Launching a Tech-Financed Career: Securing a FinTech Startup Internship
The meeting with my professor of Multivariate and Simulation Methods, a figure I greatly admire for his exceptional dedication to student success, was a routine yet insightful engagement. We delved into the upcoming fall semester's curriculum and subsequently shifted our conversation to potential career paths following my graduation from an MBA program with dual majors in Finance and Business Analytics.
He enlightened me on the myriad of career opportunities available for individuals equipped with a robust blend of finance and technical skills. During this discussion, he inquired if I was open to the idea of undertaking a part-time job or internship during the fall semester. Interested in understanding the scope of such a role, I expressed my desire to learn more about the responsibilities involved.
Consequently, he connected me with a contact at ProSeeder Technologies, a tech startup specializing in Software as a Service (SaaS) solutions for finance firms, including Venture Capitals, Angel Investors, and Broker-Dealers. Eager to explore this opportunity, I promptly reached out via email to arrange an interview or informational call.
The following morning, the interviewer provided an overview of the job responsibilities. The role encompassed tasks such as data review and modification using Excel, quality assurance, content development for client demo sites, market research, and other ad-hoc projects. The prospects of the internship piqued my interest, and I was enthusiastic about the learning opportunities it presented.
During the call, the interviewer inquired about my proficiency with Excel. I responded confidently, highlighting my experience in developing various financial models including Option Pricing (both Binomial and Black-Scholes models), Bond Pricing, Firm Valuation, and Merger Models. My familiarity with Excel was well-received, leading to an immediate invitation to join the team the following Thursday.
The interviewer also asked if I knew of any potential candidates for similar roles at the company. Recalling a friend in search of a fall semester internship, I recommended them, and an interview was scheduled for the ensuing week.
This moment marked a significant milestone, a culmination of a year's worth of dedicated effort and hard work. My immediate focus now shifts to excelling in this internship, with the goal of advancing within the company and furthering my professional development.
He enlightened me on the myriad of career opportunities available for individuals equipped with a robust blend of finance and technical skills. During this discussion, he inquired if I was open to the idea of undertaking a part-time job or internship during the fall semester. Interested in understanding the scope of such a role, I expressed my desire to learn more about the responsibilities involved.
Consequently, he connected me with a contact at ProSeeder Technologies, a tech startup specializing in Software as a Service (SaaS) solutions for finance firms, including Venture Capitals, Angel Investors, and Broker-Dealers. Eager to explore this opportunity, I promptly reached out via email to arrange an interview or informational call.
The following morning, the interviewer provided an overview of the job responsibilities. The role encompassed tasks such as data review and modification using Excel, quality assurance, content development for client demo sites, market research, and other ad-hoc projects. The prospects of the internship piqued my interest, and I was enthusiastic about the learning opportunities it presented.
During the call, the interviewer inquired about my proficiency with Excel. I responded confidently, highlighting my experience in developing various financial models including Option Pricing (both Binomial and Black-Scholes models), Bond Pricing, Firm Valuation, and Merger Models. My familiarity with Excel was well-received, leading to an immediate invitation to join the team the following Thursday.
The interviewer also asked if I knew of any potential candidates for similar roles at the company. Recalling a friend in search of a fall semester internship, I recommended them, and an interview was scheduled for the ensuing week.
This moment marked a significant milestone, a culmination of a year's worth of dedicated effort and hard work. My immediate focus now shifts to excelling in this internship, with the goal of advancing within the company and furthering my professional development.
Catastrophe Bonds
Catastrophe Bonds: An Overview
Definition
Catastrophe Bonds, commonly referred to as Cat Bonds, are unique financial instruments that involve the transfer of risk from the bond's issuer, typically an insurance company, to the investors. They serve a similar purpose to reinsurance, providing risk mitigation for insurers.
Description
Cat Bonds are utilized by insurance companies seeking to hedge against the financial impact of major catastrophic events. These events, if they occur, would necessitate substantial payouts to policyholders. The bonds are issued via investment banks and then sold to investors. They are generally assigned a “BB” credit rating, reflecting their higher risk profile, and typically have maturities of less than three years.
If the bond's maturity period elapses without a qualifying catastrophic event, the issuing insurance company pays a coupon to investors. Conversely, if a catastrophic event occurs, the principal amount of the bond is forfeited and used to compensate affected policyholders.
