Moving from investment banking into an investing role requires forethought, time, and attention. The best way to make that transition depends on where you are in your career.
Early on, developing your skills takes priority. For an Analyst level banker, the skills needed to be effective as a banker are the some of the same skills needed to move to the buyside. Modeling skills are important, but thinking critically about the output is more important. In addition to providing your senior team with the analysis needed to do your deal, start thinking about whether you would want to invest in the outcome and why or why not. In your personal time, start to formulate opinions about the market, your own deals, and transactions in the news. Begin developing a stronger understanding of both public and private credit and equity. Being able to think critically about your work can be a differentiator for you, especially when transitioning to a private investing role.
If you are interested in public credit or equities, start a paper portfolio. Many bankers have restrictions on their ability to trade, and others do not yet have the capital to trade. Either way, do investment research, and track the trades you would want to execute. Be sure to time stamp every dummy trade. Use your paper portfolio to improve your understanding of the market, and to hone your skills by learning from failures and successes. The portfolio can also serve as an example of your ability to transition to a public markets role.
Further along in your career, you can facilitate a move by positioning yourself in roles that allow you to build a network along with the skills needed for investing. Experience in Leveraged Finance, Restructuring, M&A as well as Private Credit or Financial Sponsors teams can raise your profile with funds. We have discussed in earlier pieces the importance of developing a network in your area of expertise. That network of people knows how you think and can provide context and referrals for future opportunities.
As a more senior banker, your greatest asset will be expertise in an industry and C-suite contacts, especially for private investment roles. That origination skillset is key to transitioning at a senior level. Capital Markets expertise is also valued at the senior level.
The way you approach moving into an investment role will largely depend on your seniority and background. You may need to make an intermediate move on your way to the buyside to gain skills that are valued by investors. The transition requires diligent networking, strong analytical skills, and intention.
