- Audit, Capital Markets, and M&A at Deloitte
- Breaking into venture capital
- How public accounting experience translates to VC
- Not boxing yourself into certain roles
Alex Federinko spent 10 years at Deloitte. During that time he was in three service lines, two countries and three offices. Alex is now working in venture capital and just started his MBA at the Darden School of Business where he is an Oculus Fellow. Do read the full interview!
Sure - I was born in a one-stoplight town in western PA before moving to a suburb of Pittsburgh where I grew up and then spent my high school years. I went to college in Pittsburgh at Duquesne University, which is a smaller Catholic institution in the heart of the city where I was also a scholarship track and field athlete in the Atlantic 10 Conference. Similar to most 18 year-olds, I really didn't know what I wanted to do, so I gravitated toward the things I did like – sports and finance – and decided to dual major in sports marketing and finance. After an underwhelming internship in sports marketing and some coaxing from my accounting professors I ended up switching to a dual finance and accounting major before my junior year. As most top accounting students do, I looked toward the Big 4 accounting firms and chose an offer from Deloitte in Pittsburgh.
Yes, I started in the audit practice serving some of our largest public clients in Pittsburgh. While the nature of audit work never quite satisfied my professional desires and I knew it would not be a long-term career play, it was a great steppingstone for the rest of my career. In audit, I had exposure to many different industries, companies, and pieces of each business, and combing this with meeting interesting, diverse people along the way it gave me a nice exploratory phase early in my career. The profession also gave me the opportunity to manage teams at a young age and the time spent speaking with and working through problems with client executives provided invaluable experience that I took with me once I left public accounting. Since I knew my time in audit would be limited, but I didn’t quite know what the next step would be, I started petitioning my partner group to work on special projects outside of Pittsburgh. My general theory was that if I kept putting myself out there in different situations, on different projects, in different cities, networking with different people and taking advantage of the best opportunities available, I would eventually figure it out: many months were spent in Chicago, western Kentucky, Las Vegas, Midland, MI and countless other places in between.
As I was doing all of this, which was quite unusual for our Pittsburgh office where most colleagues had a strong preference for no travel, I was also working toward an international deployment, a goal that I had set when I started at Deloitte. If you rise to a certain level and attain certain performance ratings within the firm, global deployments become an option and it was an opportunity that I thought I would regret later in my career if I didn’t at least pursue the possibility. The hard thing about finding the right global role was that there was no one in Pittsburgh who had really done it before. So, I spent a long 12-ish months connecting with new people in the broader Deloitte network who had been on a global assignment and finally after all the networking, research, and soul searching, I found, interviewed, and was accepted to a very niche group in London called our Global Capital Markets. We were about 20 US expats who were the US/SEC rules and regulations experts, oversaw the audit teams and audit quality of large US filers headquartered in the UK and assisted foreign companies raise debt or equity in the US. Whether our clients where in the UK, rest of Europe, Middle East, Russia or other parts of the world and wanted to have an IPO or raise debt or other depository receipts, we would work with the bankers and lawyers to help shepherd that filing process along. This was the main reason I decided to move to the UK – the nature of the work was unique, and the global exposure was unmatched. I had great professional and personal development including learning a valuable technical skillset, working with teams across the globe and, of course, I used London as a jumping off point to personally travel to places I had never been. It was quite the 2 years after being abroad for only the first time just months before my assignment.
From the moment I arrived in the UK I was already thinking about what I was going to do after my couple-year assignment, and M&A had always been in the back of my mind which was a fairly natural progression from my capital markets role. I kept the transactional nature of what I was doing in the UK and came to New York to work in another niche group where we provided buy-side and sell-side due diligence services for large private equity firms (exclusively KKR by the time I left Deloitte). Among other translatable skillsets, knowledge of the US IPO process I learned while in the UK became valuable as a potential exit strategy for PE portfolio companies is through an IPO, so I was able to lend some of that expertise for a couple IPOs while I was in New York.
