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AfroPreneurs: Banking

In this AfroPreneurs profile, BlackSpeaks.com decided to feature Arman Walker, president of Davos Capital, Inc.

A graduate with honors in international economics and economic development of University of California in Berkeley in 1979, Walker started his career in finance as corporate banking officer for Wells Fargo Bank in New York and San Francisco that same year.

Then, he provided financial analysis for board of director presentations of Wells Fargo’s loan portfolio and managed large corporate relationships in New York and New England regions.

Today, Walker is president of Davos, a Los Angeles-based financial services firm, where he has served since October 2013.

Davos specializes in lending to, investing in and counseling real estate and businesses of other industries, especially food, coffee or specialty retailers. Davos also advises nonprofits, religious and government agencies on business, finance and economic development matters.

Throughout his career in financing, Walker has specialized in loans, corporate and noncorporate finance, energy efficiency consulting, renewable energy financing, equipment loans and leases, mergers and acquisitions, cash flow lending, commercial lending, commercial banking, project financing, senior cash flow lending, credit, portfolio management, asset-based lending, cash flow, credit analysis, due diligence, investments, middle market, funding, mezzanine, commercial mortgages, factoring and real estate.

Part of his career included the founding of Pine Cobble Funding Corporation in 1993 to 1997 in Los Angeles. After founding the company, Walker set up accounting systems, operating and lending policies, staffing, lending and growth of operations.

Previous to his stewardship of Davos, Walker served as managing director of the Cranbury Group, LLC in Thousand Oaks, Calif. from September 2012 to June 2014. The Group provided customers with such financial solutions as project finance, equipment leasing and cash flow loans. Aside from helping implement these solutions, Walker assisted emerging job-creating businesses with the capital they needed.

From January 2007 to June 2014, Walker also worked as managing director of Tarkus Capital LLC in Woodland Hills, Calif. Tarkus Capital provided senior cash flow loans, middle-market businesses, mezzanine, subordinated loans and investments.

He served as regional president and chief lending officer of One United Bank where he managed bank operations from January 2004 to December 2007.

From January 2000 to December 2001, Walker was western regional manager of KBK Financial, Inc. in Pasadena, Calif. There, he oversaw asset-based and factoring business development and portfolio management.

Prior to this, he served as vice president of middle-market lending of City National Bank from 1997 to 1999 in Beverly Hills, Calif., senior manager of project and corporate finance of Sanwa Bank Ltd. in Los Angeles from 1985 to 1993 and assistant vice president of corporate banking of Marine Midland Bank in New York City from 1983 to 1984.

The following is a Dec. 26, 2014 phone interview between BlackSpeaks.com and Walker, who is in Los Angeles:

I had the chance to view your Linkedln profile online and viewed your entire work history online.

1) What were the trends in the financial industry when you first started in the late 1970s? What are the trends now that you are president of Davos Capital in the millennium?

I would actually argue or at least point out that, when I started in the business world in the late 1970s, in some ways, it is directly comparable to what is happened in what I call the Great Recession. I was hired by Wells Fargo Bank in August 1979.

About two months later, there was an infamous Black Friday that was caused by the Federal Reserve, which was changing its policy attacking inflation. Interest rates shot up some time later in the economy. In the early 1980s, that’s when we had the 20 percent prime rate and it sent the economy into a tailspin — although the difference was, at that time, the banks had a lot of capital and money to lend and the Fed was trying to push off double-digital inflation and the Fed was trying to push inflation down.

The problem was that most major Fortune 500 corporations could not survive that over a period of time so what you saw was the real estate industry builders — those companies just went by the wayside. A lot of major corporations were having problems. I work on Wall Street financing those types of businesses at that time.

That’s where I cut my teeth and — if you can contrast that to the Great Recession — the big difference was that the Great Recession in the last five or seven years, it was a mortgage-lending crisis. The rest of their bank portfolios were fine. It was the mortgage industry. It was not just really the banks but the finance companies that inflated the market.

The banks had a lot of capital to lend in the Great Recession. That was the greatest recession since the Great Depression up until this economy — the Great Recession. With the Great Depression, there was the stock market crash. The reasons for that is that it was a banking problem, a lending problem. The lenders overlent, flooding the market with way too many loans, and overinflated the value of real estate. We had $2 to $3 trillion of overvalued real estate.

