DoorDash, SoFi, Warby Parker, Rent the Runway, Grab — these are just a few of the successful ventures launched by Stanford, Harvard, and Wharton MBAs. Impressive? Of course. But they also made it look easy, and it was anything but.
Entrepreneurs know that no matter how sterling their academic pedigree, it’s not easy to launch a successful company, to innovate, to disrupt, to elbow your way into a market and thrive. The most difficult part is also the most important: raising funds. If you can’t get the money, you can’t get off the ground, and your brilliant innovation may never have a chance to be the next big thing. For business owners still in school, the hurdle is even higher.
And that is where The MBA Fund comes in. Four MBA students — Hiro Tien and Hansae Catlett from Stanford Graduate School of Business, Josh Hoffman-Senn from Harvard Business School, and Sieva Kozinsky from Wharton Business School — created the Fund in 2018, looking to invest in early-stage, student, and alumni founders from the three B-schools, with priority given to minority founders. Their efforts quickly bore fruit, because there was a huge need. Backed by top-tier venture capital firms and executives of Fortune 500 companies, The MBA Fund has become a thriving network of founders, executives, and investors committed to mentoring and investing in young entrepreneurs.
As meteoric as their rise has been, their goal, says Hoffman-Senn, is unchanged: Help MBA students bring their ideas to life.
“People often have this misconception that if you go to a school like Stanford, Harvard, or Wharton, you’ll be able to raise money easily,” he tells Poets&Quants. “People think it’s easier than it is. Any founder who’s raising money for their startup is going to have to learn to master the art of fundraising.”
In under three years, the MBA Fund has distributed over $2.2 million in seed money to 60 companies. The Fund’s portfolio companies have raised money from such major venture capital firms as Sequoia Capital, Bessemer Venture Partners, Accel, and Founders Fund; several are now valued at over $100 million.
But The MBA Fund does more than just invest in startups — they go out and find them, too, holding annual pitch competitions at each university with investors and venture capitalists acting as judges. In 2019, their competitions awarded $1 million in prize money; last year the amount grew to $1.3 million, split between 15 winners from each school. Not only did the chosen founders walk away with cash, the judges became part of the startup they decided to invest in.
Investment brought the four together. Tien, Catlett, Hoffman-Senn, and Kozinsky met online when they were networking with others who had an interest in venture capitalism. Networks — and like-minded goals — naturally led to the launch of a fund that helps MBA students raise money to launch a successful venture.
“I was angel investing before school and noticed a lot of great companies coming from the top MBA programs,” Kozinsky tells P&Q. “Given that I was going to be on campus, I figured we would have an advantage sourcing and helping new great companies launch their ventures at these schools.”
Hoffman-Senn was introduced to Kozinsky while he was trying to find other entrepreneurs through his community. “He had an interesting vision for something like The MBA Fund, and we started collaborating.” Meanwhile at Stanford, Catlett was inspired to begin a class fund and was introduced to Kozinsky through a friend, thinking it would be a great idea to combine capital, networks, resources, and break down the silos to help startups from these three schools be successful.
Tien also had long inspired to help early-stage founders. With an entrepreneurial background, he was continually asked questions by his GSB classmates who had no prior startup experience but were inspired by the startup ecosystem. “I was meeting extremely smart, interesting people who could see the future,” he says. “I thought, if I had the money, I would give them the means to scale their businesses in five to seven years. This is what got me interested in beginning a fund.”
“We wanted MBAs to be able to get some backing, publicity, and recruit talent,” Catlett says. “Plus, we saw that there were no large-scale pitch competitions at business schools, which led us to our vision for The MBA Fund’s annual pitch competition.”
GAINING $2.2M IN THE FUND’S BACKING
Despite having no prior connections to the backers, the partners were able to land high-caliber investors. Gaining funds from co-founders of DoorDash and Trulia, partners at Khosla Ventures and NFX, the president of L’Oreal, and many other high profile entrepreneurs and venture capitalists, they raised $2.2M for their first fund in 2018 and are in the process of raising money for their second.
“It was just the four of us emailing people, asking to chat about an opportunity to invest in the future,” Tien says. “We reached out to our school’s alma mater first, and many alums wanted to stay close to the community and continue to give back. They could also see the huge opportunity to invest in the upcoming best companies that are going to be killing it in the future.”
Catlett adds, “We didn’t know anyone, and were surprised by the amount of interest in people wanting to give back to their alma mater. When they saw how well these MBA-funded and MBA-led startups were performing, it became undeniable that this was an attractive opportunity for investors. When you couple that with the attractive financial opportunity and the ability to mentor and work with the founders, it became a compelling investment.”
After spending the summer of 2018 building relationships and successfully securing backing, they launched the MBA Fund in September 2018 and hosted their first pitch competition in spring 2019. Now, the Fund has over 120 mentors and 40 LPs, including venture capital firms, angel investors, and founders.
RUNNING A REMOTE TEAM
The partners launched The MBA Fund together remotely — first because of geographic distance, and then due to the Covid-19 pandemic.
“There was a long, important phase of getting to know each other and working together before we decided to launch the venture,” Hoffman-Senn says. “It’s a testament to what you can do even remotely with lots of Zoom meetings, as the world is now discovering.”
With the hope to build community, provide entrepreneurial support, and see an increasing success rate of Stanford, Harvard, and Wharton entrepreneurs, the partners share a common mission and help to “keep the Fund’s machine running,” as described by Tien.
With teams of eight to 12 people at each school, the partners have extra help as they raise funds for each iteration of the pitch competition and provide resources, assistance, and mentorship to the early-stage entrepreneurs.
SUPPORTING MINORITY FOUNDERS
The MBA Fund wants to help those who historically have received a disproportionately small amount of funding. More than half of the Fund’s portfolio are Black, Brown, and female entrepreneurs.
“Helping these founders ended up being a huge focus for us in terms of an unmet need. If we can build a vibrant community where new businesses are getting built by a diverse set of founders, that will look like success to us,” Catlett says.
Not only does the Fund invest in minority founders, it also invests in a diversity of industries. “We don’t think of ourselves as too thematic by industry; we’re in communities where diversity of thought and even industry is something we value tremendously,” Catlett continues.
While the Fund helps to raise money for minority founders, it also allows the team members at each school to learn the necessary skills in a real fund before entering into the investment industry following graduation. Plus, it helps to expand their networks and connect with the Fund’s high-profile LPs.