Silicon Valley isn’t just for engineers and computer science majors. It has been — and continues to be — a hub for entrepreneurial MBAs. Of the 100 startups on Poets&Quants Top MBA Startups this year, 42 are based in California — the vast majority of which are based in Silicon Valley or nearby San Francisco. And for the first time in the five years we’ve compiled the list, Stanford’s Graduate School of Business had more startups make the top 100 — at 27 — than Harvard Business School or any other B-school in the world. In four out of five years, more than half of the startups have been founded by graduates from Harvard Business School or Stanford’s GSB, and this year’s no different with Harvard MBAs behind 26 of them. In all, 53 of the top 100 have roots in either Boston or Palo Alto.
Each year, we scour the internet and reach out to the world’s most elite business schools to find startups launched in the past five years with at least one founder who graduated with an MBA in the same time period. We then rank them on one standard: how much funding each new venture has raised. With last year’s winner, Deliveroo no longer fitting in our timeframe, there had to be a new winner on top. This year it was Farmers Business Network, founded by a pair of MBA grads: Charles Baron from Harvard and Amol Deshpande from Cornell’s Johnson Graduate School of Management. Their agriculture technology company collects and analyzes data from a network of nearly 6,000 family-run farms totaling about 20 million acres across the U.S. and Canada.
Founded in 2014, Farmers Business Network (FBN) debuted on our 2016 list at 26th place with $23.9 million in funding. Last year, the venture elevated to 13th place by adding another $20 million in VC-backing. But this year, FBN zoomed to the top of our list, passing many others, with a $40 million Series C round last March and a $110 million Series D round in November. In one year, FBN tripled its total funding, reaching a total of $193.9 million. FBN was followed by last year’s third-place finisher, DoorDash, which remained at $186.7 million. The food delivery platform was founded in 2013 by a team from Stanford. In third place was Kacific, a broadband satellite company that has raised $147.3 million and was founded by a team from Chicago’s Booth School of Business.
STARTUP FOUNDERS DECREASING AT TOP B-SCHOOLS
While student-founded ventures are holding their own, the number of recent grads starting ventures while in business school or immediately after graduation is trending down. Earlier this week, the Financial Times reported that B-school graduates founding businesses immediately after earning MBAs is now at an eight-year low. After peaking at 22% in 2015, the rate of recent grads founding businesses is at 16%, according to the FT’s surveys of Class of 2014 alumni. Last year, 63 graduates from Stanford’s GSB founded companies within three months after graduation, representing 16% of the class. The rate was a slight uptick from 61 founders in 2016, but off a peak of 70 in 2013. At Harvard Business School, some 64 graduates (7% of the class) launched their own companies in 2017. This is a slight drop from 65 in 2016, but a more significant drop from the six-year peak of 84 founders in the Class of 2015. At MIT’s Sloan School of Management, the rate is also on a five-year slide from 37 founders — 10% of the class — in 2013 to 19 (or 5%) in the Class of 2017.
According to Deborah Whitman, the director of the Center for Entrepreneurial Studies at Stanford’s GSB, the slight decline could be the result of a frothy MBA employment market. “When it’s more challenging to find really awesome jobs upon leaving the business school, you actually see business formation numbers going up a little bit,” Whitman tells Poets&Quants. And as reported earlier this week, MBA alums are getting very highly compensated jobs right now.
The amount of funding being raised by the top MBA startups is also trending down. This year, total funding for all the top 100 ventures fell to just under $2.5 billion, from $2.9 billion last year and far off the 2016 peak of $5.2 billion. Money is getting harder to come by, even though 2016’s numbers were inflated by SoFi, which at the time had raised more than $1.3 billion alone. But even taking out that $1.3 billion, the total would have still hovered around $3.9 billion, also less than the combined $4.9 billion on our 2015 list.