We have been coming out of difficult economic times and, even though we have a 5 percent GDP, it does not feel good because the average person is on the margins. People in their 50s and 60s are not making the money they made before and young people are having trouble entering the market.

It does not feel as good and it certainly does not feel as good having four to five million people being foreclosed on in the past five to seven years. This is something that is silent in the media yet that is a reality for many families in the past five to six years.

(2) That’s what happened then. When you first entered the industry, it was comparable to what you see now. The different solutions being implemented then were the same as the solutions being implemented now? I am hearing different terminology. What is the term being used now? There was a term called quantitative easing.

The essence of quantitative easing is that the Fed is buying debt and buying mortgage tax securities, and it puts capital into the market. If you look at the bank’s balance sheets, you’ll see that the six big banks dominate 80 percent of the market, post-Great Recession. They became significantly larger. Chase got WAMU. BofA (Bank of America) got Countrywide. Wells Fargo got Wachovia. Those six banks became three. All of them were among the largest in the world.

When you look at quantitative easing, you have the big liquidity in the banks. The banks have a lot of liquidity and a lot of money to lend. QE helps the banks. It helped major corporations because the interest rates are low. Most banks were borrowing at very low interest rates and it put a lot of capital into the market.

It stabilized the banking system, which is good. It helped many businesses, which is good. However, when you then look at the balance sheets of the banks, the banks were foreclosing and, by foreclosing on five to ten million people, they were pulling capital out of the equity out of the middle income area of America.

They were taking away credit cards. They were taking away lines of credit on homes. They were increasing fees. They were doing the exact opposite that you would do and, at the same time, small business lending had dropped as well. QE was great for the economy overall and, certainly, the U.S. economy has outperformed slowly. It’s been very good and steady for job creation.

Pennies on the Dollar - bill with pennies on white background.Helping big business is a good thing. No one is complaining about that but, on the other hand, the fact that big banks get bailed out and the fact that this favor was not passed onto America was a travesty of the recession. I think the bank solution that was missed was an obvious solution.

If a borrower comes to me with a problem, if I think there’s one way to help them, I think the immediate way is to lower the interest rate. The banks actually resisted or fought lowering the interest rate.

The whole conversation on loan modification — loan modification can be a one-page document approved of or disseminated in one to ten minutes — [was missing]. The banks took, in some cases, six months, a year, two years, three years, to render decisions, most of which were to turn down the loan modifications.

The problem with the solution was to fail to lend as opposed to bailing out the consumer, taking some responsibility. We banks inflated the market. No individual inflated the market. Maybe some of you [members of the public] may not have taken this loan but millions of you did. Most of you did.

The banks did the completely wrong thing. It did not lower the interest rate. I personally was in a loan modification program. It took me four years to get Chase Manhattan Bank to approve a loan modification. I was in a loan modification before the Great Recession so I intimately watched Chase Manhattan Bank’s and Bank of America’s processes. Everything they did hurt me. If it was hurting me, a sophisticated borrower, with a jumbo loan, I know it was devastating America.

With the solution and the best part of the solution — QE, as I said — the Fed can’t get the banks to loan money. The Fed does the best it needed to do but the banks did not pass on the responsibility. I would call it a fiduciary responsibility to the industry. I actually think that, based upon the settlement, and the admitted frauds and whatnot, the banking industry decimated its character because it really had solutions but those solutions were not put in place.

What we have is a very slow and arduous recovery. If a person looks closely at the mortgage lending industry now, still, almost the absurdity, is that most bank s are lending to loans to small businesses and to consumers. Mortgages are still guaranteed still, FDIC guaranteed still as well as FHA or Fannie Mae-assisted. The banks really aren’t lending money so we have a slow, arduous recovery.

Month after month, America, if you will, has an entrepreneurial society still. That’s the good thing. That is what drives us.

3)What are your goals as president of Davos? What do you want to accomplish that you haven’t as leader and manager in other banks? What is the size of your business and your profit margin yearly or the value of your stock shares? Are you, in fact, publicly traded? How many employees work for your company?

