Starting Own Business After Investment Banking
Hi all - First time poster here.
I was wondering how many of you have started their own business after 1-3 years in IB? I am currently in my second year and feel like I started to burn out a bit and thinking of new options. Not really keen to do PE as it is IB 2.0 for a bit more cash in my opinion, and do not want to downgrade to an “average” job (e.g. corp finance) because I have sacrificed quite a bit during my university years and in the last 1-2 years to do this job, i would feel it was for nothing.
So did any of you start a business which started generated similar comp as what you got in IB quite soon? How did you approach this problem - my plan is to start working on ideas during free time (ofc it will take longer) and trying to come up with something interesting and start it besides IB and as it become more legit and the potential routes are more visible (e.g. if it is a complete failure) then leave IB (in a year time maybe). Any success stories or horror stories?
Ah, the entrepreneurial spirit is alive and well, even in the grind of IB! It's not uncommon for investment bankers to catch the startup bug. Here's what I've gathered from the most helpful WSO content:
Burnout in IB: It's a real thing. Many in the industry start feeling the heat after a couple of years. It's the nature of the beast with its long hours and high-pressure environment.
Transitioning to Entrepreneurship: Some bankers do indeed make the leap. The skills you've honed in IB, like financial modeling, due diligence, and understanding how businesses are valued, can be incredibly beneficial when starting your own venture.
Compensation Expectations: Matching your IB compensation right out of the gate with a new business is, well, ambitious. Startups often take time to become profitable, and many entrepreneurs go through a period of reduced or even no salary as they get their business off the ground.
Approach: Your plan to work on business ideas in your free time is a common strategy. It's a way to mitigate risk while exploring the viability of your concepts. Just be mindful of your current employer's policies on side gigs to avoid any conflicts.
Success and Horror Stories: For every tale of a banker turning a side hustle into a booming business, there's a cautionary tale of someone who jumped ship too early. It's a mixed bag, and success often hinges on the market, the idea, the execution, and a bit of luck.
Remember, while investment banking can be a fantastic launchpad for entrepreneurship, it's a path fraught with risks and challenges. If you're serious about this, consider leveraging any free resources, like the WSO Networking Guide, to connect with others who've made similar moves. They can provide invaluable insights and maybe even help you avoid some common pitfalls. Keep swinging for the fences, but maybe also keep a safety net handy!
Sources: To everyone who left BB S&T: Where are you now?, IB Startup Ideas | MEGA THREAD, Anyone start in RE and end up leaving for another industry?, In hindsight, what type of role would you have STARTED OUT in?, Did you all really go to Ivy League schools just to end up working the same hours as a sweatshop worker in Bangladesh?
Take the risk. It's worth it.
Make sure the business you have in mind can produce +10-15% net margins comfortably (preferably early on ie. year 2). I got burned a couple times on low margin ideas. Feel free to look around at buying a business if you hate startup risk, some real bargains are starting to pop up. I mean shit you already have the mindset for it and should know what to look for in a good business.
Scale your business as slow as time / workload permits. Don't let a soul in the office know. Fuck compliance and don't be afraid to tell them to pound sand.
Wife and I have an acreage just outside the city; she is a massive animal lover and operates a dog kennel (moving towards a resort this year, 8yrs in business). We have good reoccurring business with two local police department's K9 team. Occasionally when I get bored Enron'ing the dog kennel finances I go fuck off and do some things in between like flipping commercial trailers.. none of which are sexy business models, but got pretty damn close to eclipsing my comp last year.
You have no idea what kind of business you can create if you dedicated even a fraction of IB hours on it. Just get started and learn along the way.
Godspeed sir
So much money to be made honestly in 'un-sexy' businesses. Aware of a family that works in construction / real estate and to come to think of it, they have ownership of nearly every part of the value chain (building commercial properties, owning real estate - 50 or so apartments with recurring rent from tenants, owning a supply chain company which probably lowers their construction business costs while being able to profit by selling supplies to competitors).
Amassed a sizable fortune, low barrier of entry - kids are college educated but technically didn't even need that to take over their parents' business.
As a result of seeing a few families like this in recent years, my siblings and I occasionally vet business opportunities that are 'unsexy' but scalable. Might have a sizable liquidation from an investment we made years ago, if that goes through - we might seriously look into acquiring / building a company in the next few years.
What kind of returns and sales cycles do you get on flipping commercial trailers? We have more than enough land to keep one on ice for a while, so I am interested….
Molestias exercitationem sit qui officia non harum molestiae accusamus. Soluta nihil praesentium quis ut debitis autem quos. Molestiae occaecati aut quisquam veritatis corrupti inventore et. Sunt impedit non dolor ex ut est. Qui atque sit aut corporis. Quia soluta quo nulla at voluptatibus eos sunt. Quasi magnam at ab quia omnis qui nobis.
Vero dolores est sint saepe tempora. Repudiandae nemo hic doloremque ex qui quaerat sint officia. Velit iure maiores excepturi et ut aliquid.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...