Investors in Cat Bonds often include Hedge Funds, Catastrophe-oriented funds, and asset managers. These bonds are usually structured as floating rate instruments (LIBOR + a fixed rate) and are designed to lose their principal upon the occurrence of specified catastrophic conditions.
Example
An insurance company with a portfolio of property insurance in a hurricane-prone coastal area may choose to mitigate risk by either reinsuring these policies or sponsoring a Cat Bond. Through a Special Purpose Entity (SPE), the company issues Cat Bonds with the assistance of an investment bank. Investors receive a floating rate coupon (typically between 3% and 20%) unless a qualifying event like a hurricane occurs, in which case the principal is diverted to policyholder claims.
History
The concept of Cat Bonds emerged in the mid-1990s following major events like Hurricane Andrew and the Northridge earthquake. Pioneered by firms such as AIG, Hannover Re, St. Paul Re, and USAA, the Cat Bond market initially grew to $1-2 billion per year in 1998-2001, expanding significantly post-9/11. The market further surged post-Hurricane Katrina in 2006, leading to the development of reinsurance sidecars.
Investment in Cat Bonds
Cat Bonds are particularly attractive to investors seeking diversification, as they are largely uncorrelated with traditional financial assets like equities and fixed income securities. They offer higher interest rates compared to similarly rated debt instruments.
Ratings
Rating agencies such as Fitch, S&P, and Moody’s assess Cat Bonds based on the likelihood of default triggered by qualifying catastrophic events. These bonds typically receive ratings between BB and B.
Structure
Most Cat Bonds are issued by SPEs located in jurisdictions like the Cayman Islands, Bermuda, or Ireland, taking advantage of tax, regulatory, and legal benefits. These bonds can be structured in various forms, including derivatives linked to indices or other parameters.
Trigger Types
Cat Bonds utilize different trigger mechanisms, which can be categorized into four types: Indemnity, Modeled Loss, Industry Loss, and Parametric. These triggers range in their correlation with the issuer's actual losses.
Facts and Current Market
The Cat Bond market is dynamic and has grown significantly, with notable issuances from entities like the World Bank. These bonds are increasingly used to hedge against diverse risks, including natural disasters and, potentially, terrorism.
Costs
The issuance of Cat Bonds involves various costs, including legal, accounting, and information-related expenses. SPEs manage these costs through insurance premiums, interest, and principal payments, typically investing in Treasury and other high-grade securities.
Future Prospects
Given the increasing prevalence of catastrophic events, possibly exacerbated by global warming, Cat Bonds are expected to play an increasingly vital role in risk management. They offer innovative applications beyond natural disaster hedging, such as protection against stock market crashes or the collapse of large auditing firms.
Notable Commentary
In his article "In Nature’s Casino" (New York Times Magazine, August 2007), Michael Lewis discusses the early development of Cat Bonds, highlighting key figures like Karen Clark and John Seo who significantly contributed to the field.
References
1. [Catastrophe Bond - Wikipedia] (http://en.wikipedia.org/wiki/Catastrophe_bond)
2. [Reinsurance Sidecar - Wikipedia] (http://en.wikipedia.org/wiki/Reinsurance_sidecar)
3. [GAO Report on Catastrophe Bonds](http://www.gao.gov/new.items/d02941.pdf)
4. [Bloomberg Article on Cat Bonds](http://www.bloomberg.com/news/2014-06-17/buffett-warning-unheeded-as-catastrophe-bond-sales-climb.html)
5. [New York Times Article by Michael Lewis](http://www.nytimes.com/2007/08/26/magazine/26neworleans-t.html?pagewanted=all&_r=2&)
Definition
Catastrophe Bonds, commonly referred to as Cat Bonds, are unique financial instruments that involve the transfer of risk from the bond's issuer, typically an insurance company, to the investors. They serve a similar purpose to reinsurance, providing risk mitigation for insurers.
Description
Cat Bonds are utilized by insurance companies seeking to hedge against the financial impact of major catastrophic events. These events, if they occur, would necessitate substantial payouts to policyholders. The bonds are issued via investment banks and then sold to investors. They are generally assigned a “BB” credit rating, reflecting their higher risk profile, and typically have maturities of less than three years.
If the bond's maturity period elapses without a qualifying catastrophic event, the issuing insurance company pays a coupon to investors. Conversely, if a catastrophic event occurs, the principal amount of the bond is forfeited and used to compensate affected policyholders.