I recently set up Davos company so this is the company’s first year of operation. I previously worked for decades in the banking industry and I was lending to the very markets in mortgages in the Great Recession. So I set up Davos Capital. What I didn’t see and what I don’t see in America — to this day — is that this sophisticated world leader has virtually no system to help specifically black-owned businesses to raise, grow and start capital. I would like to say that the system is broken but no. There is no system. There is nothing there. There is almost no new capital going to black-owned businesses.

This last year, the largest region for lending was the SBA (U.S. Small Business Administration) Los Angeles region. There was $1.3 billion in SBA loans last year. About 2.2 percent, which is $28.6 million, went to black-owned businesses. When I was running a community bank, we often lent more than that each month to black-owned businesses. We’re talking about the major banks that do SBA lending.

No, it’s a broken system and it’s not to say that banks by themselves are at fault. The companies need more than bank lending. They need equity lending. They need advice on how to grow a business and how to start a business. What are the best practices to start and grow a business?

Those are the areas that Davos Capital wants to be more engaged in recently. Davos Capital, by design, the company, addresses this very issue. We identify black-owned businesses. We will also do business with any businesses that are special and our target focus is on black-owned businesses because that’s where we see Ferguson, Mo. That’s where we see Detroit. That’s where we see Oakland. That’s where we see Watts. That’s where we see Harlem. That’s where we see in every city in the country, an urban inner core of African-Americans that have very identical problems.

I studied at the University of California in Berkeley. I studied economic development. This is the issue I have focused on for 30 years. It is something that I put in capital in prior life to — prior to joining and running a lending department when I worked with One United Bank, the largest African-American-owned bank in the country.

We provided in four years as a matter of public record. Government regulators know me. In a four-year period, right in the Great Recession, we lent $715 million — just shy of $1 billion. About half of those loans were to low-to-moderate income tracks in Los Angeles but some were in Boston and some in Miami but mostly here in the Los Angeles area. Half were to low-to-moderate income tracks.

When I left the bank, we had no losses. We had no delinquencies in over 30 days. I have never seen that in a portfolio in my life and I have facilitated billions. And I had never seen that. An executive came to see me at the bank. He was boasting that he had the best portfolio in the country in commercial mortgages — not residential. I wanted to say this to him but my portfolio figures were better than his.

What I saw was that the reality of the urban and inner city was not what the perception is. I see economics of how to make money in urban markets. So Davos Capital will invest in businesses. It will invest in real estate, mostly minority and mostly in inner city but it will also surround companies with what we call best practices.
If it comes to me, it comes to us and they have all the bells and whistles. Then we can assist them with more capital. We have relationships. We have relationships with venture capital funds, with pension funds and other types of insurance and capital as well as relationships with banks, finance companies and leasing companies.

But, if they have themselves together, we can help interview and we can help write their story. Businesses spend a lot of time doing business plans but writing their story for the capital source isn’t something that needs to be more than a few pages. But it needs to say the right things to the right audience. Bankers may look for something differently — different from a venture capitalist and different from mere experts on the myriad of financing options.

What’s to say that a company comes to us and they have something together? Maybe it’s that they don’t have a very good key financial officer. Finance and accounting are not up to par or certainly they are not ready for prime time. We’ll introduce them to strategic partners that we have that provide outsourced, web-based, transparent accounting services for businesses.

If somebody comes to us and let’s say that they don’t really have a strong human resource function. We can introduce them to strategic relationships that provide high-quality human resources. With human resources, not only are you looking for good people, you don’t want to violate a myriad of rules and so these companies will help them.

Just because you outsource does not mean you don’t have your own staff internally but you now have this power source for marketing and sales. They’re named the director of marketing and sales. Or they’re in search of one. Or they’ve have got one person but they don’t have the resources to do a multi-level, multi-faceted, social media, sales and marketing campaign. We will introduce them to strategic relationships.

At the same time, we are not necessarily passive but we can play the role of chief financial officer, part-time director of sales and, in my team, we have very strong people in marketing and sales as well as very strong, finance, accounting, CPA-type backgrounds. We know what the world’s looking for out there. We can also help the company internally.

We believe that, when companies go through either our process or they’re ready for prime time. We refer them a lot to incubators that we know, business schools or other community development corporations that do small business lending. We are really big on utilizing the existing network that’s out there.

Part of the broken system is that it is getting better but there is this sort of one-stop shop that a person can go to and say, “Number one, I don’t even know what’s out there. So who knows what’s out there and who can introduce me to these people?”

