MBA Entrepreneurs Have Netted $100 Billion In Venture Capital — Here's Where They Went To School
Zuckerberg dropped out of college — but business school can be valuable for start-up founders
The who’s who of the billionaire founders club, especially in tech, reads like a ranking of college drop outs — à la Mark Zuckerberg, who fled Harvard University to launch the world’s biggest social media network.
Yet the management nous and network gained at business school is increasingly valuable for start-up founders.
Some 6,648 MBAs have founded 6,035 companies and raised $99.395 billion in venture capital for them.
That’s according to figures published by PitchBook, which tracked b-school graduates over the past 10 years to see which ones are pumping out the most founders, companies as well as securing VC backing.
The data come as MBA students increasingly shun cushy corporate gigs to found or join riskier entrepreneurial ventures.
Separate figures from the Financial Times show that three years after graduation, around 24% of MBAs have founded companies.
Emily Taylor, director of MBA career education at UCLA Anderson School of Management, suggests that the wave of VC funding and tech IPOs in previous years has lured students away from more traditional paths.
“There has definitely been an appeal to join, create or finance the next unicorn,” adds Emily, coining the phrase for ventures valued at or above $1 billion.
And when it comes to founding unicorns, Harvard Business School is the most successful, ranked no 1 by PitchBook. The best example? Anthony Tan founded Uber rival Grab less than a year after getting his MBA there. Four years later, and the venture is valued at a reported $2.3 billion.
HBS alums have also raised the most capital; 1,069 MBAs launched 961 companies that secured $22.4 billion in backing, according to PitchBook. These include Oscar, the health insurance start-up backed by $727 million in VC, and BabyTree, the Chinese parenting website that has scored $534 million.
Hot on HBS’ heels is Stanford’s Graduate School of Business, ranked no 2, where 720 MBAs launched 636 businesses that went on to net about $14.5 billion in VC.
The most noteworthy include Harry’s Razor Company, which does what it says on the tin, and which has $287 million in equity funding. Marketplace lender SoFi, meanwhile, has secured a staggering $1.4 billion in VC.
Given Stanford’s proximity to Silicon Valley’s tech start-up culture, this will come as no great shock. Its San Francisco campus is within earshot of the Sand Hill Road cluster of more than 20 VCs, such as Kleiner Perkins Caufield & Byers.
“There’s an obvious advantage to being at Stanford: In order to get a meeting with a VC you just drive a few minutes down the road,” says Tom Sabel, associate director at Stanford’s Career Management Center. “And if you look at VC firms, there is a significant Stanford alumni network in them.” That’s biggest benefit to a Stanford degree, notes Daniel Macklin, SoFi co-founder: “When I first raised money to fund the company, almost without exception every investor came from Stanford,” he says.
This “Stanford effect” reflects a sense of unease in the venture capital community — investors may be hedging their bets by sticking to known geographical realms and established networks, according to Garrett James Black, senior PitchBook analyst.
It is little wonder, then, that VC-backed start-up production at elite schools with the strongest investor bonds is surging. So much so, that PitchBook revised upwards its figures from the top 10 undergraduate programs, from 3,000 companies that raked in $33.5 billion in VC, to 6,000 and $105.8 billion.
At the prestigious Wharton School at University of Pennsylvania, for example, ranked no 3, MBAs have banked about $10.6 billion in investment for 506 businesses, such as e-commerce site Jet.com, which was bought by Amazon last month for $3.3 billion.
However, there is a notable entrepreneurial culture at schools outside of the US prestige circle. INSEAD for instance, in France/Singapore, is ranked no 5 by PitchBook. There, MBAs raised about $6.1 billion for ventures including ride-hailing app BlaBlaCar, which alone is valued at $1.5 billion.
“There are sexy stories,” says Jeff Skinner, executive director of the Deloitte Institute of Innovation at London Business School — like WorldRemit, an LBS money transfers venture valued at about $500 million.
Given the success, entrepreneurship is being highly touted as a career choice.
And to cater to Millennials who idolize Silicon Valley stars such as Elon Musk, schools are competing with one another to launch the best start-up incubators. In the past 12 months, HBS and NYU’s Stern School have set-up launch-pads to accelerate the growth of student ventures.
Such courses mitigate the risk of starting a company, says Caroline Daniels, senior lecturer in entrepreneurship at Babson College. “The MBAs feel more confident.”
Zuckerberg may have dropped out of school, but the next tech billionaire may just be an MBA.