This is a long story and one I could talk about for hours, but I’ll spare the audience and give the shortened version. I have had nothing but phenomenal experiences at Deloitte and great memories. Business Week magazine voted Deloitte the best place to launch your career when I was in undergrad which was a huge reason why I joined the firm. Almost a decade later, I cannot refute that. But overall, I was becoming a bit uncomfortable with staying at Deloitte for the rest of my career. As you can see from the various pivots I made at Deloitte, I was always trying to gain new and different skillsets while always looking internally for that next move – there is so much opportunity at Deloitte if you know where to look and when to speak up and I will always tell colleagues to make sure you have exhausted those resources before moving on. But at this point there wasn’t anything else that excited me. I wanted to be more diverse in my career, be more than just finance, have more adventure and overall be a significant voice at the table when decisions are made and not just be in the room, if you get the analogy. And just as important on the personal front, I would always look ahead and say, “Who’s life do I envy?”. Quite frankly I didn’t envy the lifestyle of the partners who I worked for in M&A. I worked for some brilliant minds and for some people I have great respect for, and a great thing about those people was that when Alex Federinko was working until the wee hours of the morning, so were they. They were right there in the trenches with me. But that was also the depressing thing about the lifestyle – when I looked ahead to the next level, at a time when I would likely have a family, I didn’t see a good example of going to all the little league games, never missing an orchestra concert, or just overall being extremely present with family and during life’s subtle moments. So, it was a combination of wanting a different future lifestyle and wanting to be more than a “finance guy” when I decided to move into venture while also picking up my MBA from a top school. And here we are.
A bit of a crazy story. When they tell you that venture is all about your network and who you know they aren’t kidding. I had always been interested in VC – it’s exciting, fresh, and so far, I wake up every morning ready to dive back in. I’ve been engrained in the investing ecosystem for years, whether that was my work in the private markets with KKR most recently or all the personal investing I’ve done in the public markets over the years, but venture is a different beast, especially at the early stages which is where I currently play at the moment. When I decided early last year to go after a top MBA, my next goal was to leave Deloitte as soon as possible soI could get experience in venture before starting my program. This way I could decide from that experience that either I would continue to work in venture through the MBA or pivot to focus on a different track.
Now that I think about it, it’s funny how similar my venture pursuit was to my global deployment pursuit at Deloitte. I had virtually no one in my network who was working in VC, much like I had no one in the Deloitte Pittsburgh office who had previously been on a global assignment. I just had to hustle like crazy on my own. I wanted it so I went after it with everything I had. Thankfully, early on in the process I connected with a fellow Duquesne grad (Eric Bruckner if you’re reading this transcript, I still owe you one) who had been working in VC for some time and he provided me with some great advice and gave me a handful of contacts to work with. Through those connections I met Grant Newlin who had been in the VC game for some time, formerly running deal flow at Newstack Ventures out of Chicago before spinning up his own fund. We had several initial conversations, built a quick rapport, and one day he looks at me and says, “I need a head of deal flow.” I told him I’m his guy and here we are. Basically, he had been a one-man-band after starting his fund about a year ago and needed someone to control the inbound and outbound deal funnels: source companies, determine if they are on our thesis, take calls with founders, evaluate the businesses, perform due diligence, and ultimately determine if we should invest and why. So, what I’ll call pitch deck to term sheet. Of course, I didn’t have specific venture experience but I've had along history at Deloitte with ample parallel experience to pull from. I can roll with it and figure it out what I don’t know as I go. I'll make mistakes, sure. But this was an opportunity that I couldn't have written any better. You can call it lucky if you want. I’ll always tell you it was the perfect intersection of where preparation met opportunity.
Our thesis is focused around three things. One is InsurTech. A lot of the big insurance corporate venture arms are in/near Chicago (where our fund is based) and we all have experienced the lack of innovation in this pace across all insurance offerings. The second is a broad bucket around the consumer. We have quite a few consumer package goods startups in our portfolio but lately we've been leaning more toward a tech enablement product or service for the consumer, so something that is an IOT or smart hardware that is consumer facing. The third bucket, which is probably most interesting to me, is around Food and Agriculture Tech. Anything that touches the food ecosystem, from the farm level (tech enabled devices and services that aid in helping farms become more efficient, more sustainable, more profitable) to the manufacture of new better-for-you protein ingredients(e.g. plant based products) to the end of the spectrum where the consumer gets their groceries delivered or how the consumer interacts with the food system.
