From $100K to $0 in 60 Seconds: How to Go from Investment Banking to Tech Startup
Like a boss.
Or better yet: be your own boss.
Ask any finance professional what he/she really wants to do, and “being your own boss” or “starting a business” will be at the top of the list – even if he/she won’t admit it.
But few people, at least until recent times, ever leave to “follow the dream.”
Besides the capital required and the high chance of failure, there’s another problem: it’s really, really hard.
And it requires certain personality and mindset traits that are in short demand.
But there is an 80/20 solution: join an existing startup.
The path to a startup shop is very much an unpaved one: getting in won’t involve financial modeling tests or working with headhunters.
More often than not, getting into a startup is about making the right presentation to the right people in the unlikeliest of places.
If you’re looking to move from investment banking to tech startup land, you can follow this 6-step process to make the switch:
- Highlight your transferable skills.
- Find the right startups to join (hint: they’re not in your friend’s garage anymore).
- Network the right way and get in touch with the right people.
- Make your pitch and explain why you’re the perfect fit.
- Prepare in advance and interview successfully.
- Follow-up once you’ve gone through interviews.
Step 1: Got Transferable Skills? Make Sure They Know It…
The majority of investment bankers end up in tech startup roles with titles such as:
- Business Development: This is where you develop partnerships, set up joint ventures, and find ways to make 1 + 1 equal 3 for both parties. Some general “sales” tasks also fall under this category.
- Financial Planning and Analysis: This is where budgets are prepared and expenses are projected.
- Operations: This is where you determine what resources will be deployed to carry out a company’s strategy (read: how it will generate revenue).
The first step is to figure out which of these roles suits you best.
Do you want to continue doing Excel and PowerPoint work, but contribute to something more meaningful?
Would you rather spend your days hustling up partnerships, speaking with customers, and figuring out how to make the product/service better?
Or would you rather think about the company’s overall strategy and find new ways for it to make money?
Once you’ve decided which role(s) you’re going for, you can look at your IB experience and resume and figure out the transferable skills to highlight.
A few examples:
- Business Development: Talk about your experience reviewing definitive agreements, your client management skills, and how you came up with lists of potential buyers or acquisition targets.
- FP&A: Play up your Excel, accounting, and modeling skills, and talk about how your supreme attention to detail saved the day more than once.
- Operations: Talk about the qualitative work and analysis you did, such as writing information/offering memoranda; also highlight work you did with other teams at the bank and how you turned unstructured information into granular models.
Step 2: Find the Right Startups: Get Connected to Get Ahead
Once you know the roles you’re looking for and the transferable skills you have, you need to start networking at events.
There are several interesting groups for just this purpose in the NY Metro area:
- Wall Street to Silicon Alley: Curates workshops and socials with venture funds in order to bring together former finance professionals under one roof for best practices on getting into a startup.
- Strategy Hack: Pairs marketing experts with entrepreneurs to develop growth strategy over one-on-one sessions in the course of a day.
- General Assembly: Hosts courses and workshops on a variety of topics, including data science, digital marketing, and business foundations.
- Alley NYC: Offers office hours for entrepreneurs from experts in the fields of law, marketing, and accounting.
- Wix Lounge: With a freemium model (it generates revenue via add-on features such as coaching), this venue offers free co-working to anyone with a laptop during office hours. The first question you’ll always get is: “What’s your startup working on these days?”
If you’re in New York, Charlie O’Donnell maintains a list of events for professionals in the startup space, with a focus on the technical side.
If you’re in another major city, The Fetch curates a list of events for professionals in the business administration, technical, and creative areas.
You can also think about events sponsored by incubators such as Y Combinator and TechStars – or even contacting alumni that have been through those programs.
There are even government-backed organizations that focus on entrepreneurs in a specific geography – one example is TechBA.
But Wait, Which Type of Startup to Pick?
Presumably, you’ll pick a startup working on a problem or working in an industry you have some interest in.
Just like it’s a mistake to join an investment banking coverage group that you have 0 interest in, it’s also a mistake to join a “hot” startup that bores you to tears.
I can’t tell you exactly which sub-industry to pick, but I can tell you that it’s crucial to review the amount of funding the startup has received and its employee count.
For example, if the company has 10 employees and has raised only a Series A round of $1 million, it’s exceptionally unlikely that they’ll need anyone in FP&A or Operations roles.
“Business development” roles, if they’re more sales-related or the company is heavily dependent on partnerships, are more likely.
So if you’re going for FP&A / Operations-type roles, you’re better off targeting later-stage companies with multiple rounds of funding and at least 50-60 employees.
Even then, you’ll end up wearing multiple hats outside the scope of your official job description.
Use CrunchBase to find information on employee counts and funding rounds, and focus on companies that have just raised capital – they’re most likely to be in “hiring mode.”
Step 3: Contact the Right People
At banks, contacting HR can be a fool’s errand because they may or may not have any real hiring power.
At startups, HR is still worth contacting (if there is an HR team…), but your best option is to contact people in the group you’re interested in joining.
When you’re networking your way into a bank, you can get away with cold-calling and cold-emailing Managing Directors; at a startup, though, it’s not a great idea to reach out directly to the founders or the C-level executives unless 1) It is a very small company or 2) You are interviewing for senior-level roles.
