Which business school boasts the most entrepreneurial prowess? It’s a question of viable interest, and the answer, of course, depends on who you ask. Existing rankings that attempt to provide some guidance are badly flawed, either at U.S. News & World Report or Entrepreneur magazine. The former relies entirely on the opinions of deans and MBA directors who have little knowledge on other schools. The latter hodgepodge ranking is based on a methodology that lacks transparency and legitimacy.
Neither list takes into account the actual success of the ventures launched on college campuses. At Poets&Quants, we believe one of the most important indicators of a school’s entrepreneurial efforts is the amount of smart money its startups collect. Do investors pony up the cash to back the ideas and teams that come out of a business school?
So when we produce our list of the Top 100 MBA startups, we also look closely at how many startups come from each school and how much funding they’ve attracted. To be sure, these companies represent a small subset of all the startups launched at business schools over the past five years. But the 100 on the list are clearly among the most exceptional companies. They’ve won the endorsement of angel investors and venture capitalists. They’re comprised of teams of highly intelligent and driven individuals from within and outside of world-class MBA programs (only one founding member must have an MBA to be included). To even be included on this year’s list, each startup had to convince investors to open their pocket books to the tune of $2.4 million of funding in the past five years.
ALL HARVARD MBAs REQUIRED TO TAKE FIRST YEAR ENTREPRENEURSHIP COURSE
The vast majority of those startups come from the Harvard Business School. This year, 42 HBS-founded ventures made the list of the Top 100, up from 40 last year and 34 the previous year. Stanford’s University’s Graduate School of Business was second with 23 ventures, down from 31 last year and 32 in 2013.
Tom Eisenmann, the faculty co-chair at Harvard’s Rock Center for Entrepreneurship, credits HBS’ required first-year courses for the school’s number one finish. He believes that the school’s curriculum nourishes an entrepreneurial mindset in MBAs from the get-go and whets their appetites for the more risky path of doing a startup.
“For students who didn’t think about themselves as being entrepreneurs, learning about it early and trying it, that’s a big accelerator for a pretty large fraction of the students,” says Eisenmann. “Some try it and say it’s not for me. But others try it and launch their business later in the program and say, ‘Wow, this thing now exists in the world because we created it. This is here because we turned our idea into it.’ And they go off during the summer like all MBA students do before their second year and they will work full-time on that idea that they had in the first year.”
And in the second year, Eisenmann explains, students can come back and take courses that fit nearly every stage of a fledgling venture and find a faculty member or two to guide and mentor them through each of the challenges they are likely to face. “Because of the scale of Harvard Business School, we have a lot of faculty, which means we have a lot of course offerings that are a range of terrific second year electives,” says Eisenmann. “So if you’re interested in entrepreneurship the second year, we’ve got pretty much anything you would need to move your understanding to the next level.”
STANFORD’S 22 VENTURES HAVE COMBINED FOR MORE THAN $2.5 BILLION IN VC FUNDING
Most HBS students, some 46%, decide to start a business in their second year of the MBA experience. But as many as one in five come to campus, some 22%, having already made up their minds to use the two years to do a startup. Of the 84 founders who spurned the six-figure offers from prestige firms to do their own thing, 68% had co-founders and a hefty 55% conected with a co-founder at HBS.
According to the school’s employment reports, about 350 graduates have started their own businesses since 2011. Considering 42 Harvard-founded ventures made the list, an impressive 12.3% of those 350 have raised more than $2.4 million. Meantime, about 195 GSB graduates have launched companies during the same time frame. And with their representation of 23 ventures on the list, about 11.3% of 195 graduates raised at least $2.4 million.
While HBS has the most startups among the Top 100, GSB’s 23 ventures have piled up $500 million more in funding than Harvard’s 42. Stanford-founded ventures raised more than $2.5 billion collectively. Harvard ventures on the list have combined for just under $2 billion. Many point to Stanford’s closeness to Sand Hill Road, the epicenter of venture capital, as a factor in the mountainous amounts of VC backing its graduates have been receiving.