Interest in entrepreneurship is accelerating at the University of Pennsylvania’s Wharton School of Business – the percentage of MBAs opting to start their own businesses hit an all-time high since the school started tracking data in 2005. Some 7.4% of MBAs in the Class of 2013 aimed to strike out on their own, up from a mere 1% in 2005.
These entrepreneurial MBAs are launching businesses across a broader range of industries than in previous years. Most graduates still favor technology sector startups (32%), despite a slight drop from last year’s 34%. However, retail companies represent nearly a quarter (23%) of all new ventures, and consumer goods businesses have doubled from 4% in 2012 to 8% in 2013. Startups in the financial services sector have also boomed, tripling from 5% in 2012 to a whopping 15% in 2013. Healthcare was the only industry to see a significant decrease in activity, dropping from 14% in 2013 a mere 8% in 2013.
Wharton MBAs are jumpstarting their entrepreneurial careers earlier, as well. This year, more than 70 first-year students signed up for summer internships at startups – a 15% increase over last year’s 61 students. The interning MBAs have also spread themselves across a broader range of industries. Most still prefer technology (32%) but roughly 19% flocked to healthcare startups, up from only 5% in 2012. Media internships also grew from a mere 2% in 2012 to 6% in 2013. Retail internships dropped by half from 16% in 2012 to 8% in 2013, while internships in the aggregate category of agribusiness, financial services, incubators and innovation consulting rose seven percentage points from 6% in 2012 to 13% in 2013.
Wharton has responded to this trend by allowing students with entrepreneurial ambitions to opt out of core classes for a more startup-oriented curriculum, according to Maria Halpern, Wharton’s career advisor for entrepreneurship and startups. The school has also launched a Founders’ Retreat where students who have already started businesses or express interest in doing so attend a pre-orientation and meet with alumni and faculty who offer advice, connections and guidance. In 2010, the school’s career center formed a team dedicated to help guide students eyeing entrepreneurial careers. The career center has also forged partnerships with venture capital firms and incubators to provide more opportunities and connections to startup-oriented MBAs.
Wharton also expanded the geographical options for MBAs by offering a semester in San Francisco on Wharton’s West Coast campus, which was previously reserved for Executive MBA programs. Some 60 full-time MBAs took advantage of the opportunity to study in the innovation hub – a perceptive move given that roughly 16% of accepted offers for the Class of 2012 were on the West Coast. Preliminary data for the Class of 2013 suggests that figure could jump as high as 20% for the Class of 2013. “We have more people coming in with entrepreneurial experience and coming in to school indicating that they intend to start a business immediately after graduation, so I think we’ll see the trend toward entrepreneurship continue to increase over the next few years,” Halpern says.
While Wharton has worked to cultivate a startup environment, the school is also attracting more entrepreneurial types. The number of incoming students who started their own businesses before coming to Wharton tripled between the Class of 2013 and Class of 2014.
Giving the risks involved in joining a startup, it’s worth noting that Wharton MBAs are also graduating with record levels of debt. The Class of 2013 will likely pay more than $100 million in loans and interest payments. However, many MBAs are embracing risk and lower paychecks to pursue meaningful careers. “The number one reason that students tell me for wanting to join a startup is that they want to be passionate about what they’re doing on a day-to-day basis,” Halpern says. Many MBAs don’t view startups as more of a gamble than some of the more traditional B-school employers. “A lot of the students were impacted personally or saw the fallout from the financial crisis in 2008, and they don’t see going to a startup as all that much riskier than going to a large financial institution or a large company,” Halpern says.
Startup employers have noticed the uptick in MBA interest, with many later-stage companies targeting MBAs with more streamlined recruited efforts. Spotify, Box and ZocDoc have all hired Wharton MBAs as either interns or full-time, and another 20-25 startup companies welcomed Wharton to present data on the value of MBA recruitment. Early-stage startups are particularly keen to snatch up MBA talent – half of accepted startup internships this summer are at companies with fewer than 20 employees.
However, like most trends – it’s unlikely the entrepreneurship uptick will follow a sharp, upward trajectory forever. “At some point there’s got to be a leveling off because there’s still a large majority of students who come to business school to pursue careers in consulting or banking or large technology – there’s still a lot of value in getting an MBA to do that, as well,” Halpern says.