Tech-Specific IB Interview Prep

As to what drew me to this coverage - tech is just incomparably more attractive to me than any other coverage. Way more sexy, you’re playing for growth. Find it cooler to grow a company’s revenue over time than to lever up a company to maximise your PE IRR through financing structures (although you can do both). 
 

Tech and software is also obviously way more scalable than any other business on earth due to upfront fixed cost and low marginal costs (SaaS = >90% gross margins) hence you have cooler stories as companies can scale very rapidly in massive TAMs  

Also it’s backed by structural macro tailwinds (cybersecurity, e-commerce, digitisation, automation, remote working, people being glued to their phone…) which creates a lot of opportunities and also a lot of deal activity which is good for you as a banker. In addition, tech is now applied to every single economic sector in every single country on earth so you have a lot of diversity. Also a lot of headroom for growth, as surprisingly there is a lot of white space everywhere (look at how many companies don’t even have a CRM…). And besides all these success stories, we’re barely just scratching the surface: banks still have a legacy digital infrastructure from the 1980s, precision medicine is barely developed, we have no general AI yet, AR/VR haven’t been applied anywhere meaningfully, lots of people unfortunately still lose most of their life on brainless tasks than could be done better and cheaper by automated systems, etc. 
 

Obviously now you have all the hype around AI and GenAI which creates a an accelerated cycle as funding goes into these companies, who then accelerate their product roadmaps, etc. Being more volatile than other industries,  down cycles you also have companies becoming cheap which drives a lot of takeover activity (look at Thoma Bravo), although I guess this could be said of any industry.

Typed up a bit fast so there’s probably loads of typos but anyways, hopefully helpful - but you can’t just copy paste the above in interviews, you guys have to do your own research and sound genuine, for example some people may just be attracted by the technical nerdy infrastructure stuff, others be more attracted by e-commerce/social media and consumer trends,  and that’s totally fine too. In any case it’s a dynamic industry so if you’re curious and ambitious you should like it. 
 

One thing I would say though, unless you have a lot of MDs who specialise in a specific part of tech, the sector is so broad that you often spend a lot of time actually trying to understand the product and market in question and the technicalities / trajectory around that so in that sense there is probably more “consulting work” to understand and market a company than say if you were to cover utilities. With regards to modelling, it’s a bit less technical than the infrastructure stuff and primarily centered around the sales motion and customer retention and upswell/cross sell and churn.