We try to facilitate that process because we have relationships that are often at high, decision-maker, executive levels with most of the banks and lending institutions, community development corporations, SBA and various organizations but we can facilitate introductions for the businesses.

We believe that, if we are Davos Capital and we’re involved with businesses, we think that it doesn’t guarantee success but we think that it will lower the risk for businesses, lower the risk for investors and increase somebody’s success.

4) If I am understanding this right, you’re going to do what many other banks don’t quite do. Banks lend money but don’t create plans for maintaining capital. That is to say, they don’t make references. Is that fair to say?

Banks are not set up to provide consulting. A good banker will refer people but they’re limited. There’s a lot of liability. The problem with the big banks is that they got tremendous resources but are certainly ill-equipped. It’s not economic for them so the problem we have with society is a huge economic issue. It’s that the large banks are not the best ones to be helping small-to-medium-sized businesses.

When we introduce a client into a bank, we want to know that we can talk to the decisionmakers. That does not happen at a big bank unless you are a $50 million-type business. The whole small business world is larger under $10 million, really under $5 million. Most of the transactions are in the small business world, which is half the economy, and are under $2 to $3 million.

About $2 to $3 million is hard for a $1 trillion bank to focus on in any earnest way in that market. It’s a criticism because we think the big banks are too big. It creates a massive economic risk for our society if Wells Fargo screws up commercial real estate lending. America gets hurt — just one bank. That should not happen.

The banks aren’t really that equipped to get that involved. We work with the banks. If they turn something down, we’ll work with them. Now the banks are not set up to do this and our concerns are that we aren’t seeing focus on the black businesses. I believe that I don’t know of any bank in America, unless it’s a black-owned bank, that has any department with any person that focuses on black-owned businesses. It’s locked up in diversity but no one’s looking at black-owned businesses.

When you start looking at statistics such as unemployment, minorities hire more minorities. We can track it right back to slavery. There’s never been capital flow to help black businesses. It’s a systemic problem and we believe that it is these types of solutions than we don’t solve. We don’t solve income disparities. These are the types of things that have to happen.

5) Do one of your goals include making lending more accessible and more affordable to small businesses? Do they include lending to minority-owned businesses? If so, what are some the challenges you will face in doing so and what are the challenges, in your view, of minorities securing sufficient financial capital for their businesses?

Minority businesses have the same problem that non-minority businesses have. In many cases, they are not prepared. They don’t understand the lender or the investor well enough. Therefore, they are not asking themselves the right questions.

I say my biggest and key criticisms of small-to-medium-sized businesses is that they have not thought strategically about capital because capital is just a tool. Strategy is the key. Often we’re getting requests from people who have emergencies who have not thought strategically. We’ll talk to an entrepreneur about a solution and they really aren’t sure if it is a good solution or not because they have no perspective, which means that they have not been thinking strategically.

We believe that companies need to think strategically first. It is critical for any business. The minority businesses have that problem. They also have that problem and I’ll focus on a black person. I know what it’s like to raise capital.

I know what it’s like to have a chief investment officer tell me — after flying to Sacramento with a business partner, after the O.J. Simpson trial and after we had flown up to Los Angeles on our dime (and he said at an introduction to a business meeting) — “Why should I invest in your business?” when O.J. Simpson got off.

We don’t have and I don’t think that there are any chief investment officers and very few working for public pension funds making decisions. If there are minorities, their problem is that they are playing by traditional rules. Black-owned businesses need more individualized attention than the traditional rules.

There are barriers — the discrimination. I know what it is like to work on Wall Street and to sense discrimination from my peers. I know what it’s like to be working in the middle market and assisting businesses and sense discrimination from my peers.

I happen to be a sophisticated person who has had to deal with that. If I wasn’t and I was the owner of a black-owned business not used to working in this environment, I would not even know necessarily about being discriminated against.

At Davos Capital, we can’t ensure complete success let alone our own but we can assist in leveling the playing field. We do believe that when one of our representatives is in the room with any business person or with any capital source. We have leveled the playing field because there is nothing that Chase Manhattan Bank or Morgan Stanley are going to tell us that, from a financing small business perspective, we don’t likely have an opinion on.

