Q&A: Left IB to Start My Own Company

Thanks! Honestly most of our engagements up to this point have come through relationships (for example I mentioned the software and cannabis companies... we have C-suite connections at both of those). That said, there are a few other ways we are planning to source engagements going forward: 1) using our experience thus far to pitch additional companies in those industries, and 2) we all went to the same uni and have strong ties around the area, so we may use that network to find some gigs as well.

Additionally, there are a few websites for finding M&A or consulting work (TopTal, Catalant, Graphite, Upwork). One of our partners used them when he was freelancing on his own before we linked up. 

Hey Video Tape - if you want to dm me I'd love to get some more specific feedback that came out of the demo. We've done demos throughout the development of LBO Calculator, starting with when we only had a very simple DCF and our "full" modeling suite was more of a concept. We're finishing the buildout of our core modeling suite soon, and the output of that will be every bit as sophisticated as the models I built in IB (in my opinion).

That said, we've specifically held off on building what I think are some core functionalities of the product (output to PPT, for example) because those really need to be tailored to the client. The goal of our product is for an analyst / associate to be able to hit "calculate" then directly paste our charts, tables, graphs, etc. into their new business presentation, and that only happens if our outputs match your firm's formatting.

Anyways, I'd love to connect! Let me know if you want to discuss anything. 

damn this dude really doxxed OP so casually

1) Our first few customers did come through our networks (both within IB and personally). For example, a client I worked with contacted me after I left because his friend needed someone to help with a rollup strategy (lots of M&A work). We've also been connected through other friends that are still working in IB or PE, and I have a fairly large startup / VC network from being in San Francisco that we've found some work through. All that said, we are thinking about trying to grow our base and doing some broader marketing starting this year. I will have to let you know how that goes.

2) Yes definitely! What we've done is essentially pulled all the assumptions into an online dashboard. There are dropdowns and other checkboxes for the specific things you need, or don't need. An analyst will typically go through and fill in the main information, then the deal team can access it to review everything in one tab or make changes. The time saving really comes from a few places: 1) All the math happens on our end, so when you export your model to excel, you know that all the formulas are correct every time (as an associate or VP you don't need to dig through excel to check everything, just take a look at the assumptions to decide if they make sense), 2) we can also customize charts, graphs, tables, etc. by the client, so that when you export a model, you can also export everything you need in PPT for a pitch presentation. This makes your turns go a lot faster because you're not manually going in and updating everything throughout the pitch.

Sounds like you are figuring things out! Your relationships (both business and personal) are the most important things in life in my opinion. Hope you find something fulfilling. Feel free to reach out if you want to chat. 

Thus far we've been fairly generalist. Personally I've done a lot of buyside M&A work (deal negotiations, valuation, arranging financing, etc.), business development (worked on lining up partners ahead of a software product launch), strategic planning and market analysis (when and how to enter new markets, financial forecasting, etc.). We've also worked on salesforce integrations, capital raises, and a few other things. 

Not at all these are great questions.

1) Modano is a great product, and I think it makes a lot of sense to use as an operator, or someone in the finance department at a company. Our product is really focused more directly on expediting financial modeling for M&A transactions. We're not building a highly detailed operating model that would be used internally, but rather something that will have a high level 3-statement, LBO, and DCF that can be leveraged for building your marketing materials. As far as different business models, we've tried to be pretty thoughtful about making the product moldable to different industries, capital structures, etc. by building in drop downs and other ways to customize the model as you are inputting your assumptions. 

2) Ha, honestly we just haven't paid much attention to LinkedIn tbh. We also have our own individual LLCs for solo engagements in addition to marketing as a team.

3) For the software product our target market is banks, smaller advisory shops, maybe some smaller PE (they've mostly looked at it for back of the envelope or quick deal evaluation), and transaction focused consulting firms. 

4) Like I said earlier, you don't sound like an asshole at all these are great things to think through. I think in our case we are aiming to solve a different problem than Modano, which is that building the model every time you have a new deal or pitch is a pain in the ass, and costly mistakes are sometimes made (the analyst screws up the signs on the cash flow statement, or there are leftover relics in the model from an old deal, etc.). We're trying to fix those issues and lower costs by making it faster, easier, and error proof in a very specific niche (new deals for investment banks and consulting firms).