So if you’re going for Business Operations positions, find the team leader on LinkedIn (someone with a “Manager” or “Team Lead” or “VP”-level title, but not “Chief” anything) and send him/her a message there.
Once you’ve met a solid group of contacts at these events and you’ve reached out to others via LinkedIn, follow-up with everyone, establish rapport in informational interviews, and ask for an introduction to the team of your choice.
Especially if the startup is in “hiring mode,” they may be more responsive than banks… but you still need to be politely persistent to have a good shot.
Step 4: Pitch Yourself Like a Pro
Telling your story is even more important when interviewing at startups, because they have little else to go on.
There are no “technical questions” unless you’re an engineer, and while they may ask for work product samples, 90% of the hiring decision comes down to how much they like you and how well you fit in with the team.
A lot of bankers assume that joining a startup will be “easier,” and then deliver a weak pitch:
“I did an internship in corporate finance at GE, and I’ve been working in the industrials investment banking team at JPM for the past 2 years. Now I’m looking to move into startups and use my skills to help your team expand its partnerships.”
Even for a short “elevator pitch,” this is sub-par because it lacks specificity and doesn’t indicate a clear direction.
By adding more information, you can make this same story substantially better:
“I have a background in the manufacturing space, having worked in corporate finance at GE and then in investment banking at JPM covering industrial companies. I’m interested in leveraging the business analysis / technical skills I have, and my experience with bigger companies in your market, and helping your team disrupt the typical supply chain management process by expanding your set of partners. Your product is great, and I’m confident that you can grow sales by leaps and bounds with more partnerships.”
This version is better because he focuses on what’s in it for the startup – product/revenue growth – and how his IB experience translates into something useful.
Adding more specifics about your role and your targeted geography is always helpful.
Step 5: Prepare for Interviews and Amaze Them
One difference when interviewing at a startup is that your role may not even exist yet.
Therefore, your #1 goal is to show how your past experience fits in with the company and the team.
Hiring managers or team leads might say something like: “I don’t have a need for your skill set.”
And that’s a perfect opportunity to ask for work – similar to unpaid, “trial” internships in IB. You’re really asking for a chance to collaborate and show them what you can do.
In fact, you can even preempt it by doing work in advance of the interview and sending it to them:
“I’ve prepared a brief sector update for you that covers what your competitors are up to and the challenges they are facing – from a marketplace point of view. I thought it would be useful as you continue to develop your company’s revenue streams. When would be a good time to follow up with you?”
By doing this, you’ve now demonstrated that you know the market, you’re capable of doing work without being asked to do it, and that you can add value to their team in specific ways.
In fact, this presentation could even become the key talking point in your interviews (similar to how a case study or model might work in IB/PE interviews).
If you’ve made it past this point and you’re now going through more traditional interviews, or you started with normal interviews in the first place, the questions you’ll receive depend on the role you’re interviewing for:
- Business Development: You’ll get asked about your sales skills, you may be asked to pitch something on the spot, you might get asked to analyze a potential partnership and make a recommendation on it, and so on.
- Operations: You’ll get questions on leadership, teamwork, “failures” / weaknesses, and how to solve internal operational challenges at the company like finding new ways to generate revenue, determining how many people can work in the office if frequent travel is required, and so on. A few online seminars through Coursera on this exact topic may be the difference between an offer and a follow-up interview..
- FP&A: Here, you’ll get more traditional finance/accounting/economics questions on topics like comparable companies, valuation, budgeting and revenue/expense forecasting, key financial metrics and ratios, and so on.
The biggest difference compared to IB/PE interviews is that company-specific knowledge is crucial.
Most banks are not that different from each other, so you can get away with more generic answers to questions like “Why our bank?”
By contrast, if you walk in for an interview with an online storage company and all your revenue generation ideas are related to mobile games, you’ll look clueless.
So it is much harder to “interview around” at dozens of places and look reasonably competent.
If you have a week to prepare for a business development interview at a tech startup, your timeline might look like this:
- Day 1: Review your resume, refine your story, and come up with 2 examples of team/leadership stories and 1 example of a “sales” story.
- Day 2: Review any models or materials on partnership / JV analysis, think about the assumptions that would go into the models, and the key output.
- Day 3: Look at your deal experience and note what’s relevant to this role for each deal/client you have (ex: customer or partner due diligence, analysis of the marketplace in a pitch or client presentation…).
- Day 4: Research the company, its competitors, and bigger companies in the space, and brainstorm partnership ideas.
- Day 5: Run the numbers on your partnership / expansion ideas so that you’ll have a more credible case to present.
- Day 6: Research the people you’ll be speaking with, look up previous places they’ve worked at, and familiarize yourself with management.
- Day 7: Review everything you’ve done and practice your pitch, the 2-3 stories you can use for the “fit” questions, and the partnership/JV ideas you’re going to propose.
Step 6: Follow-Up and Next Steps
The good news is that startups need to make decisions quickly and can’t afford to spend 6 months interviewing you as a buy-side firm might.
The bad news is that startups are growing very quickly and therefore tend to be disorganized, so follow-up is still critical when you haven’t heard back.
This part is not much different from what you do to follow-up after any interview: touch base every three weeks, stay on their radar, and send over anything that might help the company.
With enough persistence, you’ll get that elusive “yes” decision.
You might take a cut in your cash compensation by joining…
But if you pick the right startup and get a decent percentage of equity, your earnings could go to infinity and beyond.
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