by Brian DeChesare Comments (20)

How to Break into Investment Banking as a Former Entrepreneur

Entrepreneur to Investment BankerWait, WHAT?!!!

Yes, I know what you’re thinking: you could see how liberal arts majors, accountants, consultants, engineers, and male escorts might want to get into finance…

…but why would you ever want to go from running your own company to creating pitch books in a dungeon for 80 hours per week?

At first glance, it does seem implausible.

But I’ve seen a lot of questions about this transition in the past few years.

It might have something to do with the record number of idiots running around telling everyone to “be their own boss,” after which most people realize they do not want to be their own boss – but that’s just my cynical hunch.

As with any other transition into finance, your “story” is the most important part since you’ll use it when writing your resume, networking, and interviewing, so we’ll focus on that.

But before diving into the specifics, let’s go back to that original question: why would you want to make this move?

So Why Would You Ever Want to Do This, Again?

Because you started or co-founded a company and you realized it’s not for you.

You might have been lured by promises of how great it would be, or maybe you watched The Social Network or Silicon Valley one too many times and got sucked in by the fantasy without understanding the reality.

Or maybe you had a great idea and executed it well, but you couldn’t gain traction or turn it into a sustainable business.

Or maybe you did gain traction, but you didn’t like the culture of a startup or the money and skills you gained weren’t worth the time and effort you invested.

In any case, though, it’s unlikely that you did exceptionally well (read: earned $5-10 million or more) in your venture, and you now want to get into IB – with that amount of money you would have to be crazy even to think about it.

Bankers know this as well: they’ll assume that you either “failed” or did “OK but not that well” if you started your own business and now you want to move into finance.

What You Have Going for You: Is That Midnight Oil Burning Yet?

In general, banking and even buy-side finance roles have little in common with entrepreneurship because they require completely different mindsets.

So you’ll have to overcome quite a few obstacles to make this transition – but let’s start on a positive note and point out what works in your favor with entrepreneurial experience:

  • No one will doubt your ability to work long hours since you are on call 24/7 and constantly work as a business owner.
  • Your communication skills are presumably above average since you had to use them to secure funding, win customers, and recruit team members.
  • You’ll stand out because few people recruiting for IB will have had your exact experience.

Your #1 Challenge: Proving You’re Not a Failure

On the other hand, you have at least one giant challenge to overcome: proving you’re not a failure.

Bankers often look at former entrepreneurs and assume that “they failed” and need to get traditional jobs – so they can save up money and eventually return to new ventures.

To overcome this objection, you need to make three points in your story:

  1. You started a company, but decided the work itself was not for you, and now you have moved on completely. The company did decently, and you left not because it “failed” but because of the work itself.
  2. While running this business, you were exposed to finance in some way (fundraising, budgeting, forecasting, etc.) and liked that aspect more than operations, marketing, or product development.
  3. And now you’ve demonstrated a clear commitment to get into the industry via off-cycle internships, pre-MBA opportunities, an MBA/MSF program, or some combination of those.

It is extremely difficult to make this transition without some additional experience or degree.

You might be able to pull it off if you had a corporate job for 1-2 years, started your own company, and then quit within 1-2 years, but I haven’t seen a firsthand example of someone doing that.

How to Spin Your Story Like a Pro

Normally you want to sound as accomplished as possible when telling your story, but it’s a bit different here: if you sound too successful, you’ll give the impression that you want to go back to a startup.

So you should focus on three points when you explain your transition:

  • Point #1: Downplay Your Role and Contributions and Explain Why It Wasn’t for You
  • Point #2: Use Your Startup Experience to Explain Your Shift into Finance
  • Point #3: Explain Your Demonstrated Commitment to Finance

Point #1: Downplay Your Role and Contributions and Explain Why It Wasn’t for You

If you make it sound like you were part of a team, or at least that you were not the sole founder, your story will be more believable.

You’ll appear to have less of a “do or die” attitude toward entrepreneurship, meaning that you’re less likely to return to it in the future.

So it’s better to use language like “I had the opportunity to co-found a company with two classmates” or “I was part of the early team at Company X” rather than “I really wanted to start a company based on this idea I had…”

You could then say that you liked the company’s market and product and joined because of those reasons, but found that you weren’t a good fit because:

  • It was difficult to gain specific skills because there was no structured learning environment – you had to do a lot of random things to find new customers and keep the business running.
  • You had to cold call a ton of prospects to win sales – while you don’t mind some cold calling, you didn’t want to do it full-time.
  • You didn’t have an edge because you weren’t a top engineer or highly connected investor/deal-maker, and startups heavily favor those types of people.
  • You were not making an impact because the product was too early and you hadn’t found product-market fit yet; your skill set would have been more useful at a more mature firm.

