MBAs Found to be Behind 25% of Unicorn Companies

The use of the word ‘Unicorn’ to describe a startup company that has surpassed the billion-dollar valuation threshold was frequently listed as one of 2015’s worst examples of business jargon. While it was originally coined for enterprises who had achieved success deemed as bordering on the mythical, current annoyance with the term seems to center on their increasing ubiquity in the business landscape.

However, like it or not, there’s no denying the term’s significance to those interested in tracking the performance of startup companies and this week, a second-year MBA student at Harvard Business School (HBS) has underlined the value of the degree he is studying for by pointing out that a quarter of today’s Unicorn companies (those that have yet to hold an IPO or be acquired) have at least one founder in possession of an MBA degree.

The HBS student, David Fairbank, had been hoping to show an even greater proportion of MBAs behind the world’s most successful startup companies and prove those who poured scorn over the degree’s usefulness to entrepreneurs wrong. However, in a post for NextView Ventures, he concludes that 25% is a figure that’s “actually pretty remarkable”.

Of the 157 Unicorn companies analyzed by the HBS student, 38 had at least one MBA degree-holder as a founder. The total number of MBA founders he found among these 157 startup companies was 63. 

HBS’s Unicorns lead the way

Reassuringly for a man in attendance at Harvard Business School, Fairbank also found that HBS came out top when breaking down either the 38 MBA Unicorns or the 63 MBA Unicorn founders by the business schools they had attended.

Among the 63 MBA founders of Unicorns, more than half studied at one of HBS, Wharton or Stanford GSB, with 18 graduating from Harvard alone. Away from the US’s ‘big three’, there were two representatives from each of Chicago Booth, MIT Sloan, Berkeley-Haas, Columbia and Washington University in St. Louis (Olin) on the Unicorn founders list. INSEAD, meanwhile, had five and leads the way for founders who graduated from MBA programs outside the US.

Some of these successful startup companies are led by more than one MBA from the same school, such as BlaBlaCar (INSEAD) and health insurance firm, Oscar (HBS). Others transcend the institutional divide and feature founders from more than one MBA degree program, such as  the e-commerce industry’s Global Fashion Group (GFG) whose founders are attributed to a mixture of alumni from schools in the US, Europe and India.

Industries and locations of MBA degree-holders’ successful startup companies

The most monetarily successful entrepreneurial MBAs, it seems, are those who have founded startup companies in the technology industry. Of the 38 Unicorns founded with at least one MBA at the helm, approximately three-quarters are defined, in the HBS student’s analysis, as operating in software, consumer internet or e-commerce. Financial services and healthcare are the only other areas to get a decent look-in with each accounting for roughly 1 in 10 MBA Unicorn companies. But, while the tech and finance figures are broadly representative of the proportion found among all 157 Unicorns, you’re far more likely to find healthcare startup companies in this bracket with an MBA degree-holder involved than without.

You’re also slightly more likely to find an MBA Unicorn based in the US - three-quarters of their number call the North American country their home as opposed to 63% of the full 157. The difference comes largely at the expense of those based in India – while 18% of all Unicorn companies are based in India it’s only 3% among those with MBA founders. Interestingly, the reverse is true in the rest of Asia; 7% of all 157 companies are said to be based in Asia, but this proportion rises to 13% among the 38 MBA Unicorns. One example from Asia is Dianping, described as a mixture between Yelp and Groupon and cofounded by Wharton MBA, Zhang Tao in 2003.

Still, it’s possible that the tilt towards the US as a base of operations will change as today’s new startup companies evolve into the Unicorns of tomorrow. Stanford’s latest MBA employment report, for instance, pointed out that its class proportion of entrepreneur graduates was higher among its international students than its domestic participants and indeed, 28% of entrepreneurs in the class of 2015 said they would be setting up shop outside the US. Either way, it’s clear from the figures in this analysis that the MBA demographic is extremely relevant to any discussion about how best to develop business ideas and succeed in the startup space.