Despite the downturn, Clare Leinweber, the managing director of Penn Wharton Entrepreneurship at The Wharton School says entrepreneurial interest among Wharton students and the broader University of Pennsylvania community is higher than ever. Leinweber’s office hosts a Startup Expo at the beginning of the academic year. This year, Leinweber says attendance jumped by 57%. What’s more, she says, students signing up for meetings with entrepreneurial experts through the Entrepreneurs in Residence Program had a massive increase of 620% this year compared to last year. “The signals are strong that there is significant interest across the entire community,” she says.
FROM A SINGAPOREAN DATING APP TO A SILICON VALLEY AG-TECH VENTURE
Similar to other years, though, this year’s list features a wide-range of interests and industries. They are changing the daily lives of people across the globe — from the rural American and Canadian farmers using FBN to how people are networking and dating through Paktor, a Singapore-based dating app founded by a team from Chicago Booth. This year’s list includes Clutter, a Los Angeles tech-based storage company founded by a team from UCLA’s Anderson School of Management, Wharton-founded FabHotels, which is a platform for booking budget hotels in India, and FourKites, which was founded at Northwestern’s Kellogg School of Management and tracks and orchestrates logistics through the trucking industry. Be it the way farmers buy seed and sell food or having an outlet for bridesmaids to rent expensive dresses for weddings, these MBAs and their teams are creating massive industry and lifestyle changes.
While most of these companies are based in urban areas, some, like FBN are operating in very rural communities. Baron, who graduated from Harvard Business School in 2013, was introduced to farming after spending a corn harvest on his brother-in-law’s farm in Nebraska. The former program lead in energy innovation and geothermal at Google was fascinated by the uniqueness of farming and how challenging it seemed. “Farmers are truly the original entrepreneurs,” Baron told us last year. “On a given day they are a mechanic, agronomist, commodities broker, veterinarian, and business manager, just to name a few.”
At Harvard, Baron was the co-president of the HBS Energy & Environment Club and spent the majority of his free-time studying the agriculture industry. Upon graduating, Baron linked up with Deshpande, who earned his MBA from Cornell in 2005. The two knew each other from their time at venture capital firm Kleiner Perkins Caufield & Byers. Their goal? To flip the farming and agriculture industry on its head.
DEMOCRATIZING FARMING AND PUTTING MORE MARKET POWER IN THE HANDS OF FARMERS
While farming is “extremely consolidated,” Baron says, prices are not all that transparent. Indeed, he’s right. Last September, Dow Chemical Company and DuPont completed a $130 billion mega-merger, creating DowDuPont. And now the Department of Justice is mulling a proposed merger of seed giant Monsanto and chemical behemoth Bayer. In the U.S., Monsanto and DowDupont already own more than 70% of the available corn seed, Baron says. “What’s happening is what used to be the local regional farm economy is now replaced by this oligopoly system of consolidated manufacturers, retailers, and buyers.”
According to Baron, the North American seed and chemical industry can be valued at $26 billion. “And there’s almost not a single price posted online,” Baron explains. “If you or I wanted to buy something for our daily lives, we’d just go online, start with Amazon and shop around to find the best price. Even if you want to buy a car, you can find the MSRP and then negotiate from there.”
The result is “the least transparent and least competitive market you can imagine,” Baron says. Or, all of the power is currently in the hands of these mega-agriculture companies. “Famers are consumers, too,” Baron continues. “There are hundreds of thousands of U.S. farms, and they buy billions of dollars of these products, and they get completely hosed and taken advantage of. They lack basic consumer rights and transparency that you or I benefit from.” When a farmer joins the network, his or her data on seed prices and performance as well as agronomics analytics are all posted online and available to all farmers also on the network. “We are providing transparency in a market that doesn’t allow it to happen,” Baron boasts.
By providing farmers the ability to make smarter, informed decisions, each farm is able to save around around $120,000, he estimates. “In South Dakota, that’s a new tractor or sprayer or putting your kids through college,” Baron points out.
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