Investment bankers discover an appetite for food entrepreneurship
When Jonathan Faiman, Jason Gissing and Tim Steiner quit their jobs at Goldman Sachs to create the online grocery service Ocado in 1999, it seemed an odd career move, sacrificing the expense accounts and promise of six-figure bonuses for the struggle of making a food start-up work.
But since the financial crisis, a raft of young investment bankers have been following their lead, seeing food entrepreneurship as a better alternative to the money markets.
Frank Yeung had been working at Goldman Sachs for a little under two years when he co-founded the burrito chain Poncho 8, aged 23. The business now has six outlets in London and 72 staff.
As the son of a restaurant owner, starting a food business had always been an option, Mr Leung notes. But it was the work trips to New York with Goldman that ended up giving him the idea of bringing Mexican food to London.
Others have followed. Monique Borst, a specialist consultant for food start-ups, has calculated that about a fifth of the 130 founders she advises have left jobs in finance to become entrepreneurs, by far the most common professional background among her client list.
“Founders of food businesses coming out of finance often have funding to development stage, and access to start-up capital,” Ms Borst notes. “However, they typically struggle to engage others into their idea because they’re used to a world where secrecy is very important.”
Before co-founding Coco di Mama, a chain of outlets in the Square Mile selling quick meals to the City-worker lunch market, Daniel Land’s only experience of work was in the corporate finance and broking team at Merrill Lynch. He had interned there as a student in 2005 then joined after university.
“I had not planned to be an entrepreneur,” he admits. “But I knew that I was going to do something else and I wanted to get a solid professional services grounding first.”
Neither he or his business partner knew anything about Italian food before deciding on their business concept. However, life as a banker had brought Mr Land into contact with a lot of fine food.
“Bankers are naturally curious about the businesses they use most frequently,” he explains. “They like to discuss the businesses that they use and therefore I think it is natural that some, myself included, become excited by the potential in such an exciting industry.”
Mr Land also had the contacts when it came to seed funding. Coco di Mama’s backers include the former chairman of Marks and Spencer Sir Stuart Rose and Arjun Waney, who has invested in several successful London restaurant chains, such as Zuma.
On a day-to-day level banking and food entrepreneurship have little in common, Mr Land admits, although both involve very long hours. “I start a few hours earlier than I used to,” he notes. “I am on my feet troubleshooting, and always have a lot of things at the forefront of my mind.”
For Nadia El Hadery it was the lack of certainty that she would have a job as much as the declining bonus payments that convinced her to quit the capital markets and co-found upmarket food delivery service Flavrbox.
“Everyone was too job insecure to say boo to a goose, so I decided it was time for me to make some radical changes,” she recalls. Although Ms El Hadery came from an entrepreneurial family – both her parents and her younger brother run their own companies – there was a significant price to be paid in moving from banking to food business start-up.
“They no longer know my name in Armani,” she jokes. But giving up the six-figure salary that enabled her to eat at top restaurants rather than try to deliver food to others were worth it, she insists. “My priorities have changed. The only thing I do really miss is free time.”
The greatest challenge of moving from banking to food start-up has been adjusting to the lack of back up support when it is just you against the world, Ms El Hadery says. She misses her Bloomberg terminal in particular.
“When you have a name of a big bank behind you and are given an address book which let’s you know if the person you are trying to contact is in or not. It makes your life a lot easier.
“In a start-up, you are an unknown name and you have no idea who the people you need to speak to are or how to get them to listen to you.”