You should pick points that are the opposite of what you get in banking.

For example, IB offers a highly structured learning environment and requires no cold calling from junior bankers (though you will have to do that in many entry-level PE ones).

Also, you don’t need an “edge” to succeed and make an impact as an analyst or associate – you just need drive, work ethic, and the ability to pick things up quickly. And you start seeing the results of your work within the first few months of the job (well, sometimes).

Point #2: Use Your Startup Experience to Explain Your Shift into Finance

Once you’ve explained why the startup world wasn’t for you, explain how the experience made you more interested in finance.

For example:

  • You were involved in the fundraising process and liked pitching investors and answering their objections more than managing business operations.
  • You were tasked with finance-related work, such as budgeting or creating forecasts, and found yourself more interested in that than in managing employees.
  • You liked financial analysis, such as reviewing your company’s financials and making recommendations on future spending, more than interviewing users or researching new markets.

So you became interested in investment banking since it combines finance with the aspects you liked about the startup world, such as the fast pace, team environment, and client interactions.

Point #3: Explain Your Demonstrated Commitment to Finance

At this point, your story may sound logical but not credible: bankers will be skeptical of your intentions if you haven’t had relevant experience.

I have rarely seen someone make this transition without one or more of the following:

  • A previous corporate job that was related to finance.
  • An MBA or MSF degree.
  • An internship, pre-MBA or otherwise, at a boutique bank or private equity firm.

You could point to self-study, but the examples above carry more weight because they require far more commitment from you.

The Result: Mark Zuckerberg Turned Gordon Gekko?

So if you put together all these pieces, you’ll end up with an outline like this for your story:

  • The Beginning: Your undergraduate degree, what you did immediately after, and how you got involved with a startup.
  • Finance “Spark”: While working on your startup, you realized it wasn’t quite for you because [Insert Reasons from Above] and that you were actually more interested in finance as you [Insert Reasons from Above].
  • Growing Interest: So you became more interested in investment banking since you saw it as a way to combine finance with the skills you gained at the startup and in undergrad, and you completed an internship at [Finance Firm Name] to develop the required skills. You also decided to attend [MBA/MSF Program] based on feedback from recruiters and bankers that you would be seen as a “career changer” candidate.
  • Your Future + Why You’re Here Today: So you’re here today because you want to make a long-term career in investment banking, and this firm is the best place to do that; you’re confident you can combine your background with the finance skills you’ve gained and advise companies in [Industry Name].

A good, executed example of this story might be:

  • The Beginning: You’re originally from Chicago, but lived in Europe and the Middle East while growing up, and you attended high school in the UK and university in California at UC Berkeley. You were always interested in both finance and technology and took classes in both, and you had the opportunity to start an online marketing firm with two classmates after undergrad.
  • Finance “Spark”: You were exposed to operations, management, and finance because you helped fundraise and create financial projections for the company, and you really enjoyed those tasks. While the startup was a great experience, you wanted more of a structured environment for learning the ropes, and you wanted to develop your financial skill set, so you decided to leave the company and pursue other opportunities.
  • Growing Interest: You then interned at a local PE firm that was looking for people with experience in the online advertising industry; you liked working on deals, but you wanted to work on a greater variety of deals and advise companies’ management teams, which drew you to investment banking. You also decided to attend [Top MBA Program] to gain more of the skill set.
  • Your Future + Why You’re Here Today: So you’re here today because you want to combine your startup, finance, and PE experience with the skills you gained at [MBA School Name] and work on more complex and varied transactions, ideally with Internet and technology companies.

Note the following points:

  • He establishes his interest in finance early on so that his transition, later on, is not too much of a logical leap.
  • He makes the process of starting a company seem like less of a 1-on-1 personal effort by saying “had the opportunity to” and pointing out the other two co-founders.
  • He makes it clear that he left the company and is now pursuing only finance opportunities.
  • The last part of the story references a specific industry, which is essential at the MBA level.

Networking: Dialing for Dollars Interviews

Once you have your pitch, you can start networking.

I don’t have much new to say, but a few additional points include:

  • If your startup was venture-funded, go back to those VCs and get introductions to bankers from them. Even if your company failed or didn’t do so well, they should be willing to help as long as you had a decent relationship with them.
  • Go back to candidates you recruited and even people you interviewed who might have connections to bankers, ask for referrals, and see what comes of it.
  • Tap all your networks – undergrad, MSF, MBA, and anything else you have – and ask for referrals from professionals at the smaller firm(s) where you interned.