One of the huge differentiators for us at Newlin is our geographical focus. Many VCs at the seed stage will have a tighter geographical focus. For example, they will only invest 200 miles around Pittsburgh to help build out that startup ecosystem, or they only focus on the Midwest, or maybe only in the Bay Area or on the coasts. At Newlin we focus not only on North America (both the US and Canada), but also on South America. The LATAM market is so undercapitalized and has incredible value especially around our Food and Agriculture Tech focus in countries like Brazil, Argentina, Chile, and Mexico. We’re really excited about this region and talk to founders there daily. Additionally, I was able to source our first deal outside of the Americas, which is a company in South Asia who we’re really thrilled to be working with – that announcement to come from us soon. Ever since my days in London, I knew I wanted my career to continue to be very cross border, so this has been great to further that international focus.
We’ll invest at the Pre-Seed, Seed and Series A stages, and our check sizes are usually $100,000 to $200,000. If it's a pre-seed round, depending on the size, we may lead and help set terms, but most times we're follow-on capital for raises that get in the multiple millions or so.
That’s the goal. There's definitely an opportunity for me juggle my MBA while still heading deal flow for Newlin and it’s something I want to make work because I see so much value in continuing this experience. It won’t be easy to manage but nothing worthwhile is ever that easy. If I want to continue with VC long term this hustle will pay dividends long into the future so it only behooves me to stick with the industry and do as much as I can.
I think I’m pretty set on VC at this point, but I don't want to leave any stone unturned. I'm not sure what other industry that I'm going to look at specifically, but I wouldn't say no to an operational role within an early-stage company whose mission I align with. My longer-term goal is to be COO or CEO of a company that I care deeply about. To get to that point, I would need to be operational and help build something along the way and in any event, an ops role within a startup for a period would also be very valuable if do decide to stick with VC longer term.
First, public accounting is very client facing. You have to be able to hold your own in conversations, regardless of topic or industry. Starting when you’re 22 years old you’re with finance people in an organization who have worked in that role for 10, 20, 30 years. You're not going to know everything that they do, but you hone an ability to ask the right questions, to flow with the conversation, to lend a hand or a thought where you think it's appropriate. That’s a powerful skill to have. When I talk to founders, I haven't been in their shoes starting a company, but I'm able to ask questions to understand the business, give suggestions from what you’ve seen other companies do, and at the same time help them access the right type of capital at the right time.
You’re also exposed to different people, different places, different industries, different businesses in public accounting. You've been in the guts of a company before, within audit or other advisory work. So, you have a lot of experiences to lean on and share. Just the professional adventures that we've had in our careers to date gives you ample material to pass along to founders.
Additionally, a skill which is more applicable to later stage VC than earlier stage is the ability to tell the story of a company through their financials. The ability to pick up a set of financials and tell what's happening with the business, where they've been, where they’re going, are they healthy or not, do they need more capital, etc. is a great skill which I was able to hone during my time in London. Being able to diagnose companies through that lens is a pretty important technical skillset.
As someone who studied accounting and/or finance, you're going to be tagged with that label. Outsiders will say you’re an accountant, that's what you do, that's what you can do, that’s what you know. My general advice is to stop boxing yourself into those specific roles. Think bigger – if you had a blank slate, what is it that YOU want? Look, if you want to go be a controller or work in FP&A or SEC reporting, that’s great. I know a lot of tremendous people that are doing good work in those roles. But that just wasn't what I wanted for myself. So, I always saw past those labels. And what I tell people is just stop discounting the experience that you've already had. Better yet, stop letting others discount your experience. See through those labels and show what you can bring to the table. Maybe you need to supplement your experience with taking on a different project in your current role or maybe grab some volunteer experience in the industry or role you’re pursuing. But you can use your parallel background, experiences, and stories to get where you want to go. Then network like hell.
