If by “main street”, you mean non-accredited; you would have to use a securities exemption that allows non-accredited investors, such as Regulation D, Rule 506(b), Regulation CF or Regulation A+.
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How can QOFs bring in main-street investors into OZ investments?
How can this be done by “mixing” funds?
Answers
There's no problem bringing in Main Street investors. This is much more sensitive from the securities side. If you're going beyond accredited investors, it'll be more trouble than it's worth, but Fundrise appears to have pulled it off, probably at great cost. With accredited investors, you'll need a PPM, which will be rather expensive, but the fund typically bears that expense in the long run.
Crowdfunding sites may play a role to get more investment into these deals. Community-focused funds set up by a knowledgeable attorney is another. I'm advising a client on an OZ housing development. Investors could invest whether or not they have capital gains they are bringing to the offering ("a mixed fund") but non-qualifying capital gain investors would get no OZ tax benefits.
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