Investors in Cat Bonds often include Hedge Funds, Catastrophe-oriented funds, and asset managers. These bonds are usually structured as floating rate instruments (LIBOR + a fixed rate) and are designed to lose their principal upon the occurrence of specified catastrophic conditions.
Example
An insurance company with a portfolio of property insurance in a hurricane-prone coastal area may choose to mitigate risk by either reinsuring these policies or sponsoring a Cat Bond. Through a Special Purpose Entity (SPE), the company issues Cat Bonds with the assistance of an investment bank. Investors receive a floating rate coupon (typically between 3% and 20%) unless a qualifying event like a hurricane occurs, in which case the principal is diverted to policyholder claims.
History
The concept of Cat Bonds emerged in the mid-1990s following major events like Hurricane Andrew and the Northridge earthquake. Pioneered by firms such as AIG, Hannover Re, St. Paul Re, and USAA, the Cat Bond market initially grew to $1-2 billion per year in 1998-2001, expanding significantly post-9/11. The market further surged post-Hurricane Katrina in 2006, leading to the development of reinsurance sidecars.
Investment in Cat Bonds
Cat Bonds are particularly attractive to investors seeking diversification, as they are largely uncorrelated with traditional financial assets like equities and fixed income securities. They offer higher interest rates compared to similarly rated debt instruments.
Ratings
Rating agencies such as Fitch, S&P, and Moody’s assess Cat Bonds based on the likelihood of default triggered by qualifying catastrophic events. These bonds typically receive ratings between BB and B.
Structure
Most Cat Bonds are issued by SPEs located in jurisdictions like the Cayman Islands, Bermuda, or Ireland, taking advantage of tax, regulatory, and legal benefits. These bonds can be structured in various forms, including derivatives linked to indices or other parameters.
Trigger Types
Cat Bonds utilize different trigger mechanisms, which can be categorized into four types: Indemnity, Modeled Loss, Industry Loss, and Parametric. These triggers range in their correlation with the issuer's actual losses.
Facts and Current Market
The Cat Bond market is dynamic and has grown significantly, with notable issuances from entities like the World Bank. These bonds are increasingly used to hedge against diverse risks, including natural disasters and, potentially, terrorism.
Costs
The issuance of Cat Bonds involves various costs, including legal, accounting, and information-related expenses. SPEs manage these costs through insurance premiums, interest, and principal payments, typically investing in Treasury and other high-grade securities.
Future Prospects
Given the increasing prevalence of catastrophic events, possibly exacerbated by global warming, Cat Bonds are expected to play an increasingly vital role in risk management. They offer innovative applications beyond natural disaster hedging, such as protection against stock market crashes or the collapse of large auditing firms.
Notable Commentary
In his article "In Nature’s Casino" (New York Times Magazine, August 2007), Michael Lewis discusses the early development of Cat Bonds, highlighting key figures like Karen Clark and John Seo who significantly contributed to the field.
References
1. [Catastrophe Bond - Wikipedia] (http://en.wikipedia.org/wiki/Catastrophe_bond)
2. [Reinsurance Sidecar - Wikipedia] (http://en.wikipedia.org/wiki/Reinsurance_sidecar)
3. [GAO Report on Catastrophe Bonds](http://www.gao.gov/new.items/d02941.pdf)
4. [Bloomberg Article on Cat Bonds](http://www.bloomberg.com/news/2014-06-17/buffett-warning-unheeded-as-catastrophe-bond-sales-climb.html)
5. [New York Times Article by Michael Lewis](http://www.nytimes.com/2007/08/26/magazine/26neworleans-t.html?pagewanted=all&_r=2&)
Why I Had To Say No To An Investment Banking Internship Offer
After an extensive job search, involving the distribution of numerous resumes to various investment banks, I was fortunate to secure an interview with a boutique investment banking firm. This opportunity was particularly notable given my academic background, which did not include a degree from a traditionally recognized "target" business school. The interview panel comprised three individuals, including the firm's president, and they posed a series of standard questions typical of investment banking interviews. These included inquiries about my proficiency in financial modeling, experience in company valuation, and knowledge of recent Initial Public Offerings (IPOs).
