MBA Grads Are Behind 38 ‘Unicorns’

Harvard Business School Baker Library – Ethan Baron photo

It’s a constant and hotly argued debate. Is the MBA a worthwhile pursuit for startup success? On the one hand, the degree doesn’t come cheap. It requires a huge commitment of time. Even administrators at Stanford’s Graduate School of Business, nestled against and within Startup Mecca, now tell students to at least wait until after graduation starting a venture.

On the other hand, entrepreneurship inside the confines of a business school campus reduces risk. There’s hand-holding from professors and entrepreneurship directors. There’s financial and physical support. And there’s access to potential co-founders and investors galore.

New research from seed investment firm, NextView Ventures adds to the pro-MBA camp. A second-year Harvard Business School student at NextView Ventures, David Fairbank, set out to find just how many ‘unicorn’ companies have MBAs on the founding team. It turns out, quite a few do. Out of the 157 world-wide companies to hit unicorn status as of the end of January, 38 (24%) have at least one MBA founder. What’s more, a total of 63 MBA founders are represented on those 38 companies. As a reminder, the majestic ‘unicorn’ is an independent company valued at greater than $1 billion.

HARVARD BUSINESS SCHOOL CLAIMS 13 OF THE 38 MBA-FOUNDED UNICORNS

Those 38 unicorns have been valued at a combined $64.7 billion. They’ve also raised a combined $18.7 billion in funding. And like the Poets&Quants Top 100 MBA Startups of 2016, one school unsurprisingly stands well above the rest. Harvard Business School can lay claim to 13 MBA-founded unicorns, with 18 total founders. Next up is Stanford’s Graduate School of Business, with seven unicorns and nine founders. The Wharton School at the University of Pennsylvania has five unicorns and also has nine founders total. Rounding out the top four schools is INSEAD with four unicorns and five founders.

Harvard-founded unicorns are valued at nearly $26 billion and have raised a collective $6.3 billion in funding. Wharton’s unicorns, valued at nearly $11 billion, slightly edge out Stanford for second place.  The Stanford unicorns have a combined value of  $10.5 billion. The Wharton-founded billion-dollar-and-up players have also received $5.1 billion in backing, while Stanford GSB-founded unicorns have generated $2.9 billion.

The most valuable MBA company of all? Korean e-commerce venture, Coupang, valued at $5 billion. Widely known as the “world’s fastest growing e-commerce company,” Coupang was founded by HBS grad Bom Kim in 2010. Not that far behind is Chinese mobile internet company, Dianping, which sports a $4.05 billion valuation. Tao Zhang of the Wharton School founded Dianping in 2003. The third highest MBA-founded venture is e-commerce fashion site, Global Fashion Network. The venture has the highest valued cross-university founding MBA team, drawing on MBAs from INSEAD, Harvard, Wharton, Chicago Booth and IIM-Calcutta.

SOME 18 BUSINESS SCHOOLS ARE REPRESENTED AMONG THE UNICORNS

Perhaps most impressive is the diversity in schools represented. Out of the 38 unicorns, 18 different MBA programs are represented. Besides Harvard and Stanford, there’s IIM-Calcutta in India, Vienna University in Austria, and Washington University in St. Louis. Interestingly, four unicorns were founded by MBAs from multiple schools and a dozen were launched by at least two MBAs from the same school. No surprise, U.S. B-schools hold the majority of MBA-founded unicorns, but five schools outside of the U.S. have 10 unicorns represented.

DIVERSITY IN MARKETS AND PRODUCTS FROM MBAs

MBA-founded unicorns have tapped into multiple market,s too. The majority (27%) are in the software industry category. The consumer internet category is the second most popular, claiming 24% of the MBA-founded unicorns. Next is e-commerce at 18%, while  financial services has the fourth highest amount of MBA-founded unicorns at 10%.

Of course, diversity of interests and startups among MBAs is nothing new and increasingly expected. Startups to make the Poets&Quants top MBA startups list included companies doing everything from off-grid energy solutions in east Africa to medical devices that track brain health to dating apps.

Similarly, the 38 MBA-founded unicorns represent an array of products and industries. Blue Apron, one of the world’s leading food delivery platforms, is valued at $2 billion and has a Harvard MBA on the founding team. SoFi, the Stanford GSB-founded student loan refinancing company to top the Poets&Quants top startups ranking, is the fifth highest MBA-founded unicorn, valued at $3 billion. The Honest Company, an e-commerce venture that emphasizes non-toxic household cleaning solutions, was founded by a team comprised of a UCLA Anderson MBA and actress Jessica Alba (of course the school closest to Hollywood would have a celebrity co-founder).

MORE MBA-FOUNDED UNICORNS TO COME?

It should also be noted just 16 of the unicorns were founded in 2010 or later. The oldest unicorn is HBS and Wharton-founded Red Ventures in 2000. The youngest are e-commerce venture, Jet, and insurance company, Oscar, both founded by HBS MBAs. With interest in entrepreneurship high, it’s not hard to imagine the percentage of MBA-founded unicorns increasing in the years to become–especially if the funding market doesn’t fall completely apart.

Truth is, more top schools are producing entrepreneurial-focused MBAs than ever before. For the class of 2015, 84 out of 908 HBS graduates elected to start ventures. Only going into finance, consulting and tech were more popular options that launching a company for last year’s class at HBS. At Stanford’s GSB, more graduates (16%) started ventures than went to work for consulting firms (14%) last year. At INSEAD, more graduates decided to start ventures than were hired by Microsoft, Google, Apple, Deloitte and Citi combined.

Simply put, in the enormous world of entrepreneurship and startups that, at times, rewards college dropouts as much as PhDs, MBAs are holding their own. Being able to claim 24% of the current unicorns is impressive, for sure. And with the amount of venture-armed MBAs increasing, five years from now that percentage could certainly tick up.

(See the next page for a list of all MBA-founded unicorns.)

Fairbank’s full analysis here.

The Top 100 MBA Startups of 2016:

Poets&Quants’ 2016 Top 100 MBA Startups

The Investors Behind The Top MBA Startups

The Top Business Schools For MBA Startups

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