Whether throwing an annual party to celebrate our investors or inviting them to a San Jose Sharks game, we don’t miss an opportunity to recognize them. Today we spotlight Elyse Phillips, a tech startup marketing executive who’s worked in Silicon Valley for over 20 years.
Born and raised outside Chicago, Elyse relocated to San Francisco to attend college and eventually made her way to Silicon Valley. She’s lived in Downtown San Jose for over 20 years and was drawn to investing in our Opportunity Zone Fund I by the idea of investing “in my backyard,” as she put it. After investing in our Fund I in 2020, Elyse doubled her investment in November 2021, shortly before we closed the fund.
She spoke with us over the phone last month to explain why she decided to double down on her initial Fund I investment, among other topics. I’ve edited the following excerpts from our conversation for length and clarity.
Q: Please tell us about yourself.
A: I’m a marketing executive for Series A and B-type companies in the artificial intelligence analytics sector. I’m a self-proclaimed “startup junkie” on my tenth startup.
I’m originally from Chicago; I moved to San Francisco to attend college. I now live in the Naglee Park neighborhood in Downtown San Jose, about a mile or two from most of your projects. I bought my house there in 1999.
Q: What interested you in investing in Urban Catalyst's Opportunity Zone Fund I?
A: In the fall of 2018, the startup I worked at had an initial public offering that resulted in a nice exit for me. I looked into opportunity zones as part of my strategy to diversify my gains from the IPO.
The potential tax benefits of opportunity zones made this investment very attractive. Moreover, investing in the infrastructure and different types of real estate you’re building is a net positive for San Jose.
Q: How do the potential tax benefits of an opportunity zone investment work to your advantage?
A: The opportunity, pun intended, to defer my capital gains and not have to pay taxes on them after 10 years made opportunity zones an attractive investment. I was assessing my options to diversify out of having most of my money in a single stock, and for most of the other investment options, I would have needed to pay capital gains taxes to move my money out of that stock.
Q: Were you nervous about putting your money in a 10-year investment?
A: I wasn’t that nervous because opportunity zones are part of my larger investment strategy. I asked myself, “Do I need this money for the next 10 years?” No, not really. This investment is just a portion of my portfolio, so it makes sense as part of a broader investment strategy.
Q: Why is investing in San Jose real estate important to you?
A: We’re the heart of Silicon Valley; so much innovation happens here. You always hear about other parts of the world becoming the next Silicon Valley, such as the Midwest becoming “Silicon Prairie.” While it’s true that tech doesn’t exist only in Silicon Valley, it still exists here in a big way — and San Jose is ground zero for a lot of innovation. Google has reinforced that idea by wanting to put its largest campus here. They could have put it anywhere else in the world but said, “We’re going to do this in San Jose.”
With its high-tech ecosystem and the innovation and wealth created here, San Jose has a lot of inertia and is very different from anywhere else to live, work, or invest.
Q: You invested twice into our Fund I, first in the summer of 2020 and again in November 2021. Why did you decide to double down on your initial investment?
A: The market and the circumstances throughout 2021 gave me the confidence to double down and invest more. That and my other investments appreciating, my wanting to diversify some more, and my faith in your business strategy.
Q: How would you describe your overall experience with us?
A: The experience has been good. I love your blogs, and your monthly bus tours and events are great. In addition, there’s a lot of transparency about what I’m investing in. And it’s really cool to drive past your project sites on my way to work or dinner and say, “Hey, I’m part of that!”
Contact us today to learn about investing in our fund.
Important Disclosures
The contents of this communication: (i) do not constitute an offer of securities or a solicitation of an offer to buy securities, (ii) offers can be made only by the confidential Private Placement Memorandum (the “PPM”) which is available upon request, (iii) do not and cannot replace the PPM and is qualified in its entirety by the PPM, and (iv) may not be relied upon in making an investment decision related to any investment offering by an issuer, or any affiliate, or partner thereof ("Issuer").
All potential investors must read the PPM and no person may invest without acknowledging receipt and complete review of the PPM.
With respect to any performance levels outlined herein, these do not constitute a promise of performance, nor is there any assurance that the investment objectives of any program will be attained. All investments carry the risk of loss of some or all of the principal invested. Assumptions are more fully outlined in the Offering Documents/ PPM for the respective offering. Consult the PPM for investment conditions, risk factors, minimum requirements, fees and expenses and other pertinent information with respect to any investment.
These investment opportunities have not been registered under the Securities Act of 1933 and are being offered pursuant to an exemption therefrom and from applicable state securities laws. All offerings are intended only for accredited investors unless otherwise specified.
Past performance are no guarantee of future results. All information is subject to change. You should always consult a tax professional prior to investing. Investment offerings and investment decisions may only be made on the basis of a confidential private placement memorandum issued by Issuer, or one of its partner/issuers. Issuer does not warrant the accuracy or completeness of the information contained herein. Thank you for your cooperation.
Real Estate Risk Disclosure:
- There is no guarantee that any strategy will be successful or achieve investment objectives including, among other things, profits, distributions, tax benefits, exit strategy, etc.;
- Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
- Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
- Potential for foreclosure – All financed real estate investments have potential for foreclosure;
- Illiquidity – These assets are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments.
- Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
- Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits
- Stated tax benefits – Any stated tax benefits are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing.
Opportunity Zone Disclosures
- Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings.
- Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments.
- Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations.
- Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available.
- Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund.
- Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments.
- Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities.
- It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.
The above material cannot be altered, revised, and/or modified without the express written consent of Urban Catalyst.
