impact investing, up to 42.5% annual growth.

“Our top priority is supporting the communities we serve and seeing them thrive,” commented Randy Garrett, Co-Founder and President. “We are building an ecosystem that attracts both public and private capital to businesses in these struggling communities, and we do this by focusing on building relationships and understanding first.”

With 52 million Americans living in economically challenged communities, economic development is a key goal for OppZo. The startup, which was founded in 2020, aspires to connect small businesses to public and private funding opportunities with the ultimate goal of creating jobs.

“OppZo solves the conundrum the financial services industry has long faced: how to seek impact without sacrificing a sustainable business model?” said Andrew Hallowell, Managing Director of Arcadia Funds, LLC, expressing his enthusiasm for the economic development aspect and the potential for impact of the startup.

While the global public-facing tech industry is still in its infancy, experts say it has reached a tipping point, citing increased adoption of technologies that meet broad public needs. In this world, South Florida is a rising star, with fast-growing scale-ups like GovSpend and startups like GovLia.

PHOTOS AT THE TOP OF THE POST: OppZo co-founders Warren Reed, CEO (left), and Randy Garrett, chairman (right). This story can be updated.

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