May 4, 2009

Timing was right for DC firm's valley entry

By William-Arthur Haynes

PALO ALTO - About 18 months ago Steve McBee decided he'd bet on opening a public policy outpost in Silicon Valley, and that bet is paying off.

McBee, CEO of Washington, D.C.-based McBee Strategic LLC, opened his Palo Alto office in July 2008.

Since January, Tesla Motors Inc., SolarCity Corp., Google Inc. and a host of other Silicon Valley companies have expanded McBee Strategic's client list.

But, as the many who have tried and failed can attest, breaking into Silicon Valley's famously insular culture is no cakewalk.

Last year tectonic shifts in energy policy, impending economic distress and advances in clean technologies created an unprecedented opportunity.

It become mutually beneficial for Washington and Silicon Valley to join forces, and it put McBee in the perfect position to hang out his shingle.

He helps entrepreneurs navigate the inner workings of policymakers and energy regulators, and also provides the beltway access to innovators and venture capitalists. Initially it wasn't an easy sell.

McBee "bored" three dozen cleantech VCs with his 45-minute slide presentation on how the confluence of political, economic and social forces would soon drive energy policy reform.

In every one of those meetings, McBee said, the response was the same: "You seem like a reasonably smart guy. We think that what's happening in Washington is moving in the right direction, but we're technology folks. We invest in standalone technologies."

McBee would explain that Silicon Valley VCs were the away team in a Washington ball game.

"This is the energy market. It's the most heavily regulated market in the world. There is no standing alone," he said.

In the summer of 2008, accessing capital in the debt and equity markets was still a relatively easy exercise. Then the bottom dropped out in the fourth quarter. Policy change accelerated in tandem with an intense downward pressure on private financing, and that's when the bet paid off.

"All of sudden, Washington became a very attractive source of non-dilutive, non-equity capital for companies whose investors were seeking to advance their business objectives," McBee said. In April, he and law firm Cooley Godward Kronish LLP announced a strategic alliance that would broaden their respective offers to cleantech clients looking to access public funds.

"The change in the environment over the last four or five months has been extraordinary," McBee said. "There isn't a venture capitalist or an entrepreneur that I know of who isn't deeply interested in what's happening in Washington."