Why Tech Investment Banking? The Classic Interview QuestionPublished:
Normally when you're asked in an interview why you want to join a certain coverage group it's a bit of a performative act. Your interviewer is really just trying to make sure that you have some vague, hand-wavy interest in the industry that the group covers and can articulate that interest reasonably well.
However, this all changes when you're applying to a tech group or, by extension, a TMT group. And the reason behind this is obvious: tech is far and away the most sought after coverage group -- not just because of the industry being covered, but also because of the better exit opportunities that generally come along with it.
So, given that tech is so sought after your interviewer will be slightly suspicious of your motives and will want to ensure that you have at least some modest genuine interest in the industry as opposed to being motivated entirely by just prestige and exit opportunities.
Given all this, you should put a reasonable level of thought into how to approach answering "Why tech?" keeping in mind that the question isn't asked entirely from the perspective of genuine curiosity.
While we always recommend not adhering to a script for most qualitative questions, here's a little multi-step framework for thinking about how to answer this question. Obviously you don't need to stick to it, but hopefully it prompts you to think about answer in a slightly different way.
Step 1: Acknowledge the Reality
Personally, we think it's always a great idea to preface your answer to "Why tech?" by saying that you understand that tech is by far the most popular coverage group to join and that many likely wish to join due to the exit opportunities and prestige that the group confers (not necessarily due to some deep and abiding interest).
What this little preamble does is immediately neutralize - or at least confront - the suspicion most of your interviewers will have about your real interest in tech banking (because you'd presumably not bring this up if you were just interested in tech due to its popularity among your peers).
Step 2: Put a Unique Spin on Your Interest
With your interviewer's suspicions at least partly neutralized, you now need to explain why you're interested specifically in tech.
Ideally, you should try to put a bit of an unconventional or contrarian spin on why you're interested in tech while simultaneously showing off your understanding of the diversity of the tech ecosystem.
Because the reality is that there is no coverage group that touches as wide a swath of companies - from semiconductors to IT services - than tech does. However, that's something not every interviewee fully appreciates - since the headlines are consistently dominated by household-name internet deals - so this provides you with a way to really stand apart from everyone else.
Given that the vast majority of interviewees will explain their interest in tech by talking about companies that are household names, it's best to steer clear of saying you're interested in tech because you've been on Facebook or Instagram since you were twelve, or because you were an early user of some social platform that recently got acquired at a 40x sales multiple.
Instead, you should try to get a bit more niche and explain that while you're fascinated by the acquisition strategies of Big Tech, what's really fascinated you has been learning more about horizontal software deals or the hardware space or IT services or anything a bit more granular.
Note: With all this said, you don't want to make it sound like the only reason you're interested in tech is due to this more niche interest. Because most of the deals you'll be working on will involve large household names in the software / internet space! Instead, you just want to show that you understand not everything done in tech is a $10b+ mega-deal and that's a pro, not a con, for you.
Note: Part of the reason why we created this site - including the Tech IB Guide - is to show the incredible diversity of TMT. As you go through the tech, media, and telecom guides you'll see that there are plenty of interesting things happening in TMT that don't hit the front pages of the WSJ or get a headline on Bloomberg.
Step 3: Acknowledge What You Don't Know
After having explained your interest - hopefully in a unique way that separates you from the pack - it's never a bad idea to acknowledge the reality: you can't say with perfect clairvoyance exactly what coverage group is best suited to you, but that tech is what has appealed to you most.
Sometimes interviewees try to overcompensate a bit too much when explaining why they're interested in tech banking and can come across as a bit presumptuous in their certainty. Your interviewer understands that you aren't an expert and that your interest in tech has not been deeply considered after years of deliberation.
So just be sure to add that while there's no way for you to know with certainty that tech is where you should be, you've spent quite a lot of time thinking about it and think it's the best option. However, you concede that it's impossible to ever know that a group is right for you until you actually begin.
Sample "Why Technology Investment Banking?" Answer
Now that we've covered these three steps, let's try to put it all together. Obviously your own answer should be different than what's below. This is just meant to give you a feel for an answer that hits the right notes:
Question: So, why are you interested specifically in tech investment banking?
Answer: Well, it's not exactly a secret that tech is the most popular coverage group at almost every bank. So, I can imagine that many candidates are looking to join either because it's the most popular coverage group, because of the great exit opportunities that come along with tech banking, or because they think they'll be exclusively working on high-flying tech startups being acquired by one of the tech giants.
While it'd be fascinating to work on some of those more headline-grabbing deals, what has really drawn me to tech is just how diverse it is and, by extension, the breadth of exposure I'll be getting if I'm fortunate enough to get an offer.
While I can't confess to having a sound understanding of every sub-sector of tech, I've really enjoyed learning as much as I can about more niche areas like IT services and semiconductors. While I know deal volumes are much less in these areas than in software, I think having the opportunity to work on these kinds of deals would be an incredible opportunity.
For example, a few weeks ago I was reading about Hitachi acquiring GlobalLogic for $9.6b. Despite how large this deal was, it struck me how few articles were written about it on Bloomberg or in the WSJ. But I found the deal fascinating and those are exactly the kinds of deals I'd love to get more exposure to since they're a bit off of the beaten path.
Ultimately, I know that the majority of what any summer or full-time analyst will be working on will be internet and software deals. To be honest, like most others, those are the kinds of deals that initially drew me into tech to begin with. However, I've been amazed at how many interesting businesses exist in different sub-sectors of tech and hope that - if I'm lucky enough to get an offer - I'll be able to work on some deals within these more niche sub-sectors during my time in banking.
While many tend to glaze over qualitative questions in favor of focusing in on technical questions, this is one qualitative question that should not be overlooked.
Piecing together a good answer to this question will not only allow you to stand out from the crowd, it will also perfectly set you up to show off your implicit understanding of tech (i.e., by talking about more niche sub-sectors).
Far from being a question that you just have to get through, you should treat this question as a way to truly differentiate yourself. Further, since this question most often comes up during the early part of an interview - often being just the second or third question asked - providing a stellar answer will set a very favorable tone for the rest of the interview.
Anyway, hopefully this post has helped to prompt your thinking and perhaps made you reevaluate how you're answering this question. If you're looking for even more practice, make sure to check out the TMT interview questions we've put together, along with the primer on TMT investment banking. If that's not enough, there are also the TMT guides as well.