Free Money
November 2025
Eric Rosenfeld
The majority of gains distributed to OVF investors to date have been free of federal, state, and local taxes for residents of Oregon and Washington. In 2026, a top-bracket investor residing in Multnomah County would face combined long-term capital gains taxes of approximately 38.5% – comprised of 23.8% federal, 9.9% Oregon, 3.8% Multnomah County preschool, and 1% Metro homeless taxes. Yet, for most OVF investors residing in Oregon or Washington, the effective combined tax rate on the bulk of OVF gains has been 0%.
Across all OVF funds, the current average net total return for investors is 3.44X – meaning $3.44 in realized and unrealized returns for every dollar invested. How do we help our investors reduce federal, state, and local taxes associated with any gains? By doing everything we can to ensure the shares we hold qualify as Qualified Small Business Stock (QSBS).
QSBS rules can provide substantial tax advantages for investors in eligible early-stage C corps, allowing part or all capital gains to be excluded if specific, strict holding and eligibility requirements are met. OVF and its portfolio companies make every effort to preserve QSBS eligibility, enabling us to pass those benefits directly to our individual investors.
Multnomah County, for example, has one of the highest combined long-term capital gains tax rates in the country – comparable to San Francisco and Manhattan. However, OVF investors living in these high-tax areas often owe nothing on their OVF proceeds. That’s real after-tax value.
QSBS was created to incentivize investment in early-stage, high-growth US companies. High-tax states and counties benefit immensely from this policy by encouraging risky investments, innovation, new business formation, and job creation. In that sense, QSBS can be a win for founders, investors in funds like OVF, and local economies alike.
Venture-backed startups generate most of the net new jobs and wealth in our country. However, an estimated 65% to 75% of VC-backed startups fail to generate any return for investors [source: Shikar Ghosh, Harvard Business School]. OVF’s historical failure rate is closer to 50%, meaning that – despite rigorous diligence and support – 50% of our exits have not yielded any return at all. The favorable QSBS tax treatment on the 50% of successful exits provides meaningful compensation for this inherent risk.
To learn more about the Oregon Venture Fund and our efforts to produce tax-free gains for accredited investors, please contact Melissa Freeman, head of investor relations, at Melissa@OregonVentureFund.com. Tell her you want free money.