Justin Fitzpatrick describes his journey from business school to co-founding one of London’s leading fintech start-ups as inevitable.
For Mr Fitzpatrick, the son of bagel bakery owners in Boston, conversations over the dinner table growing up were often about the details of running the business. After university, he was hired by New York-based GLG, an online professional development start-up still run by its founders, which he saw grow from 100 to 1,000 employees in just under five years.
By the time he enrolled on the masters in finance degree course at London Business School, Mr Fitzpatrick had saved enough money from his job at GLG to pay his tuition fees and had the drive to start a tech venture himself.
Barely a year after he graduated in 2011, Mr Fitzpatrick did just that, co-founding DueDil, an online company information database, where he is head of finance and operations.
“In my year most people were interested in going into more traditional roles in finance, either going to work for a bank or private equity firms,” Mr Fitzpatrick recalls, adding that fear of failure held back a lot of people from taking the jump into start-ups.
That nervousness among business school students is being replaced by enthusiasm for starting ventures of their own. This is true on many masters in finance courses, but actually launching a company after graduation remains a minority pursuit.
Like LBS, Imperial College Business School is based in London, which hosts the largest grouping of tech start-ups outside the US — in an area known as Silicon Roundabout — as well as being Europe’s banking and finance centre.
The university nurtures student-led businesses through Imperial Innovations, a technology commercialisation and investment business, which evolved from an internal project into a publicly listed company traded on London’s junior stock exchange, Aim.
Despite this support, just 10-15 per cent of the 450 students graduating from masters in finance courses each year immediately start companies. The vast majority take salaried posts in banks and finance companies, according to Diane Morgan, associate dean of programmes at the business school.
“We get a lot of people who say in their application they would like to run a business,” she notes. “The reality, however, is that when they have finished many go to work for banks where they can build a career.”
The immediate need to pay off tuition costs is a barrier to many, while others will want to get some experience before striking out on their own, according to Ms Morgan. “People feel the need to pay their fees,” she says. “Some have an idea, but they know they are not yet ready to make it a business.”
Duedil’s Mr Fitzpatrick claims that he still uses skills learned during the masters in finance course at LBS, such as modelling financial statements and funding methods. “It gave me a real grounding in the practical tools of finance,” he says.
Although he knows of students on other courses and from other year groups launching companies, Mr Fitzpatrick does not know of any students in his class who started their own business.
However, he says there has been a “cultural shift” since he left LBS, as he is aware of more graduates today considering becoming entrepreneurs.
Adrian Gunadi graduated from the masters in financial management programme at Erasmus University’s Rotterdam School of Management in 2003. He became an entrepreneur only in October, when he co-founded the peer-to-peer lender Investree after almost two decades of salaried jobs in banking.
Working in the industry for a long period enabled Mr Gunadi and his co-founders, who were also bankers, to save enough money to fund the first eight months of their company’s development. Over the years, Mr Gunadi says he has built a network of industry contacts who have helped him deal with the various hurdles of getting a financial services venture off the ground. “I spent a lot of time learning about banking,” he says. “This knowledge is very important in understanding the risks involved in the market we are now operating in.”
Proportion of Imperial’s masters in finance graduates who immediately start their own venture
The need to experience banking before trying to disrupt the business model is important to masters graduates looking to become entrepreneurs, according to Myriam Lyagoubi, head of the specialised master in corporate finance programme at EMLyon Business School in France.
She sees very similar percentages of her masters in finance students going into entrepreneurship as those at Imperial College Business School, but notes that many of these start-ups are not in financial services.
“Those that found companies in the financial services industries tend to have felt the need to gain many years of experience in banking before founding their company,” she says.
That said, she believes there is growing interest among masters in finance students in starting a business, not because of a lack of banking jobs, but because it is seen as a more interesting career. “This is a generation that wants pleasure in their professional life and their private life,” she says.