If you’re attending an MBA or MSF program, you need to start far in advance (~4-6 months) of the program’s start date to have a good shot at winning interviews via networking.

You obviously want to target smaller firms for your initial (pre-MBA) internship, but beyond that it makes sense to target firms only if you’re doing it based on industry focus (e.g., a biotech startup founder going to healthcare teams).

Your Resume / CV: Successful and Committed

Just like your pitch needs to show that you weren’t a “failure” and that you do have a demonstrated commitment to finance, your resume must do the same.

I recommend our MBA template because you’ll almost certainly need some additional degree to make this move.

Focus on anything finance-related from your startup experience, minimize the rest, and put an even greater emphasis on the internship(s) you completed afterward.

I see many bullets similar to the following on these resumes:

  • Worked with team to conduct user surveys and determine most-requested features; prioritize implementation order and ensured timely completion
  • Assisted CEO with fundraising deck and positioned company as leader in on-demand storage market for large enterprises

While these bullets aren’t terrible, the language sounds too product/marketing-focused and therefore less relevant to finance.

It’s better to emphasize the quantitative side and show how your work led to specific financial results:

  • Projected costs and potential revenue from 5 most-requested features, and recommended one with potential one-year ROI of 2x and two-year ROI of 3x
  • Researched top 10 venture capital funds and created customized fundraising presentations based on each fund’s portfolio companies and investment criteria; resulted in $2 million Series A round at $10 million valuation

Interviews: Objections, Please

As with all interviews, your success mostly comes down to your story.

But you can expect to be questioned on these additional points:

  1. How do we know you’re committed to banking for the long-term? Why not just start another company?
  2. Answer: The fact that you’ve done it once makes you less likely to do it again because you know what it’s like and are 100% convinced it’s not for you. It would have been much easier to go back to another startup or take a normal job at a tech company; you’ve made a huge commitment by going down this path instead.

  3. So did your company fail? Why are you really here?
  4. Answer: The company was not a blowout success, but it did decently, and it was still growing when you left. You left not because it failed or because you lost money, but because you realized the day-to-day work wasn’t for you and that finance was a better fit – for all the reasons you mentioned in your story.

  5. How do we know that you’re not still involved with your company on the side?
  6. Answer: You’ve quit and no longer have any involvement. Plus, it would have been impossible for you to complete a finance internship and the MBA/MSF program and now recruit for banking if you were still spending time on it.

  7. Why didn’t you start out in investment banking if you’re so interested in it now?

Answer: You considered it, but you received advice that it would be better to start a company earlier rather than later, and at that point you were not 100% set on which path you would follow. The startup experience confirmed that banking would be a better fit for you, but you couldn’t assess that upfront without firsthand experience in the field.

You will get technical questions, and case studies and modeling tests are increasingly likely, especially at smaller firms.

I don’t have much to say beyond “Take our courses” or “At the bare minimum, look at our free YouTube videos.”

Do These Strategies Work?

Yes – here are a few examples of anonymized, successful transitions from readers and coaching clients:

  • Transition #1: He did a hardware-related startup right out of undergraduate with several friends, but realized it wasn’t for him within ~2 years, then won a part-time role at a boutique bank, and then won admission to a top MBA program and completed a pre-MBA internship at a PE firm before recruiting for and winning a banking role.
  • Transition #2: She ran a real estate management company during university and for a few years after, but realized she wanted to apply those skills on a bigger scale and work on deals instead. So then she won a role as an investment analyst at a real estate development company and used that to recruit for and win a RE PE role.
  • Transition #3: This person started out in product marketing and strategy consulting, left to acquire and turn around a failing business, and then won an operations/compliance role at a large bank. No, it’s not investment banking, but winning even a middle-office role without an MBA or other internship is impressive.

And Plan B Options…

So let’s say you go through all that effort but come up empty-handed because you couldn’t get the initial pre-MBA internship, you had bad luck, you didn’t have a good story, or you flubbed the technical questions.

What’s next?

Your top three options are probably:

Are You a Failure?

If you’ve been able to start a business from scratch and make some amount of money with it, getting into investment banking should be easy, by comparison.

Most of it is about positioning yourself the right way, biting the bullet and completing another degree and gaining more work experience, and sheer persistence.

If you’re not willing to take those steps, then maybe it’s not for you.

