Do You Need An MBA To Found A Unicorn? History Says … Probably Not

Stanford’s Venture Capital Initiative, ;ed by finance professor Ilya Strebulaev, found that just 323 of 1,110 U.S.-based, VC-backed unicorns have at least one founder who went to a business school

Though an MBA has long been (and continues to be) a ticket to career success, it doesn’t guarantee it. This is particularly true in entrepreneurship. According to a Stanford professor who specializes in VC research, unicorns — companies backed by venture capital that are valued at a billion dollars — are more likely than not to have achieved their status without the help of a founder with an MBA, or who attended business school at all.

Fewer than a third of unicorns based in the United States have a founder who went to a B-school, writes Ilya Strebulaev, finance professor at Stanford Graduate School of Business and one-time Poets&Quants Professor of the Week. Of those companies that do have an MBA among their team of founders, Harvard Business School is the most-represented B-school; however, in terms of per capita unicorn founders, Stanford “is the clear winner,” Strebulaev writes on his LinkedIn page, where he posts the results of his research.

However, in another trove of recently published research, Strebulaev and his team at Stanford found that almost 30% of founders of U.S.-based unicorns either attended or worked at a non-U.S. university.

VC DATA IS HARD TO COLLECT

Ilya A. Strebulaev

Ilya Strebulaev: One of a few academics across the top B-schools doing research on venture capital

Strebulaev, who has been at Stanford since 2004, founded the Venture Capital Initiative in 2015. The team of research assistants, Ph.D. students, project managers, lawyers, and others has compiled a database that includes every U.S. unicorn startup since 1995 — hundreds of unicorns across dozens of industries, all backed by VC and having had at least one private round of funding or funding at exit with the post-money valuation of $1 billion and above after January 1, 1997. With data and prominent examples, the professor regularly reports the VCI’s findings on his LinkedIn page.

When we last checked in with Strebulaev in late 2021, he had just reported that the best age to become a unicorn founder was between 30-34 years; that unicorn founders don’t need an academic degree, but it helps to have one; and that 94.5% of the founders of VC-backed startups between 1991 and 2018 were male.

“Venture capital research is relatively recent because there really hasn’t been any data,” Strebulaev, Stanford GSB’s David S. Lobel professor of private equity, told P&Q in 2021. “It hasn’t received as much attention as I think it should have received. I have amazing colleagues at other schools — at Chicago Booth, at Harvard Business School, at MIT — who are doing research on venture capital, but it’s a relatively small group of people.’

Why has VC been such a difficult space to study? Because the companies are literally private, Strebulaev says.

“Some are very small, and many of them are going to fail inevitably. So, many of these companies just disappear from the planet. To collect data from something that doesn’t exist anymore is very difficult. Many of the companies don’t really have a lot of financial data, and even if they do, there’s no one centralized place where you can look for it.”

ONLY 29% OF U.S.-BASED UNICORNS HAVE A FOUNDER WHO WENT TO B-SCHOOL

In VCI’s latest research, the answer to the question, “Do you need to have an MBA degree to found a unicorn?” is: Probably not.

Just 323 of 1,110 U.S.-based, VC-backed unicorns have at least one founder who went to a business school, Strebulaev announced in June. That’s only 29%, meaning that in 71% of unicorns, none of the co-founders got an MBA. Of the unicorns with MBAs among the founders, 70 — 22% — have founders from Harvard Business School, such as Turo, Xometry, and ID.me; 38 — 11% — have a Stanford GSB connection, such as Medallia, SnapTrack, and Quizlet; and 28 — 9% — are connected to The Wharton School at the University of Pennsylvania, such as jet.com Integration Shopify, Icertis, and Karat.

Columbia Business School, MIT Sloan School of Management, and UC-Berkeley Haas School of Business are in the next three places with 19, 15, and 13 unicorns, Strebualev reports, noting that MIT Sloan has more unicorn founders than Wharton, but Wharton has more unicorns than MIT, “implying that Sloan MBAs like co-founding startups with their classmates.”

In response to questions posted in LinkedIn comments about the data, Strebualev writes that “About 72% (2,094 out of 2,916) of unicorn founders do not have an MBA degree (or we were unable to find any records of this degree).” He adds that “we also collected data on matched random sample to compare unicorns and other VC-backed companies, so we are able to answer a question whether having an MBA increases a chance of founding a unicorn. And we also can look at whether these companies (whether unicorns or not) are more successful if one of the founders has an MBA. Stay tuned.”

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