As far as my career is concerned, I don't have a lot of those things that I would change. I firmly believe that things happen for a reason and by working extremely hard and taking advantage of the best opportunities that present themselves because of that hard work, I’ve enjoyed my career. But I would tell myself to take more and bigger risks. People may look at my career and say that I've definitely done that. There was risk in leaving the Pittsburgh office, a risk to going overseas, and now a risk leaving the firm at which I was on a high growth trajectory. But there are other things like a side hustle, being entrepreneurial, or building relationships with people to work on a specific project that I would tell myself to do more of. So, I would have put myself out there more to experience new things in different ways. I’ve done that to a certain extent, but I would pound that into my thought process even earlier.
I would also tell myself that failing is okay and much of the time it’s actually a good thing, especially early on. Failing spectacularly maybe just as good as actually succeeding in some ways. It’s certainly not the same thing as succeeding, but failing provides different learnings and experiences. It builds resiliency. It builds confidence when you can pick yourself back up and get back on track. It can change how you think about things in the future and how you can pivot. The founders who I speak with every day take risks. Sometimes have taken big risks in the past which have failed, but they’re better for it and now have a fresh perspective to be better than they were before and I respect that.
Two things, one is the failing part. It’s good to fail. You’ll learn things failing that you’ll never learn otherwise. The other thing is to really step outside of your comfort zone, like really outside of it. You may land on something you had no idea was there. Something that leads you down a path that you didn’t know existed. You don’t know what you don’t know, so keep putting yourself out there. For me so far that was leaving the personal and professional comforts of Pittsburgh to pack up and live and work abroad. I’m forever grateful for that experience.
Clean eating and fueling my body with better products. I'm certainly going to have those junk food nights where I eat a lot of garbage. I tell Marcia, my long-time girlfriend, that I only eat junk food because she buys it and it’s in our apartment, but secretly I’m a big junk food instigator at times. But from being an athlete, always being into fitness, and certainly seeing some people through my life struggle with health-related conditions I’m very conscious of what goes into my body. If you want to live along, happy, healthy life and to be there for people around you, what you eat really matters. It's interesting to be in Food and Agriculture Tech right now and to see the developments in the area. Whether it's the plant-based space or just other clean ingredients and protein alternatives, I'm really into those products, understanding them better, and using them more often.
One I heard recently that I really love is “to be different, you have to move different.” Whether that relates to our career or our personal lives, if we want to do something unique, we can't do the same things as everyone around us. I’ve sort of lived by that motto my entire life but hadn’t really put it into works until I saw this quote.
Another one is from author Marianne Williamson - “Our deepest fear is not that we are inadequate, it’s that we're powerful beyond measure.” Sometimes I think we shrink so people don't feel insecure around us. But in reality, what we're able to bring to the table - thoughts that we have, visions that we have - gives not just you the opportunity to be more, believe more, and do more but also gives permission to those around you to do the same.
As I mentioned before, from a career perspective I eventually want to be a significant voice at the table when decisions are made and that basically means be a COO or a CEO of a business that I really care about. Being in a high enough position to affect change and help write the future of that organization is where I need to be.
From a life perspective, I think it’s to never stop exploring. Life is about adventure. It's about relationships, experiences, memories, storytelling. When I eventually have kids, that becomes my biggest project that I’ll ever sign up for and I want to put them in the best position to be successful which is a direct correlation to giving them adventure and giving them opportunities. In my perspective, I never want to force my kids into a specific path. It's more about saying - here are all the opportunities that you have go pick the one(s) you’re passionate about. Just as my parents did for my brother and I growing up. I see my two-year-old niece and she’s already amazing. She’s super smart, super capable, very energetic, and full of personality already because her parents just put her in positions to be at her best. They show her, teach her, help her develop, take her on adventures and give her opportunities to learn. That’s their biggest project. My kids will equally become my biggest project. I hope my constant pursuit of adventure and learning helps fuel a path for them.