What we do is to try to level that playing field but also we are making sure that the businesses are prepared to talk and really ready for prime time. You have got to be ready for prime time. The biggest complaint that lenders have of the black businesses is that they are not ready. There is something to that.

It’s a two-sided coin. The businesses have to be ready for capital and the capital has to be open and receptive to invest. What we would like to do is change that equation and take the color and race element out of it. We often facilitate and do transactions in which the issue of race never comes up.

We don’t even talk about it. When people meet each other, they found out but it was not germane to the decision. We have our ways of making sure. What we feel is that if the lender or investor reads the analysis that we’ve prepared on behalf of the company, we pointed out the rifts and, most of the time, the rifts aren’t about color. It’s not color in this society. We call it a color. It has nothing to do with that.

We make sure that we remain germane to the businesses. We make sure that we have our clients get it and, if we are part of the team, CFO or an adviser, we think we can make the appropriate arguments to the investment community to give the people a favorable decision.

6) Have you joined any business organizations and other groups such as the chamber of commerce? If so, which ones?

Most of the organizations that I and my associates at Davos tend to be the chambers. But we don’t focus on the minority chambers and they tend to be minority chambers — black chambers, Hispanic chambers and Asian chambers. I never quite understood why the non-minority chambers did not adopt the minority chambers or created a name brand.

When I say that I am focused on black-owned businesses, white or other, we are doing business. What I am saying is that no one focuses on black-owned businesses and it becomes a problem to say that you are doing it.

I think that white and minority chambers are grouped that facilitate these discussions, are sensitive and add features to these banks. I focus on those chambers. There are also standard networking organizations that some of them have a lot of bankers and a lot of companies affiliated. Those are networking groups such as INFA, the International National Financing Association being one, and CFA, the Commercial Financing Association being another.

Those networks are the ones in which they are lending to minority businesses before they are even bankable and this is part of the problem for all businesses. When most people think of lending, they think of banks. When I think of lending, I think of non-banks.
It’s organizations like that are lending and investing as well as other trade organizations that, because of certain trends, will operate better for minorities and lower the risk for investors. We do affiliate a lot with the franchises and other types of trade associations.

Whether we join the organization or not, we support them. We go to their trade shows. Sometimes, we may sponsor something. We’ll go in if we can speak. We love to do that as well because we believe that it is about providing knowledge and information to businesses. Whether they get something from us is not nearly as important as the fact that they get the important information.

I attend and speak at a lot of conferences and what I find is that, at the minority conferences when the banks are on the panel, there’s a sense of dishonesty or that the bankers are lying.

They’re not lying; they’re just not getting to the truth. Most businesses are not going to get the banks’ financing. If you’re sitting on the business panel, there are certain things that you are not going to say and that’s the honest truth of the matter. If I am a businessman, then I want the truth and I don’t want it with a chaser.

That’s what we try to do at Davos Capital. We don’t sugarcoat things. We are paid to analyze and assess risk. If we don’t analyze the risk, then that’s the risk. We blow it on our own capital, let alone for other people.

For a lender to sit in front of an audience and say, “I am with Bank of America or Chase and these are the services we offer to black-owned businesses.” Really, they’re irrelevant because they are not at $28.6 million in the biggest district in the country. If this is the biggest, you can imagine what the figures look like for the rest of the country.

It’s just not good but I think it’s all the level of dishonesty. I think what businesses need is to talk to the person who is up there. When I say talk tough, that “you have to get your act together,” they also need a loan for someone to do business with them.

They also know that I am willing to do business with them, as opposed to the banker up there who really doesn’t know. When the panelists are up there, they’re not really sure. They are saying all the right things but why do their numbers look so bad?

I think that part of getting involved with networks where we can provide the part of telling the truth because, if you’re telling the truth, then we can figure out a solution.

7) How did you enter the financial industry? How did you gain an interest in it? Who inspired you?

When I was in college, it was my first father who said, “You might want to study economics.” It was just like him saying, “You might want to study history.” I studied economics at the University of California at Berkeley and what I found was I emphasized international economics and I emphasized economic development while I was there.

I also found a lot of information but I also found that Berkeley is not that far from Oakland. That’s a lot of time going to the streets of Oakland. I might go there at noon. I might go there at midnight. I might go there at different times of the day.

I did not grow up in a poor area or middle class. I had an African-American father and an Italian mother but the areas that we lived in were predominately white. I had experienced racism but I still didn’t know what it meant to be black.

