Wall Street Mastermind

YT09: Investment Bankers Are Quitting to Take These Jobs.

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Sam Shiah

June 18, 2024

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Did you know why most investment bankers quit their jobs after just 2-3 years? It’s not because of the long hours.

Rather – it’s because investment banking does such a good job of opening up future doors to even more amazing opportunities, that investment banks end up having a tough time retaining their own employees!

Today, I’m going to walk you through all the BEST exit opportunities coming out of investment banking.

Category #1: Buyside Investing Jobs

This is what most people think about first when they talk about “exit opportunities” for investment banking.

It includes jobs like private equity, growth equity, venture capital, and hedge funds.

Long story short, these are all just different types of investment funds, where they go out and raise large pools of money from institutional investors like school endowments, pension funds, and ultra high net worth individuals, and they then invest that money on behalf of these institutional investors and then charge both a management fee as well as a profit share.

The difference between these different funds just comes down to their investment strategies:

Private equity firms

Private equity firms acquire late stage, mature businesses using debt to finance a significant portion of the purchase price, and then pay down that debt with the cash flows generated by the business.

The private equity firm will usually do this over a period of 5-10 years, and make improvements to the business during that time.

It will then sell the business to someone else, hopefully for a profit.

It can also exit the business by taking it public again.

The analogy for this strategy is the real estate investor who buys a fixer-upper using a loan from the bank, and then pays down the loan using the rent collected from the tenants.

The investor also remodels the home to make it more valuable, and then eventually sells the home at some point for a profit.

Growth equity

Growth equity is a similar model, but instead of acquiring late stage, mature businesses that have steady cash flows, it’s investing in middle stage companies that are still in their “growth phase”, but are not quite a startup anymore.

These companies usually have already found what’s called “product-market fit” – which means they offer a product or service that clearly has real demand in the market.

And now they’re just working on how they can scale the business through an effective go-to-market strategy.

The money invested by the growth equity firms is used to help with this scaling effort.

Unlike private equity firms, growth equity firms usually won’t buy the entire business, but will invest in a significant minority stake instead.

While they don’t have full control of the business, they will usually get at least one board seat so that they can still influence the strategic direction of the business.

Venture capital

Venture capital moves further along the spectrum to even smaller and earlier stage companies.

These are typically startups in high-growth industries like technology or biotech, and at this stage, the companies are almost always still unprofitable.

Some of these startups are even just an idea still, and they don’t have a product yet because it still needs to be built.

Venture capitalists are often investing in an idea, or the team behind an idea, and they might make 10 investments with the expectation that 9 of them will completely flop, but 1 will become the next Airbnb or Uber – which would more than make up for all the losses.

The reason why these jobs are attractive exit opportunities to investment bankers is that they require a lot of the same skill sets that you develop in investment banking – whether it’s financial modeling, due diligence, or just knowing how to think like an investor in general.

Also, you go from being a 3rd-party advisor that’s just giving advice to your clients, to being an investor who’s actually putting large amounts of capital to work.

In many instances, you actually become the client for the investment banker, so now you get to order the investment bankers around.

Because of this, most of the time your work-life balance is going to be significantly better than it was in investment banking – and not only that, the pay is often higher than what you would have made in banking as well.

So if you can work less and make more, what’s not to like, right?

I would say the only downside to buyside investing jobs is that they’re extremely competitive and difficult to break into – even harder than investment banking.

This is because your primary competition is everyone else that has already broken into investment banking, since these buyside investing firms won’t typically hire someone who hasn’t already gone through banking first.

So in other words, the bar is much higher.

There are also fewer jobs on the buyside than in investment banking, so there are simple supply vs demand forces at work as well.

So what if you can’t break into the buyside, or if you just don’t have any interest in being an investor?

Category #2: Industry Jobs

The second category of exit opportunities we often see is industry jobs – think of it as going in-house to work for a company that used to be your client, usually somewhere on the finance side of their org structure.

The most common exit in this category is probably corporate development, which just means you’re working on M&A deals, but you’re doing it in-house for just one company.

Corporate development teams usually consist of former investment bankers.

They spend their days thinking about potential acquisition ideas for the company they work for, and when investment bankers want to pitch an idea, they usually go through the corporate development team first.

Only the best ideas are run up the ladder to the CFO and CEO of the company, after some serious vetting.

Aside from corporate development, other in-house finance roles include strategic finance or business operations (I’ve seen these terms used interchangeably).

This is actually the role that I did at tech companies like Square and GitHub after spending 5 years in investment banking and private equity.

Essentially you’re the finance business partner for a specific functional area within the business – think of it as if you were the mini-CFO for just one division or team inside the business.

You help them manage their budgets, but more importantly you apply your strategic thinking skills that you learned from investment banking, and help your business partners take an analytical approach to their business problems.

