Early in his investment banking career, Tom Steen learned a valuable lesson about changing markets.

Steen, who at the time was arranging tax-exempt financing deals for Dain Bosworth Inc., watched in 1979 as interest rates rocketed into the double digits. “Overnight, (that) destroyed the appetite by institutions for those kinds of tax-exempt bonds,” he said. “So the first lesson in capital markets that I got was, ‘Nothing is forever.’ The markets change; appetite for capital investments change.”

Having spent his career connecting companies with sources of capital, Steen has for the past year been developing his own company, Transition Capital Management. TCM is now working with groups such as the Greater Des Moines Young Professionals Connection to develop relationships with entrepreneurs who want to expand their businesses.

“There are big gaps out there,” Steen said. “Entrepreneurs don’t have any way of communicating with the capital markets, or even being able to drive their businesses to be able to obtain that dispassionate capital. The need is huge. Our business is to fit that need. We consult, we can advise, we can invest, or we can raise capital in the traditional investment banking fashion.”

Before launching Transition Capital Management, Steen was a principal with Cybus Capital Markets, an investment banking firm he co-founded in 1995 as a management-led buyout of MONY Capital Markets from Mutual of New York. With Cybus, Steen was responsible for recruiting companies suitable for venture financing through the state’s tecTERRA Food Capital Fund, a $43 million public-private limited partnership created to invest in biotechnology and agribusiness companies.

After tecTERRA became fully invested in August 2004, Steen ended his involvement in Cybus and formed Transition Capital Management.

“It is very similar to that moment in time when we left the umbrella of Mutual of New York and started developing the Cybus recognition,” he said. “You never really understand fully what happens when you’re out creating something that’s not like what you did before.”

Steen, who brought his youngest son, Adam, on board shortly after launching TCM, said his company is looking for young entrepreneurs as well as established companies that may be seeking expansion, buyout or succession opportunities as potential clients.

“We have spent the past 14 months getting the feel of this business,” he said. “We have made the strategic decision to spend most of our efforts in 2006 to developing a systematic approach to relationship building with private companies. In other words, get to know what’s available before you go out to the capital sources and try to lock up relationships. You’ve got to know what the marketplace flow of opportunities is first. The capital relationships come secondary.”

TCM has been working to cultivate a client base by conducting seminars throughout the state.

On Feb. 7, Transition Capital Management will conduct the first of a planned series of entrepreneurial workshops in conjunction with the Young Professionals Connection. Ivy Satre, the YPC’s vice president for professional development, said last week that her committee had already received 20 responses to an invitation e-mailed to members last week for the workshop.

“Actually we have quite a few professionals who either have their own business or want to start their own business,” she said. “I see this as a great way of reaching out to those professionals.”

Reaching out to the right people can help them accelerate their business success, Steen said.

“Rather than taking a lifetime to learn what works and what doesn’t, I think you can compress that with people who are high energy, high learners, highly engaged people who will listen,” he said. “So I will talk about the high-water marks that entrepreneurs can shoot for as they build a business plan. I’ll also be talking about the many kinds of mistakes that are made. That will give us a base of relationships with young people; we’re looking to do the same with established businesses.”

As it’s laying the foundation for future business relationships, TCM has also been busy on some early deals, the first of which is expected to close early this month, Steen said. That deal involves two partners who developed a site for Elkhorn Valley Ethanol, a $63 million ethanol plant to be constructed in Norfolk, Neb.

“Rather than raise the capital for the plant, it was my job to find a method so the two entrepreneurs could extract the value in their site development before all the diluted capital came in on top,” Steen said. “They aren’t farmers or producers; they just took the site through the permitting process to the point where they created value.”

TCM has also been working for the past year with a Missouri food manufacturing company that is preparing for a major expansion of its dry corn milling plant.

“We’re helping them realign their business model for higher profitability, negotiate with their existing financial institution and bring in new capital,” Steen said.

“The big projects we have seen to date are not in Iowa,” he said. “On the other hand, Adam has been very good at connecting me with young people who are entrepreneurs. I’m very optimistic about the quality of small business development in the state of Iowa. We’re not there yet, but I think we have the programs in place to get there. I see businesses in Central Iowa that have the ability in a short amount of time to be bigger businesses.”

More information about Transition Capital Management can be found by visiting www.transcm.com. For more information about the Young Professionals Connection programs, visit www.ypc.desmoinesmetro.com.