While I was at Berkeley, I would go into, particular, Oakland. That was part of the problem. When I went to Oakland at midnight, it was bright and lit up. You would have thought it was noontime or daytime.

There was drug activity and transactions, prostitution, crime. I would mingle in this. I was comfortable with my own safety if you will. I would go into bars and I would mingle. I would get to know people and I would get invited. People would start sharing some of their stories.

Naturally, you start meeting people and I was a young bachelor at the time too. Certainly, the women would take an interest and I wasn’t due for study all the time but I was gaining a normal life experience with the inner city. How can I change something that I know nothing about?

When I got out of school at Berkeley, I wasn’t really sure exactly what I wanted to do but I noticed that I looked at some of the wealthier kids were going into banking and I asked one of the guys, “Why is it that you’re going into banking?” He said, “Well, it may not be the best paying profession but it is an honorable profession.”

So I went into banking for two core reasons. It’s what I call my secondary reason. It was key to me. It is that It was an honorable profession and I felt that banks were honorable. I feel that this climate is a disservice to my honor because that is the profession that I picked, which is why truth of the matter is important. The truth of the matter is that banks are lying about making bad foreclosures. That’s a lack of honor, let alone a violation of law and regs.

I also went to banking because this was the primary reason. In order to solve urban and inner city problems — I needed to learn the money system. Because I had emphasized international studies, I had gone ahead and had found that every urban area had an African-American population at in the inner city that was at a higher level than normal of unemployment and poverty.

But also, Africa was colonized and went through de-colonization at the same time that America went through [the Civil Rights Movement] and the African countries were going to be developing and re-developing.

We often talk about slavery’s impact on the slaves. About 300 million people were taken from Africa. They lost their labor force for centuries and were colonized. By going into banking, I wanted to learn how to finance the world. I set out in banking in 1979 as a 21-year-old kid to learn everything I could about money and banking.

Over the years, I’ve done mergers and acquisitions. I’ve done leveraged buyouts. I ran a financed group that’s run energy, power plants and infrastructure. Translation: you can finance a city’s road.

I financed small-to-medium-sized businesses as well as consumers so I don’t know of any banker or lender in America that I’ve met — let alone in other countries — that has done the number, the scale, of loans in various classes — meaning large corporations, small businesses and minority-owned businesses.

What I set out to do is that — I really found it fascinating to help the African-American core market. What I didn’t realize was that, given that we had a broken system, there wouldn’t be very many people who would have the level of expertise that I have to help.

It’s really about help. It’s not about me. I did this for a purpose. I did not do this to pay my own bills. I told myself that I went into banking and ran a lending department at the largest black-owned bank. I did that because, by that time, I had learned enough to apply what I knew.

I believe that you can level the playing field by making more mortgages and by lending more business loans. One of the biggest compliments that I got from a client three to four years ago. I had left a minority-owned bank and gone on to my next phase of life and an African-American business owner walked up to Magic Johnson’s coffee shop. I don’t know if he still has an interest in it but it may still be Magic Johnson’s coffee shop.

This guy was an African American but he was also large with almost this rotund shape — smooth with brown skin with a smile that is infectious and a personality that goes with it. He said, “Arman Walker, when I went to do business with you, I thought I had died and come back white.”

I say that because the service that I provided was on par with anything anyone would ever get. That’s what I set out to do — level the playing field. And I feel that people deserve it. Going back to your question, they deserve it. People deserve it. Black lives matter.

8) Walk me through a day of work for you as president of Davos. What are your day-to-day responsibilities? What clients or customers are you seeking to attract to Davos? How do you want to serve your customers? What kind of suppliers and services does your bank require to thrive every day? What would you call a good day at Davos? What would you call a bad day at Davos? Please be specific.

One of the things that I do at Davos Capital is that we tend to view ourselves as a bit of a think tank. My associates and I tend to talk a lot about economics. We also talk about political issues because we happen to think that most of it is political issues that are disguising what is going on. Our role is to translate them into economics.

We are glad to see that someone talks about a pipeline to Alaska. We see that finally the truth of the matter is coming out. It didn’t get totally politicized to build the pipeline from Alaska to Texas if they did not put solar panels all the way or build a bullet train underneath it.

