Nansee Kim Parker, a Korean-American San Francisco resident, turned her passion for motorcycles into a business in 2011, when she opened Tokyo Moto, a motorcycle repair and distribution business South of Market in San Francisco. Nansee targeted a growing market niche--novice and women riders who are often uncomfortable in the more "macho" environment of traditional motorcycle shops. Nansee and her husband, a mechanic, bootstrapped the business, borrowing against retirement savings and maxing out their credit cards. By 2013, Tokyomoto was profitable and had five employees.
Nansee wanted the business to grow. She needed $80,000 for inventory, machine repair, and working capital. Nansee made several efforts to secure a bank loan to no avail. Her small business, like many others, was considered too small, not profitable enough, and, with little collateral, too risky.
The potential returns of an investment in Tokyo Moto won't attract venture capital investors. But we can learn from the venture capital experience, help business people like Nansee, and create thousands of quality jobs for needy Californians. When a venture capital firm makes an investment in a company, that investment is two-fold: financial and human, cash and expertise. While venture capital wouldn't work for Tokyomoto, the idea behind it -- combining financial capital and expertise -- does.
In 2013, Nansee ultimately got an $80,000 loan from Pacific Community Ventures, a nonprofit social enterprise organization that lends to small businesses like Tokyo Moto that cannot find financing elsewhere. Here's where the venture capital model comes in: Before she could get a loan from PCV--and as long as she keeps the loan--Nansee is required to work with a volunteer business advisor, a senior level businessperson, someone like the kind of expert a VC firm would put to work on its investments. In this case, Nansee is working with Rebekah Helzel, a CFA with 20+ years of experience in capital markets, to better understand, present, and manage the financial aspects of her business. An area where she has no training. Rebekah meets with Nansee at least monthly, and reports regularly to PCV. Adding this expertise to Tokyo Moto mitigates risk, making the loan work for PCV.
Today, Tokyo Moto is profitable, growing, and has nearly doubled its workforce. It employs residents of local, lower-income neighborhoods, pays a living wage, and provides health insurance. These are the jobs California needs to raise up the 25% of residents who live in poverty. We need hundreds--thousands--of Tokyo Motos. With the combination of capital and expertise, we can get them.
There are over 600,000 small businesses with fewer than 20 employees--like Tokyo Moto--in California. They employ 20% of all Californians, and are adding jobs while larger businesses are shedding them. Not all are on the cusp of growth, and some will fail. But many can grow and create jobs for local residents, if they can access the capital and expertise they need.
We need more incentives to encourage investment in intermediaries like PCV that invest in small businesses, particularly in lower-income neighborhoods. In 2013, AB 32 -- increasing tax credits available to investors who make these investments -- became law. For every dollar taxpayers put up, private investors invest five dollars. That's a good return on public investment. We need more incentives like this one.
As simple as it may seem, we need help getting the word out to small business owners that this capital and expertise is available. These owners have their heads down in their businesses and, with nearly 80% reporting that they have been refused a bank loan, they are used to thinking that capital is not available. Breaking through the media clutter is difficult for organizations like PCV. We need policymakers, opinion leaders, and others to get the word out.
Finally, making loans to people like Nansee Kim Parker at Tokyo Moto requires that we have talented, experienced business people like Rebekah Helzel volunteering their time to provide the expertise alongside capital. In just five hours a month, people with marketing, finance, operations, and supply chain expertise, among others, can visit www.businessadvising.org, help grow a small business, and create a job for a fellow Californian.
This page contains materials from The Huffington Post and/or other third party writers. PricewaterhouseCoopers LLP ("PwC") has not selected or reviewed such third party content and it does not necessarily reflect the views of PwC. PwC does not endorse and is not affiliated with any such third party. The materials are provided for general information purposes only, should not be used as a substitute for consultation with professional advisors, and PwC shall have no liability or responsibility in connection therewith.