July 8, 2019
Five Tips to Jump from Finance to Entrepreneurship
A number of successful entrepreneurs have come from the world of finance. Those with a background in finance may have a few advantages (as well as a few challenges) when striking out on their own. These five tips may help with the transition.
1. Check your restrictive covenants. Did you sign a non-compete? Did you sign a non-solicit? These agreements may restrict you from engaging in certain businesses for a period of time. You should consider having an attorney review your employment documents so you can discuss your potential options and restrictions.
2. Embrace your quantitative side. If you’re working for an investment bank, hedge fund, or private equity firm, you likely have a strong quantitative background. This can be a strong – and fairly rare – asset in the startup world. Understanding concepts like dilution, convertible debt, financing rounds, and the way a capitalization table works may give you an edge in running your company. It may also give you a distinct advantage when speaking to potential investors. Investors appreciate founders who understand finance. Consider highlighting your finance background in your pitch deck and bio.
3. Form an entity early and protect your company. Once you have determined your core team, you should consider forming an entity (corporation, LLC, or otherwise). By forming the entity and setting it up properly with IP assignment agreements and founder vesting, you can help protect your concept and incentivize the team to stay for the long haul.
4. Keep your friends close. Have you built a great network while working in finance? Utilize it! One of the biggest hurdles faced by early stage startups is finding seed round financing. Your network may be helpful in making the right introductions to secure that initial investment. You may also want to consider tapping into your network as you build your Board of Directors or Advisory Board.
5. Work with the right professionals. If you’ve worked in finance, you likely know the value of a good deal team. You should apply the same principle to your new company. Consider retaining a good corporate law firm and CPA firm from the beginning. The right foundation makes all the difference.
About Jared Stark: Jared is a Managing Partner at Stark Weber PLLC where he chairs the firm’s corporate practice areas. Jared graduated from law school at Georgetown and worked at a leading international law firm before co-founding Stark Weber PLLC. You can contact Jared at firstname.lastname@example.org.
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