Cascadia Competes to Fill West Coast Gap After Internet Bust
By Hui-yong Yu
2004-11-03 03:15 (New York)
Cascadia Capital LLC, a Seattle-based investment bank, is competing to fill the gap left by the exit of firms including Robertson Stephens Inc. following the collapse of Internet stocks in 2000.
Cascadia, led by former Lehman Brothers Holdings Inc. executive Michael Butler, advises companies on equity and debt financing and mergers. Along with firms such as JMP Securities LLC of San Francisco, it's gaining this year from revived interest in fast-growing companies such as healthcare services provider NightHawk Radiology Services LLC.
"All these firms can make a niche for themselves," said Michael Guthrie, director of venture buyout firm Garnett & Helfrich Capital in San Francisco. "There's going to be consolidation in technology and somebody who consolidates those businesses ought to be very busy."
With more than 100 U.S. buyout funds with at least $1 billion to invest, demand has increased for firms such as Cascadia that help find investments and finance takeovers.
Cascadia helped raise $25 million from Summit Partners for NightHawk Radiology Services, an Idaho company that moves doctors to Sydney for three years to read scans for U.S. hospitals during off-hours. NightHawk says it expects sales to at least double during the next year, without disclosing figures.
In February, Cascadia helped World Wide Packets raise $24.5 million, ending an 18-month search for capital, said World Wide Packets Chief Executive David Curry.
Wall Street Connections
"There weren't a lot of agents in the business anymore," Curry, 57, said in an interview from his office in Spokane, Washington. "Cascadia was a rarity at the time."
JMP Securities, founded in 2000 by executives from San Francisco-based Montgomery Securities, said first-half revenue increased 75 percent to $33.2 million from a year earlier. Cascadia, started in 1999, doesn't disclose revenue. The firm is profitable, according to Butler.
Cascadia's ties with local venture capital and law firms have generated business and helped cushion the firm from the slump that caused bigger banks such as Goldman Sachs Group Inc. to put expansion in Seattle on hold.
The firm is tiny by Wall Street standards, employing 42, and gets most of its revenue from helping companies raise capital or find buyers, in many cases matching them with East Coast investors such as Baker Capital that Butler, 44, got to know during his years on Wall Street.
New Set of Investors
"They introduced us to a whole new set of investors," said Steven Hooper, a co-founder of Bellevue, Washington, venture capital firm Ignition Partners and the former CEO for several companies started by cellular pioneer Craig McCaw. Traditional venture firms look to investors such as Baker Capital to finance their companies after they're past the seed stage.
Butler, who has a master's degree in business from the Wharton School of the University of Pennsylvania, previously ran part of Lehman's equity capital markets division during his four years at the firm. He earlier spent nine years at Morgan Stanley. "When we started the firm, we were focused on early-stage investments in Seattle but now we're turning into a real investment bank," Butler said in an interview.
Cascadia has advised on 21 transactions this year, Butler said. This month, it helped WatchMark Corp. raise debt to buy Metrica software from ADC Telecommunications Inc. for $35 million.
JMP Group LLC, the parent of JMP Securities, raised $34 million in a share sale in August to expand its banking, brokerage and fund-management businesses. The firm was founded by Joseph Jolson, Carter Mack and Gerald Tuttle.