For real estate, you may get two times your money back, triple, maybe quadruple, but we don't even think about investing in a [QOZB] if we don't at least get a 10 times return on it. It's huge potential but it's also higher risk," said Phillips, who launched New York-based The Pearl Fund in May.

The Pearl Fund bills itself as the first qualified opportunity zone fund focused solely on providing venture capital to QOZBs. Phillips said he plans to raise $25M from investors with capital gains who are seeking tax-free venture capital returns.

Proponents says if it is successful, a QOZB will grow, create a lot of jobs and support the smaller businesses in an opportunity zone community.

"That can yield much more significant return than you can in real estate investing and there is a much greater impact on the community," he said. "It's nice to have that double impact."