But if you are, you can use the tips above to defy the odds and move from startup founder to financier.

For Further Reading

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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Comments

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  1. Hey Brian,
    My question is a bit different. The move is IB to entrepreneur/corporate and back to IB.
    I will soon become an analyst in a reputable MM IB (think Baird). I plan to stay there for 2-3 years before moving to the family’s business which is in a under-developped country (if it is relevant for your answer, the business is MM and valued 10-25mil USD). But what if one day after having worked in the family business and maybe created my own thing there i decide to come back to IB or PE in like Europe, N.A, Middle east or even Singapore. How will this be seen? Will I have to chance to land a position back? And how will they consider my years of experience in corporate/entrepreneur?
    Thanks a lot!

    1. It is generally quite difficult to do that. You might be able to win a PE/VC role as an “operating partner” depending on your experience (you probably need more like 10-15 years to do that), but if you move from IB to a family business, they will immediately question why you left finance and if you’re serious about going back.

  2. Good day Brian and Nicole,

    My name is Jim Yan, a business owner which primarily focusing on wine exporting, and a current Schulich MBA student in Canada. I’ve been reading your articles on this website for more than half year and thought your website is extremely helpful on coaching people how to break into finance industry. Your team’s knowledge and understanding regarding to the topic is very valuable and precious to me.

    As a business owner, I’m looking for a career change to I-banking industry. The reason I want to make this career change now is that there’s not much things I can do in the company that I created. Since the business is exporting, most of the sales are now conducted in China by my sale team which my partner is currently running. Most of my work I did for the company was at the beginning stage that I contacted with my suppliers in Canada and retail channel in China. So now, I’m kind like been pulled out from the company management which I’m not interested at all. That’s the reason that makes me think I should try to pursue the other career I’m interested. Ok, that’s some background story of me.

    By reading this article, it clears my head on how to use my entrepreneurship experience to break into the industry. I wonder does you do any remunerative personal coaching on how to break in to I-bank? I need you suggestion on what to do in next steps.

    Best regards,

    Jim Yan

    1. First off, you need a much better rationale for wanting to do investment banking. “I’m bored with my current company” is not a good reason to go into this industry.

      We do offer coaching, but we recommend that you learn more about the industry and figure out a better reason for why you want to get in first.

  3. Hi Brian,

    Thank you very much for this article. It is exactly what I was looking for because I’m trying to break in S&T (EMEA) from an entrepreneurship background. I’m back at school and applying for off-cycle internships. Do you think I should down play this paragraph of my CL? They’re still running it, but without me. The revenues weren’t bad, but not good enough to make a living from it (in my mind) and I definitely need an institutional environment.

    “My previous experience includes cofounding (Name of the company), in (City), (Country). I managed our projects and led the company as it grew to employ X people. Through this experience, I have gained an analytical and methodical approach and honed my leadership skills. Being a strong communicator, in both (European language) and English, helped me to develop a growing network of clients. Our revenues increased year by year and I had the opportunity to deliver high-pressure projects.”

    Thank you very much for your opinion.

    1. I think that paragraph is fine, but you should probably spin it to make your experience sound more finance-oriented (for example, talk about the work you did to raise funds or manage the budget at the company). They’ll care more about that, at least for trading roles within S&T.

  4. Hi Brian,

    Thank you for writing this up. I was wondering if you had any advice for a current undergraduate gunning for a Summer Internship who has also worked as an entrepreneur full-time (during studies).

    Would he/she be in the same situation as that described above?

    Cheers,
    Rory

    1. M&I - Nicole

      Yes, I’d say so, though it maybe easier for you to move into banking since you’re still an undergraduate (vs. other entrepreneurs who have spent years in entrepreneurship.) Bankers may wonder why they want to do banking after years of working as an entrepreneur, unless the entrepreneur is in a relevant field/the bank is starting a new division/the bank is starting up

  5. Hi, I am sorry for not commenting on the correct post, but I’m not quite sure where to post.

    I will be a junior next fall at a target Ivy League school. I have a 3.9, in biological physics and mathematics (hoping to keep it that way with finals). I have a lot of scientific research experience + other stuff related to it, as I am currently premed, but I am becoming increasingly disillusioned with it (hah).

    I’m trying to explore my options in finance and consulting, since a good 20% of my school ends up in these fields, and was wondering what would be the best way to try and break in. This summer, I’ve already received a fellowship for my research, and I feel like it’s too late to try for internships. I’m not sure how to proceed further, beyond going to info sessions/trying to network and was wondering if you had any thoughts or advice.

