Even though Derrick Fung says he gave investment banking his all – not even the financial crisis could prevent him from landing an analyst position – he knew all along that, when the time was right, he’s start his own company. Now he’s the CEO of Drop, a venture-backed tech startup.
Fung was on track to graduate at the worst possible time – the height of panic during the financial crisis in 2008 when no banks were hiring – so he smartly decided to delay his graduation until he was able to land an investment banking role, a summer analyst position at Merrill Lynch.
“My senior year I delayed graduation eight months because of the financial collapse, because it was tough to find the sales and trading jobs that I wanted,” Fung says. “When I was recruiting, all of the banks stopped hiring or only rehired past summer analysts, so I delayed graduation and hustled.
“My old boss at BNP Paribas called around and gave me a good recommendation, and I was one of two people Merrill Lynch hired on the trading floor in Toronto, but the training was in New York while acquisition rumors were swirling, he says. “I was following the news and watching the stock price go lower and lower and lower and then they got bailed out.
From there Fung landed an associate position at CIBC World Markets, where he started as a market-maker in the foreign exchange spot trading group, covering G10 and emerging market currencies. He then switched desks, working in the institutional equity derivative sales group, mainly selling equity forwards and swaps to mutual funds, hedge funds, pension funds and ultra-high-net-worth clients. After less than two years at that bank, though, Fung left to start his own company, Tunezy – a music startup that landed him on the Forbes 30 Under 30 list.
“While working at the bank, I had to moonlight a lot to get the startup off the ground – I often had to be on calls at midnight or later with developers in India,” he says. “Some of my bosses at CIBC became some of the first investors.”
Eventually, Tunezy was acquired by SFX Entertainment, which was rebranded as Live Nation and is now known as LiveStyle.
Fung stayed on for a year, but he got an idea for a new startup. However, rather than jump right in, he joined a New York-based venture-capital firm White Star Capital while he was incubating the idea for Drop, a consumer loyalty rewards app with offers from various brands and retailers.
“I joined White Star with the idea, ‘I’m going to start something else,’” Fung says. “I told them, ‘I won’t join the firm unless there’s a large probability that you’ll back it’ – I developed the idea during my time there, and they ended up investing.”
So far he’s raised about $5.5m in a seed round. In addition to White Star Capital, Drop is backed by Sierra Ventures, ff Venture Capital, Portag3 Ventures and HOF Capital. The soft launch attracted 250k customers across Canada and the U.S., and Fung says the company is on pace to hit 1m users by early 2018.
Fung believes that the best time to start a company – or at least start thinking about it – is when you’re in school, because you’ll still have a something to fall back on if it doesn’t work out. Technological advances help, making it cheaper than ever before to start a company.
“Many entrepreneurs dropped out of school, and while there’s no necessity to jump into the world of finance and banking, I don’t regret my time trading at banks,” Fung says. “I developed thick skin, learned to move quickly and gained applicable skills.
“When you’re recruiting talent for your startup, having well-known banks on your own resume provides good credibility when you’re hiring people,” he says. “Get some experience [working in banking] – you don’t want to stay too long and get comfortable, but it’s great training for fintech.”
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