Some MBA students have always wound up as entrepreneurs. Lately, they’re even more bullish on startups.
That’s according to a new study from Illuminate Ventures, a seed-stage venture firm, which shows MBA students are hugely optimistic about entrepreneurship as a career path. Illuminate surveyed 500 business school students at more than 20 schools, including Carnegie Mellon’s Tepper School of Business, the Yale School of Management, and the University of Chicago Booth School of Business, throughout the first half of 2020, and published its results in January. More than 85 percent of students said they were interested in entrepreneurship as a career path.
“It blew my mind that so many were interested,” says Cindy Padnos, founder and managing partner of Illuminate. Her firm regularly hosts MBA students as interns. Those students had repeatedly mentioned a high level of interest in entrepreneurship among their peers. Padnos wanted to know if the sentiment was widespread, or if it was confined to her interns and their friends, which prompted Illuminate to launch this study.
It’s hard to determine if more MBAs are interested in entrepreneurship now, as the survey only tracked current sentiment. But it showed dramatically higher levels of interest than other similar surveys. In 2018, a study of global prospective MBA students found that only about 25 percent were considering entrepreneurship as a career path post-graduation.
Among those students who said they were not interested in entrepreneurship, the top overall concern was financial security after graduation. This was the top concern among men, and the second-ranked concern (after “availability of funding”) for women.
Here are three other top takeaways from the survey:
It’s never too early to start a business.
The MBA students in the Illuminate study are not waiting for graduation to start working on their entrepreneurial dreams: Twenty-three percent said they’d already founded a business, and an additional 36 percent said they had worked at an early-stage company. In addition, 48 percent of men and 34 percent of women said they were already working on an entrepreneurial project.
They don’t need their own idea to succeed.
In the survey, a significant share of MBAs said they don’t necessarily have to come up with their own disruptive idea to succeed at entrepreneurship. About half said they were interested in working for an early-stage company, or in co-founding a company based on someone else’s idea. Of those who did want to start their own company, about a third of men, and a quarter of women, said they already had an idea in mind.
Students–as opposed to venture capitalists–seemed to have ample faith in the ready availability of excellent ideas. In 2018, Illuminate conducted a study of venture capitalists and entrepreneurs to compare their perspectives. In this study, Illuminate asked students some of the same questions it had asked of those other participants in the entrepreneurial ecosystem. When asked about the biggest barriers to entrepreneurial success, students ranked “Having a unique idea” near the bottom. Venture capitalists disagree: Women venture capitalists ranked this the most important potential barrier to success, and male venture capitalists rated it second. “The students have the confidence that a great idea will happen,” says Padnos.
Women might focus more on building a great team.
There were also some differences in how male and female MBA students are approaching entrepreneurship, and in the factors they cite as significant hurdles. The biggest is the importance of attracting a team. From earlier research, both current founders and women venture capitalists say this is the most important success factor in entrepreneurship (male venture capitalists rate it second, after domain knowledge). Male MBA students rate it second in importance, after “resilience/perseverance.” But female MBA students rank it fifth, below such factors as “networks for access” and “smart risk taker,” neither of which are ranked highly by venture capitalists. The only factor women MBA students rank lower than “ability to attract team” is domain knowledge. That’s a significant point of differentiation from most venture capitalists–especially the guys, who say domain knowledge is the single most important success factor.
“I don’t know if women MBAs are confident they can attract a great team, or if they think it’s not important,” says Padnos. “There’s research that shows one of the biggest causes of startup failure is basically having the wrong team. Women ought to be thinking about that– even if they’re super confident, they still need to prioritize it.”