I managed to respond satisfactorily to each question. My academic background in biotechnology engineering proved to be a significant advantage, especially since the firm was seeking an individual adept in understanding and valuing biotechnology companies. Additionally, my two years of professional experience in a manufacturing firm, coupled with my ongoing MBA in Finance and Business Analytics, further bolstered my candidacy for the internship role. The president and other interviewers were impressed with my experience and were inclined to offer me the internship. However, they stipulated that it would be an unpaid position.
At that time, I was facing financial constraints, and the cost of daily commuting from Long Island to New York City, estimated at around $600 per month, was a considerable burden. When asked if I was willing to accept the unpaid internship, I hesitated but ultimately conveyed my need for some form of compensation to accept the offer. The president expressed that my immediate hiring was contingent upon my willingness to forgo compensation. However, he now needed to consult with the firm's budgeting department to assess the feasibility of providing me with a stipend.
I followed up a few weeks later but received no response. It seemed likely that they had opted for a candidate willing to accept an unpaid role. Several months later, I inquired again about a potential fall internship, but the response was negative.
This experience imparted two crucial lessons:
1. Attaining an interview or offer from an investment bank does not exclusively depend on having a degree from an Ivy League or similarly prestigious institution.
2. It's essential to be fully prepared for such opportunities, as they may not present themselves again.
I managed to respond satisfactorily to each question. My academic background in biotechnology engineering proved to be a significant advantage, especially since the firm was seeking an individual adept in understanding and valuing biotechnology companies. Additionally, my two years of professional experience in a manufacturing firm, coupled with my ongoing MBA in Finance and Business Analytics, further bolstered my candidacy for the internship role. The president and other interviewers were impressed with my experience and were inclined to offer me the internship. However, they stipulated that it would be an unpaid position.
At that time, I was facing financial constraints, and the cost of daily commuting from Long Island to New York City, estimated at around $600 per month, was a considerable burden. When asked if I was willing to accept the unpaid internship, I hesitated but ultimately conveyed my need for some form of compensation to accept the offer. The president expressed that my immediate hiring was contingent upon my willingness to forgo compensation. However, he now needed to consult with the firm's budgeting department to assess the feasibility of providing me with a stipend.
I followed up a few weeks later but received no response. It seemed likely that they had opted for a candidate willing to accept an unpaid role. Several months later, I inquired again about a potential fall internship, but the response was negative.
This experience imparted two crucial lessons:
1. Attaining an interview or offer from an investment bank does not exclusively depend on having a degree from an Ivy League or similarly prestigious institution.
2. It's essential to be fully prepared for such opportunities, as they may not present themselves again.
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Ascending the Corporate Summit: A Journey from Business School to Boardroom
After enduring an unusually long and frigid winter, the warm embrace of the sun was a welcomed change. As I lay on the grass outside the library, a sense of accomplishment washed over me, having just completed a significant portion of my assignments. Reflecting on the past year, it struck me how dramatically my life had transformed.
During this transformative period, I was employed at a restaurant, a job that financed my applications to various esteemed business schools. The lure of returning to the familiarity of my hometown was strong, yet I constantly reminded myself of the transient nature of this phase. I envisioned cherishing these moments of determination and growth in the foreseeable future.
My lifestyle was defined by efficiency and frugality. Extravagant expenses, such as dining out, were out of the question, and any expenditure exceeding $10 warranted a thorough reassessment of my priorities. This financial discipline extended to forgoing a $25 guest fee for a Rotary Club of Wall Street meeting, despite my longstanding affiliation with Rotary International since 2007 and a deep admiration for their community service initiatives.
My quest for higher education led me to explore renowned institutions like Stern, Columbia, Pace, and Baruch. With my GRE scores still valid, my sister's suggestion to take the TOEFL exam was timely. This step was pivotal in advancing my application process. The turning point came at the QS World MBA Tour, where I met Dr. Andrew Forman from Hofstra University. His assurance that my profile aligned with their acceptance trends, coupled with the waiving of application fees for attendees, significantly bolstered my prospects.
Months of hard work at the restaurant culminated in a joyous moment – an acceptance email from Hofstra University's Frank G. Zarb School of Business, accompanied by a substantial scholarship. This achievement was a milestone for both my sister and me, a testament to the relentless effort and sacrifices made.
At Hofstra, my journey was marked by active involvement in extracurricular activities and an appointment as a Graduate Assistant in the Finance Department. Joining the Hofstra Investment Banking Association (HIBA) and the Hofstra Indian Students' Association (HISA) enriched my experience. My commitment to campus life extended beyond academics, as I sought wisdom and insights from both my instructors and those outside my direct field of study.