We wake up and do our own research so we might have a bit of a morning conversation but, as you will see, I tweet. I will tweet early in the morning and I get up early in 6 o’clock in the morning and try not to make phone calls around 9 a.m. to keep my own pace. What we’re doing is we invested a lot in our strategic partners whether we have databases of 3,000 or 5,000 of them being some type of institution.

We maintain those relationships so part of the day may be spent making phone calls here and there but most of the time is spent identifying businesses that we might want to invest in. We go to networking events to make calls on businesses. We may also make calls on businesses that may contract with people that we know, meaning that a small business needs to sell whatever.

Maybe it is a school lunch. We might have assisted that business because we are working with the L.A. Unified School District. Many of the businesses and corporations do have goals or objectives to purchase products from minority businesses. Most are not meeting the goals they have but you still have to meet them halfway.

As much as we are spending time to looking for businesses, we are helping the businesses to make markets meaningful since we might be providing for a client a sales process. We might also be calling on a large corporation supplier diversity channel. Part of the reason that we like to do it is that we think that we might be a little better at communicating with some of these people than a young client that owns a small business too.

We’ll look for that process. We’re looking for companies to invest and lend to and we’re also looking to make markets. Once we’ve identified companies, our time is spent.

When we talk to a company about a financial need, we then become able to add on information about that business. We are getting their business description. We want their historic financial statement, their income and their balance sheet. And we analyze that.

Our core expertise is analysis. At its core, that’s what we’re best at. We look and analyze risk and we analyze it from the financial statement perspective but then they’re really telling us more. The numbers tell us more. They tell us a lot about how they are running their business. The numbers tell a lot about how they’re making decisions. The numbers tell us about some of their weaknesses.

When a company sends us a financial statement, there is the quality of their accounting. It starts to say big things. We can tell if they’re selling undermarket. We analyze that.

And once we analyze that, we have discussions with the company about what we’ve determined. Based upon what we’re seeing, this is what I think you need to do. These are just discussions that go back and forth. Most of the time, we’re not pointing out something that’s news to them. They just really never had conversations with people about it.

What we do is that, if we identify a weakness, we try to work with the company on strengthening that. Again, we introduce them to our strategic partners, and/or if they do have everything together, then we will prepare an investment memorandum that is a summary of the business based upon our review of the financial statements, our review in conversation. We’ll provide a summary.

We’ll provide what we’re really good at. It is that bankers can analyze something one way, a leasing company is going to analyze it another way and an active base of lenders will analyze it another way. Eventually, we know all of their ways of underwriting. I know the right way to present it to that audience.

We have vast experience on our team. If we don’t know or if we know that it is a specialized area where there is more technical expertise, we will engage specialists we know and invite them to review the transactions with us.

With SBA lending, for example, we bring specialists with us. Why? All of the rules. You know they change the rules. We don’t necessarily want to spend our time keeping up on the rules but we want to make sure that we bookkeep what we do and bring them in.

We’ll prepare our memorandum. Once that memorandum is complete, our time shifts a little bit where we make an investment ourselves or are we going to take it to this bank, that lender or that investor? Or are we going to try to put together a syndicate of investors ourselves?

We have been spending time with crowdfinancing. And I reference crowdfinancing vs. funding because we’re really talking about real investment deals as opposed to the exchange things. We’ll determine what the best route is. If it is a transaction with a non-bank that requires equity, we have strategic relationships with investment banks that specialize in equity transactions or for small-to-medium businesses. We’ll put that team together to get the deal done and then we’ll help represent our client with those lenders.

We represent them but there is always the baton toss that always happens. (I used to run track.) But that baton toss — meaning that once we get an interest from the lender or investor — that interest is often garnered off our memo and conversation. At that point, we have to introduce the client directly. While we can assist, it’s really their show.

We’ll assist that process but, with the fee in particular, everyone is going to gain confidence. What we believe is that once the company has gone through the process with us, that they’re ready for the financing. What I find is that companies that don’t know how to get through the process are not ready for prime time.

We’re not sure they’re really want to do the basics. You have to do strategic banking, which you’re required to get the capital. They don’t want to spend the time to prepare that financial projection.

Because we are finance people, we can assist them at preparing these things but they have to be prepared based upon some real thinking. Anybody can put numbers to paper but, once we have gathered and analyzed the information, then we are spending our time with the investment.