    I am considering changing my major to applied math, and I probably still have time to transition to econ-math or something else, but I just feel really lost.

    Thank you so much!

    1. At this stage your best options are:

      1) Go for school-year internships at small banks / investment firms in the fall of your junior year.

      2) If that works, great, keep at it and try to line up something at a bigger firm for the summer, and then turn it into a full-time offer.

      3) If it doesn’t work so well, or you don’t get the summer internship you want, think about a Master’s in Finance degree right after undergrad and use that to break in (again, internships before/during the program are essential).

      1. Hi Brian,
        I am in almost the exact same position as A X– except that I am an engineering premed at a target Ivy League school that has only a lot of research experience. I have also become disillusioned, will be a junior in the fall, and am interested in finance. I have begun learning about financials, modeling, and started crafting my “story.” Could you please elaborate on how to get school-year internships at small banks/ investment firms during the school year? What does one do, and how much practical experience would I actually get? How should I go about looking for these internships because most small banks/ investment firms only advertise summer internships, if they do at all? Should I network/ cold call? I know that ideally I would have something by the time on campus recruiting starts in the late fall/ spring, and I definitely planning on doing my own networking and searching to find summer internships outside of on campus recruiting. However, would failing to find a school-year internship at these smaller firms hurt my chances for a summer internship at the same firm?
        Thank you!

        1. There is a really good tutorial on this topic here:

          https://www.mergersandinquisitions.com/private-equity-internship-to-investment-banking-networking/

          You have to find small firms yourself and contact them even if they don’t advertise any internships. Cold emailing works well if you have a top school on your resume.

          Yes, not finding a school-year internship (or having previous experience in general) will hurt your chances for summer internships, including potential summer internships at the same firm.

  6. Much needed article, given that entrepreneur is a buzzword now that few people actually understand.

    Curious, how does this square with your theory that “everyone that goes into banking secretly wants to be an entrepreneur?”

    Grass is greener? Lost souls following the hype?

    1. Yeah, I think it’s a bit of both. People want things that sound desirable without fully understanding them. And then people also tend to follow trends and “hot” areas a lot, and both finance and entrepreneurship have fit that bill at various points. In any case, a lot of them will soon be switching back or attempting to, which is why I wrote this.

  7. Hey Brian,

    Awesome article. Quick question – I am thinking to apply for a few postings at GS Salt Lake City office, have you heard/known anybody who worked at the Salt lake City office before?

    Also, is it true that you are getting a HUGE paycut for cities like Salt Lake?

    Thanks!

    1. Thanks! I don’t know much about the Salt Lake City office, but I think it’s an extreme satellite/regional one, and yes, I would assume you take a pretty big paycut by working there. I seem to recall some negative sentiment about that office before – people claiming it was all for cold-calling or something of that nature (???) – but can’t recall the details right now. So I would be careful…

  8. Excellent article!
    Wrote a question about this unusual situation here (https://www.mergersandinquisitions.com/stuff-investment-bankers-dont-like-2016-edition/). By the way, your advice about regular finance-related job was perfect. I have adjusted my strategy and also started BIWS, which is great. With my current knowledge it will help to open many doors.

    Thank you, Brian!

    1. Thanks, glad to hear it!

  9. “Bankers often look at former entrepreneurs and assume that “they failed” and need to get traditional jobs – so they can save up money and eventually return to new ventures.”
    It’s actually ok to try something epic and fail. You’ll learn a lot from trying to start a business/company. You just need to stress the value of what you learned to the IB monkey that you are interviewing with. It takes far more talent to build a successful startup then it does to become an IB drone. Anybody with half a brain can learn to analyze financials and create pitch books. It’s the competitive nature that makes it so hard to land an IB gig. But if I’m a hiring manager at an IB interviewing someone who came from a startup then I know you were chasing the dream of becoming dotcom mega-rich. It didn’t work out for you so now you want to become IB rich. So I know you’re just chasing money and not really passionate about the work. But then again, that’s why everyone wants to get into IB….to make f*** you money. That’s why you see bankers with degrees in History from Harvard. Why didn’t they study finance if they were so passionate about it?

    1. I agree completely, but that’s just not how large banks see it. To them, it’s all about risk management: they want people who are committed to at least a few years in the industry, and if there’s a chance you might leave before then, they’ll be less likely to hire you. So in an ideal case scenario, yes, that would be a good response, but like a lot of other aspects of interviewing, you have to BS your way through this one a bit.

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