An opportunity to serve as a graduate student representative on the Zarb Executive Committee presented itself. My sister, an NYU School of Dentistry graduate, explained the committee's role in shaping major decisions at the school. Drawing on my previous experience as the south campus chairman of the Students' Organisation of Panjab University (SOPU), I accepted this role with enthusiasm.
However, my educational journey faced a significant hurdle when my education loan was rejected. This challenge led to discussions with close friends and faculty, who intervened on my behalf with my sponsor, the CV Starr foundation. Their support resulted in an increased scholarship, allowing me to continue my studies.
A meeting with Ms. Annabelle Libeau, a Columbia University student and RCWS-sponsored MPA candidate, further influenced my academic path. Her encouragement to pursue the CFA Level 1 exam, despite my non-finance background, was a turning point. With guidance from friends and self-study over the winter break, I delved into the expansive world of finance, finding the subject matter intriguing and invaluable.
The first semester concluded with a commendable GPA, and I am now well into my second semester, diligently preparing for the CFA Level 1 exam. The journey has been enriching, and I eagerly anticipate the next chapter of securing a summer internship, continuing to embrace the opportunities and experiences this esteemed institution and country have to offer.
After enduring an unusually long and frigid winter, the warm embrace of the sun was a welcomed change. As I lay on the grass outside the library, a sense of accomplishment washed over me, having just completed a significant portion of my assignments. Reflecting on the past year, it struck me how dramatically my life had transformed.
During this transformative period, I was employed at a restaurant, a job that financed my applications to various esteemed business schools. The lure of returning to the familiarity of my hometown was strong, yet I constantly reminded myself of the transient nature of this phase. I envisioned cherishing these moments of determination and growth in the foreseeable future.
My lifestyle was defined by efficiency and frugality. Extravagant expenses, such as dining out, were out of the question, and any expenditure exceeding $10 warranted a thorough reassessment of my priorities. This financial discipline extended to forgoing a $25 guest fee for a Rotary Club of Wall Street meeting, despite my longstanding affiliation with Rotary International since 2007 and a deep admiration for their community service initiatives.
My quest for higher education led me to explore renowned institutions like Stern, Columbia, Pace, and Baruch. With my GRE scores still valid, my sister's suggestion to take the TOEFL exam was timely. This step was pivotal in advancing my application process. The turning point came at the QS World MBA Tour, where I met Dr. Andrew Forman from Hofstra University. His assurance that my profile aligned with their acceptance trends, coupled with the waiving of application fees for attendees, significantly bolstered my prospects.
Months of hard work at the restaurant culminated in a joyous moment – an acceptance email from Hofstra University's Frank G. Zarb School of Business, accompanied by a substantial scholarship. This achievement was a milestone for both my sister and me, a testament to the relentless effort and sacrifices made.
At Hofstra, my journey was marked by active involvement in extracurricular activities and an appointment as a Graduate Assistant in the Finance Department. Joining the Hofstra Investment Banking Association (HIBA) and the Hofstra Indian Students' Association (HISA) enriched my experience. My commitment to campus life extended beyond academics, as I sought wisdom and insights from both my instructors and those outside my direct field of study.
An opportunity to serve as a graduate student representative on the Zarb Executive Committee presented itself. My sister, an NYU School of Dentistry graduate, explained the committee's role in shaping major decisions at the school. Drawing on my previous experience as the south campus chairman of the Students' Organisation of Panjab University (SOPU), I accepted this role with enthusiasm.
However, my educational journey faced a significant hurdle when my education loan was rejected. This challenge led to discussions with close friends and faculty, who intervened on my behalf with my sponsor, the CV Starr foundation. Their support resulted in an increased scholarship, allowing me to continue my studies.
A meeting with Ms. Annabelle Libeau, a Columbia University student and RCWS-sponsored MPA candidate, further influenced my academic path. Her encouragement to pursue the CFA Level 1 exam, despite my non-finance background, was a turning point. With guidance from friends and self-study over the winter break, I delved into the expansive world of finance, finding the subject matter intriguing and invaluable.
The first semester concluded with a commendable GPA, and I am now well into my second semester, diligently preparing for the CFA Level 1 exam. The journey has been enriching, and I eagerly anticipate the next chapter of securing a summer internship, continuing to embrace the opportunities and experiences this esteemed institution and country have to offer.
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