Then when the group says yes, we document the transaction. Then, after a deal is done, time is often spent talking as an adviser as a sounding board to help the business run.

9) Do you see enough African Americans and other racial minorities as successful as you are in the financial industry such as Franklin Raines? If so, who? Do you feel that you can help young African Americans who may have some difficulty breaking into banking management and leadership? Do you see enough young blacks and minorities serving in leadership and management roles such as yourself as an owner of a business? If so, why or why not?

Often when I go to banking and finance conferences, certainly in my management experiences in banks, often I am one of very few. I have been away from the market for a bit but certainly, when I was in New York, I was personally responsible for getting African Americans into banking and, at the same time, I was able to mentor and assist. Many of the banks stopped doing some of their training programs. They started them back up again.

But we don’t have black bankers or black units that focus on communities. If you go through poor areas, the one consistent factor is that you will not see very many at all. In fact, you may not see any at all.

When Franklin Raines was running Fannie Mae, there was a lot of politics but Fannie Mae assisted more black and brown persons when he ran it than at any other time at Fannie Mae. What happens is that you don’t have people. It’s not enough to be black if you will. You have to know what you are doing. I see many African Americans in lending and banking saying the same thing everybody else says. That’s not going to get anything done either.

It has to be someone who has the confidence and the skills to say yes. What I found is that, once I got into a position of authority and, in particular, when I did $350 million in loans and my portfolio outperformed, everybody were saying no way too much. I don’t see the success stories. I don’t think about success in that way. I just don’t see that much. I know some African-American businesses and bankers but I just don’t see it enough.

I don’t see the iconic success. I am forgetting the name of the guy who sold the ice tea stand right now. He set up funds. That’s fine. I think that this is good. I am happy to see a business that is making to $200,000 to $300,000 per year and is employing eight people. It won’t make the Wall Street but, if I can make ten successes like that, then that really floats my boat.

10) What advice would you give young businessmen and women in business in terms of management and leadership and advancing their careers?

The generation that I believe that Davos is going to be focused on most is that generation. On the personal level, I also captured the age of my kids. But my kids are on the younger side of that. I get that generation. I think about younger people too. I see the dynamics surrounding that but also I think that the younger generation have the skill set of technical savvy. They are not resisting. They are much more open to ideas, much easier for Davos to work with.

That (struggling economy) hit them. It hurt people getting started. We are seeing some exciting companies that happen to be black or half-mixed but in new technologies. And they are coming up with some brilliant ideas. We are really excited about that generation. And the 25-year-old people! 30-year-old people!

We believe that, if you think about the strategies and best practices of the economy, we all believe that the core focus for us is that generation. We spent time talking to a business school. We talked to the business associations and the black business associations.

We do this for two reasons. We do this for not only because we want to talk to the graduates but we also want our young entrepreneurs to have a resource with them if they need to do a research project. Will you guys do this? Will you do that? And it’s time to match the academics to business.

I’m 57 and most of the entrepreneurs we talk to are under age 40. A nice young chunk is in their 20s and 30s. It makes a good match because you match opportunities with a tough economy. It is a good time to do it.

NOTE: (BlackSpeaks.com offers up AfroPreneurs, a news series featuring nonmedical white-collar enterpreneurs and professionals. AfroPreneurs are leaders and managers in a variety of non-medical fields who often use their talents to start their private practices or businesses or challenge themselves to transform and improve employment opportunities, goods and services as board members, group founders, mentors or college professors. Our AfroPreneurs series seeks to draw on and explore the expertise and experience of these non-medical heroes and put them in the public spotlight, one professional at a time.)

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Vladimire Herard, M.S.

About Vladimire Herard, M.S.

A print journalist for 21 years, Vladimire Herard freelanced for the National Senior Living Providers Network, (nslpn.com), the Guidance Channel and Longtermcare.com. Under CD Publications, Ms. Herard wrote about senior health, substance abuse prevention, and elderly housing. Under Inside Washington Publishers, she covered health care financing for Inside HCFA and food and product safety issues for FDAWeek. Ms. Herard also covered education, crime, and county affairs for daily newspapers such as the Chicago Defender. She currently covers senior long-term care, the pharmaceutical industry and issues and education. Ms. Herard resides in Chicago.

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