You are the one who’s responsible for crunching the numbers and modeling out the impact of whatever project or initiative you’re working on, and you help the business make sound decisions based on data as opposed to just gut feeling.

Last but not least…

you can’t talk about strategic finance and business operations without talking about FP&A, which stands for financial planning & analysis.

This is the team that’s responsible for budgeting and forecasting – you control how much money each team at the company can spend, and you measure what actually happens against the plan that was set initially on a monthly, quarterly, and annual basis.

This is essentially one part of the strategic finance or business operations role, without working on all of the ad hoc strategic projects.

Personally, it’s not my favorite, and a lot of investment bankers that I know find this type of work to be kind of dry and not as challenging.

But you should know that if you go to a bigger, mature megacap company, they are more likely to break up the strategic finance and FP&A functions into separate teams.

Whereas if you go to an earlier or middle stage company like where Square or GitHub were when I joined – then these teams are often combined into one team.

Just to give you a sense – Square had around 600 employees when I joined, and had a $3 billion valuation at the time.

GitHub was around 300 employees when I joined, and was just about to raise their series B round at a $2 billion valuation.

Either way – if you decide to exit to any of these industry jobs, the most successful outcome for you is likely working your way up and becoming CFO one day.

Depending on how good you are at your job, it’ll probably take 15-20 years before you make it to that level.

And of course, most people never get that high up because there are only so many of those jobs available.

Category #3: Miscellaneous Roles

This last category is kind of a catch-all category.

The reason why we need this catch-all category actually speaks to the amazing optionality that investment banking gives you.

Pretty much almost any business job you want that doesn’t require a specialized degree is fair game when it comes to exit opportunities.

Sure, you can’t become a doctor or a lawyer, because you have to go to med school or law school for stuff like that.

But I have literally had coworkers who came from investment banking initially, but ended up in roles like:

  • Business development – which means partnerships basically
  • Sales operations – which means you’re responsible for managing the sales team from a strategic standpoint to maximize their performance – by assigning territories, setting quotas and comp plans, and doing things of that nature
  • Paid marketing – which means you’re allocating the advertising budget for your company on websites like Google, Facebook, YouTube, TikTok, etc. to maximize the return on your ad spend
  • Product manager – which means you work closely with engineers to build a certain product or feature for whatever tech company you work for
  • Data scientist – you are able to pull and analyze large sets of data to help drive decision making
  • General manager – you run your own product or business line within the company, almost like you’re the mini-CEO of your own division
  • Entrepreneurship – this one is self-explanatory – you start your own company of some sort

The commonality between all of these roles is that you have to be highly analytical, and you have to be a strategic thinker.

These are both skills that investment bankers tend to have in spades.

Combine that with the fact that

1) investment bankers tend to be viewed as the “cream of the crop” because of how selective it is, and

2) investment bankers are known to be able to work extremely long hours – it’s no wonder why most companies love hiring investment bankers for the various job openings that they have.

So anyway, these are some of the most common and popular exit opportunities for investment banking, speaking as someone who has not only worked in investment banking and helped over 1,300 students with their own investment banking recruiting processes…

but as someone who has personally worked in all three of these categories as well.

I hope this gave you a good overview of all the doors that investment banking can open up for you.

Unlike most entry-level jobs out there, investment banking does not pigeonhole you into going down just one path once you’ve started.

I know it can feel very daunting to know exactly what your life’s calling is, or what you want to do in the long run when you’re still just a college student.

So if you’re not sure what direction you want to go in, and you want to kind of delay that decision and kick the can down the road for a few years, without losing any optionality and if anything, actually expanding your opportunity set – then I think investment banking could be a great first job for you.

So if after reading this, you decide that investment banking is something you would like to pursue – please don’t hesitate to reach out to our team if you’d like some help with breaking into this highly competitive industry.

And as always – remember – Nothing worthwhile comes easy, and nothing is more important than your future.

Keep Grinding!

Need help navigating through this process?

If you’re someone who’s struggled to break into investment banking on your own but you’re still holding out hope, I hope I gave you more clarity on some of the different paths you might want to consider.

If you ever need help navigating through this complicated process — please don’t hesitate to reach out to our team here: wallstmastermind.com/apply

Wall Street Mastermind, Banking on Success Event NYC 2023

About me

As a former Morgan Stanley banker, my mission through starting Wall Street Mastermind—the original and premier Wall Street coaching program since 2018—is to help our students secure the highest-paying, most prestigious jobs on Wall Street.

Connect with me

📍Linkedin www.linkedin.com/in/samshiah/

📍Youtube www.youtube.com/@SamShiahTalksFinance/

📍Instagram www.instagram.com/wallstreetmastermind/

Talk to our team to get help with your investment banking recruiting process


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