Last year was another record-setting year for venture capital investments, the second in three years. According to Pitchbook data, nearly $150 billion was pumped into ventures globally in 2017, topping 2015’s $142.8 billion. As of last October, eight ventures had received investments of at least $500 million in 2017. To be sure, many of those ventures have MBAs at the helm. One of the eight to receive at least $500 million was SoFi, which was founded by a team from Stanford’s Graduate School of Business. As part of our annual Poets&Quants Top 100 MBA Startups, we track the venture capital firms investing in the most MBA-founded companies to make the list. This year, Palo Alto, California-based and Stanford-focused nonprofit StartX had the most investments in companies on the list.
StartX, which also runs an accelerator for Stanford students and alums, invested in seven startups on the list, including Branch Metrics, Booster Fuels, and ClearMetal. After StartX was a four-way tie. New York City-based BoxGroup, New Enterprise Associates, SV Angel, and The Graduate Syndicate all invested in six MBA startups. Similar to StartX’s approach, The Graduate Syndicate is a Harvard-focused investment firm run by Jeff Bussgang, a senior lecturer in the Entrepreneurship Management Unit at Harvard Business School. This year, Stanford’s GSB had 27 startups on the list and Harvard Business School had 26.
Geographically, no other region had more venture capital firms on this year’s list than the San Francisco Bay Area, which includes Silicon Valley. Of the 20 VC firms that invested in at least four startups among our Top100, a dozen are headquartered in the Bay Area. Three others are based in New York City and another two are in Cambridge, Massachusetts.
TOTAL INVESTMENTS RAISED BY MBA-FOUNDED STARTUPS ON THREE-YEAR DECLINE
While the investment dollars remain frothy, the number of deals being made globally are dropping dramatically. After peaking in 2015 at about 19,000 deals, the amount of deals in 2017 was expected to be less than 12,000. VC firms raising funds also took a hit last year, according to Pitchbook data. After a 10-year peak of a little more than 420 funds raised in 2016, the number was predicted to be less than 300 last year. According to our gathered data, MBA-founded ventures might also be feeling the pinch. When we first created the ranking in 2013, the 100 freshly minted companies on the list had raised just under $2 billion. The combined total surged to $4.9 billion in 2015 and peaked at $5.2 billion in 2016. Last year, the number plummeted to $2.9 billion and sunk even lower this year to just under $2.5 billion.
With Farmers Business Network topping our list of Top 100 MBA Startups with $193.9 million in backing, it was also the lowest funding raised for the number one spot ever. Last year, Wharton-founded Deliveroo topped the list at $474.59 million and received a $275 million Series E round last April. In 2016, SoFi topped the list with $1.365 billion. The year before, Skybox Imaging finished on top with $500 million in funding.
One possible reason for the low numbers this year could be the maturity of companies on the list. This year, there were no ventures with Series E rounds. The largest round gathered was a $125 million funding round for Kacific, a Chicago Booth-founded venture. Farmers Business Network had the second highest with a $110 million Series D. There were only five Series D rounds raised and the majority were Series A and seed Rounds.
TOP MBA STARTUP SERIES: