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North Bay Business Journal

Monday, June 30, 2014, 6:30 am

Warren Capital marks 30 years, $1.8 billion in financing

‘Food and beverage, health care and business services. … that’s still our focus.’

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    NOVATO — Novato-based Warren Capital is charting a path for the future as it celebrates its 30th anniversary, seeing continuing growth from a long-running business model that focuses on providing financing and advising for some of the North Bay’s most well-known industries.

    It is an approach that founder and CEO Warren “Clay” Stevens said has helped the firm weather a number of recessions and to carve a niche among lenders serving the North Coast region and beyond. And while a new platform that allows equipment vendors to offer in-house financing for customers through Warren Capital is expected to play a growing role in the coming years, Mr. Stephens pointed to trends like the recent surge of interest in craft food and beverage as a sign of the ongoing merit of the company’s original formula.

    Clay Stephens

    Clay Stephens

    “The business plan said, ‘Food and beverage, health care and business services,’” Mr. Stephens said. “Thirty years later, that’s still our focus.”

    Mr. Stephens founded Warren Capital in 1984 after more than 15 years in East Coast corporate finance and banking. A Bay Area native, he relocated his family to California and settled in Sonoma County.

    “I came up here and fell in love with Sonoma County,” he said. “I loved the semi-ag, good business community and proximity to San Francisco formula.”

    Business grew quickly in those years — Mr. Stephens said his relationship with a number of East Coast lenders eager for business in California helped him to structure competitive financing arrangements that provided an alternative for the structures typically offered from a traditional lender.

    “The thing we try and do is not just be a one-size-fits-all,” he said. “We add new ideas, new capital and deep relationships.”

    Notable customers in the North Bay have included Frank Howard Allen Realtors, the 103-year-old North Bay residential real estate firm acquired by NRT in 2013, Stark Reality Restaurants, which operates a number of high-profile restaurants around the North Bay and Manzana Products, the Sebastopol-based apple producer that merged with a French agricultural cooperative in 2012. Warren Capital has also provided financing to a number of distribution companies and surgery centers in the region, and today has completed over $1.8 billion in financing for over 4,000 clients across the United States.

    “$600 million of that $1.8 billion has been new capital we’ve brought to the North Bay,” Mr. Stephens said.

    Completed loan volume is around $75 million to $100 million annually, with most loans ranging from $5 million to $10 million, he said.

    Focusing on core industries has helped Warren Capital weather several recessions, tying the company to relatively stable sectors and limiting its exposure to the tumultuous real estate market during the recent downturn, Mr. Stephens said.

    “It goes back to what I call, ‘steady Eddy’ companies,” Mr. Stephens said. “They got us through the Great Recession, and other recessions before that.”

    Today Warren Capital has funding relationships with around 25 entities throughout the U.S., acting as manager and administrator for financing partnerships involving those firms. The company also lends from its own capital base.

    “We’re the spear head. A client deals with us. But behind us, we have a very deep capital base,” he said. “Even though we’re a small company, we have financial resources all over the country.”

    The company has three arms of roughly equivalent activity — financing for the purchase or lease of equipment and software, ongoing funding for operation and expansion and financing for mergers and acquisitions, he said.

    “Everybody, at some point, needs equipment. That’s how we start our relationships,” he said. “And then, when they want to do something big — we’re right there.”

    Equipment financing has been an area of particular growth in recent years — Warren Capital launched an equipment financing platform two years ago known as “Ziplease,” a streamlined Web-based system through which equipment vendors can provide in-house financing for customers through Warren Capital. The platform is aimed at smaller vendors who might otherwise lack the resources to develop a lending platform, and is customer-tailored to reflect the company’s brand.

    Most users will be able to finance a purchase or lease via a one-page Ziplease application, and receive approval in one to eight hours, Mr. Stephens said. Warren Capital has more than 15 customers currently using the platform, and plans a new hire to help boost that roster to between 30 and 40 vendors in the near-term.

    “I see it as a big growth opportunity for us,” Mr. Stephens said. “We’re a financing and marketing tool for these equipment dealers.”

    Yet while eying a handful of hires, Mr. Stephens said Warren Capital was unlikely to grow its roster significantly beyond a core group of six employees.

    “We’re a stable company — same senior management, same phone number, same location. That has been a competitive advantage for us,” he said. “It’s nice to be able to do a financing five years ago, and have the same person pick up the phone when you call.”

     

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