How do you run a national investment bank here in the Northwest, far away from the bustling financial centers of New York and San Francisco? I put the question to Michael Butler, chairman and CEO of Seattle-based Cascadia Capital, one of the area’s leaders in providing banking services in corporate finance and strategy. His answers provided insight into banking and local investments, as well as a broader snapshot of growth areas to watch in the region.
Butler is a Seattle native who spent 16 years working on Wall Street. Like almost everyone you meet from the Northwest, he eventually wanted to move back. In 2000, he co-founded Cascadia with an eye towards making deals across a broad geographical region centered on Seattle, but stretching north to Vancouver, BC, south to Portland, OR, and east to Denver, CO. “Out here you have to educate people about what an investment bank does. Back east, everyone knows,” says Butler. “We’re a facilitator of taking capital and getting it to companies.”
The main challenge out here, Butler says, is attracting experienced bankers to the Seattle area. He says his team tracks the top investment bankers in New York and San Francisco and actively recruits those who are from the Northwest (or whose spouses may be) to come back. It’s about “getting a few good bankers,” he says. “It’s all about the people.”
On the plus side, being away from the major financial centers means Cascadia can stay “out of the rigamarole,” Butler says. “We don’t get caught up in the group-think, and we make decisions less influenced by the day-to-day noise.”
Cascadia is small, with just under 30 bankers, and is looking to focus on three main areas of high-tech. “We see telecom and [traditional] tech as consolidating. We believe growth will be in new media, cleantech, and health care,” says Butler. “There are a lot of companies with big-time capital needs.”
—By new media, he means innovative Internet-based business models. As Butler sees it, 15 to 20 percent of the Seattle-area dot-coms from 2000-2001 survived, are raking in $20 to $30 million in annual revenue, and are “doing something to get to the next level,” he says. “There’s really some great talent out here.” Case in point: WidgetBucks, the online ad network that recently raised $10 million from Draper Fisher Jurvetson and Bellevue, WA-based Ignition Partners, with Cascadia involved in the deal.
—Cleantech and alternative energy is the “fastest growing area, with a lot of capital being raised,” says Butler. But these days most of it is in Portland, OR, Denver, Vancouver, BC, and Calgary, AB—which Butler calls “absolute hotbeds.” There has been a lull in Seattle proper since an early wave of companies getting funded, such as Imperium Renewables. “The west coast is still learning the sector,” says Butler. He’s looking at closing deals soon with Bend, OR-based PV Powered and Burnaby, BC-based NxtGen Emission Controls.
—Healthcare, especially where it converges with software, has great potential for growth. “We have pretty good expertise here in using software to discover drugs,” says Butler. Plus, he says, “the Gates Foundation will transform the city… The leading experts are all relocating out here, drug companies are locating offices here. There will be an influx of people, and some of them will migrate to the private sector.” Meantime, he says, there are three to five deals to be done in healthcare tech and services for assisted living.
Butler left me with a final thought, which echoes something Xconomist Eddie Pasatiempo of the Clarion Group told me a few weeks ago. Given that mergers and acquisitions are the “exit of necessity” these days, it has become more important to position a company so potential acquirers see how it fits their needs. And a lot of that positioning is determined by the quality of the company’s investment bank. “It’s critical,” Butler says, “absolutely critical.”
