OppZo provides working capital for government contractors, uplifting communities

By Riley Kaminer

Public procurement has the potential to be a powerful tool for promoting prosperity in the underprivileged corners of America. To that end, the US government carves out a significant portion of dollars to procure from disadvantaged businesses – with the current presidential administration signaling an interest in doubling down on these efforts.

But executing a government contract once you’ve landed it can prove challenging. “Winning a contract is a government contractor’s best day and their worst day,” Warren Reed, co-founder and CEO of Miami-based fintech OppZo, told Refresh Miami

“The second they win the contract, they have to hire people and pay vendors,” Reed continued. “They have a lot of startup costs, but they may not get paid by the government for as long as 120 days.” And the numbers at play are major: for a $5 million contract, contractors may have to start delivering as much as $250,000 right away, Reed explained. Most people don’t have that kind of cash lying around – especially in underserved communities.

That’s where OppZo comes in. The company, which has been in stealth mode since being founded in 2020, provides between $100,000 and $1 million in funding to SMEs, with rates as low as 8% and no personal guarantee.

The lack of personal guarantees is critical, explained OppZo’s co-founder and president, Randy Garrett. “It can be a nightmare if you use your properties as collateral,” he asserted, noting that this can prevent small business owners from leveraging their assets’ appreciation. 

OppZo’s platform uses artificial intelligence to more effectively allocate funds to some of the 1.2 million Americans who are government contractors – plus the 52 million Americans who live in disadvantaged communities. “What we wanted to do was create a platform and provide fair capital to these communities for the first time,” said Garrett, who himself was previously a government contractor and experienced firsthand some of the very issues OppZo is working to solve.

A large part of the innovative nature of the platform stems from the digitalization of many processes that are still done manually, both by the government and by lenders. “We were able to streamline that process end-to-end, leveraging Randy’s experience and that of Kysha Pierre-Louis, who was the former president of government contract lending at White Oak, a $9 billion credit fund,” said Reed.

Earlier this month, OppZo raised a $260 million debt and equity round led by Arcadia Funds. $5 million of this fundraise is equity financing, while the remaining $255 million is debt funding. 

“On the equity side, these funds will enable us to continue building out the team and run our business,” explained Reed. “As a fintech, the debt we raised is our inventory.”

OppZo is on track to start providing financing to businesses this August. They currently have a small group of early users, plus a pipeline of thousands of contractors interested in joining the platform. 

“We’ll have $150 to $300 million going out into circulation in the next 12 months,” said Garrett. “But there are endless possibilities. It’s a trillion dollar market with $230 billion set aside [for minority founders and SMEs]. Our goal is to continue building out our balance sheet partners, getting more money in place so that we’ll have dry powder to keep growing the opportunity for these companies.”

Miami has played a key role in OppZo’s growth. Originally, the company was based in New York. When the pandemic hit, Garrett and Reed hopped into a rental car and drove down to Miami. After a three-week stay in the Marriott Biscayne Bay, they decided to make Miami home. “In New York, we would not have been able to build what we have built here in Miami,” said Garrett, praising Governor DeSantis for prioritizing keeping businesses open during the pandemic.

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Riley Kaminer