Besides ethnic and historical barriers, Hispanic CEOs face another hurdle in today's battle for investment funds. The current U.S. economy and war worries have put a damper on business investment for all groups. "Minority businesses are usually LIFO (last in, first out) when private capital availability tightens because of economic downturns," wrote J. Antonio Villamil, CEO of The Washington Economics Group and former Undersecretary of Commerce, in a presentation for last October's Hispanic Business Magazine Board of Economists Summit.
"A lot of [angel investors] have lost a lot of money, so they're more reserved when it comes to taking risks," says Mr. Garza. "On the other hand, you're talking about people who have excess capital, and they're the kind of people who are used to taking risks. So if they see a well-thought-out business plan in a viable market, they're going to pay attention."
On the following pages, Hispanic Business highlights three companies on the Captains of Capital directory that triumphed in their search for investment capital. Each company found a different avenue for access: transaction capital (Somerset Capital), public offering (MasTec Inc.), and private equity placement (Sterling Financial). These case studies show that despite the odds, courage can pay off for Hispanic entrepreneurs.
Case Study:Somerset Capital Group
Pedro Wasmer's Somerset Capital Group took an unusual route to gaining the confidence
of investors.
In 1995, it was discovered that the chief financial officer of St. James Leasing, another of Mr. Wasmer's companies, had defrauded three banks and the firm itself of several million dollars. Mr. Wasmer made restitution a priority, repaying all the defrauded parties in less than two years – a strategy that came to serve him well.
"In the process of repaying everyone, we gained the confidence of banks," says Mr. Wasmer, who wasted little time converting that goodwill into credit lines, which he personally guaranteed, to acquire equipment for a new company.
Founded in 1996 to manage the assets and finances of St. James Leasing and Somerset Investment Services, Somerset Capital leases high-tech and capital equipment – everything from computers and manufacturing equipment to furniture and fixtures – to large companies throughout the country.
