New investment bank focused on Northwest market

At a time when many investment banking firms are scaling back, J.D. Delafield
has raised $5 million to start a new Seattle bank that will help private and public
companies in the region obtain financing.

By JOHN COOK
SEATTLE POST-INTELLIGENCER REPORTER

Delafield, a founding partner of WR Hambrecht & Co., spent the past 16 months
operating the San Francisco investment bank’s Seattle office.

But earlier this month, Delafield decided to split the firm off from its larger parent
company in a move that he said would give the bank flexibility "to grow within an
environment that is not growing."

WR Hambrecht & Co. is an investor in the new firm, dubbed Delafield Hambrecht
Inc. Bill Hambrecht will sit on the firm’s board. Other investors include Benaroya
Capital, Victor Alhadeff, founder of Briazz Inc., and Bob McNulty, founder of
Coldstream Capital Management. About 25 additional investors from Seattle,
Boston, New York, Houston and San Francisco participated in the $5 million
financing round, though Delafield declined to name them.

The firm will offer corporate finance and merger and acquisition services to
companies in the technology, life sciences and consumer sectors. It also will
operate sales, trading and research divisions. It has 10 employees, with plans to
double that this year.

Delafield — a former Morgan Stanley investment banker who holds a Harvard MBA
— worked on the initial public offering of Seattle sandwich chain Briazz. He is also
co-managing the upcoming initial public offering of Bothell-based Quinton
Cardiology Systems Inc.

The split comes about a year after Dain Rauscher and U.S. Bancorp Piper Jaffray
closed their Seattle trading and investment banking operations. It also comes
amid a major slump in the market for initial public offerings and acquisitions, two
major sources of revenues for investment banks.

While investment banking firms have lost business because of the downturn in the
stock market, Delafield said now is the time to expand.

"Building in a difficult market is the right time," he said. "It gives you the ability to
build your relationships, your team, your organization and help solve problems for
companies when there are not a lot of people around to help them."

Delafield Hambrecht is not the only local firm following that strategy. In October,
McAdams Wright Ragen Inc. opened a Nasdaq trading desk in Seattle in an
attempt to raise its profile on Wall Street and expand its brokerage services.

At the time of the decision, Scott McAdams, president and CEO of the firm, said
the trading desk "is one of the legs of the stool you have to have to be a
full-service broker."

"It’s a good time to invest," McAdams told the Seattle Post-Intelligencer last fall.
"But at the same time, down the road you want a good market to get a return on
your investment."

That’s also fueling Delafield’s decision to expand in Seattle, including its own
trading desk run by former Dain Rauscher brokers. Having the trading desk will
open up access to large money managers like Fidelity Investments and Putnam,
he said.

As Delafield sees it, there is a big opportunity in Seattle to build a full-service
brokerage firm that primarily focuses on smaller, emerging companies.

"There are 260 public companies in the state of Washington and Oregon; 90-plus
percent of them are under a billion dollars market cap," he said. "If you are not
willing to work with companies that don’t have a billion dollars of enterprise value,
than you are really saying that you don’t want to work in the Northwest."

P-I reporter John Cook can be reached at 206-448-8075 or
[email protected]

http://seattlepi.nwsource.com/business/66350_bank13.shtml