Students cheer at the Harvard Business School graduation ceremony
How do you determine the best B-school for starting up a business? There are plenty of rankings that promise to parse arcane data points to reveal the true hierarchy of entrepreneurial education. But none focus solely on results–the number of successful startups a school produces and how much capital its budding businesses have collectively raised.
Poets&Quants crunched the numbers to produce the first results-based ranking. The survey is based primarily on the total number of startups a school produced that landed on our top 100 listing. These are exceptional companies that are no longer than five years old: To make the cut, a startup had to attract at least $1.6 million in investment. (Most startups get by on bootstrapping and funding from friends and family.) Investment served as the second metric–Poets&Quants‘ sub-ranked the schools according to the cumulative amount of funding their listed startups received.
Harvard Business School, with 34 startups, and Stanford’s Graduate School of Business, with 32 startups, blew away the competition, proving that the student and alumni networks of those schools are a potent force to fuel and sustain new ideas. The two MBA heavyweights accounted for more than half of the total number of startups on our top 100 list.
MIT’s Sloan School of Management came in a distant third with 11 new enterprises. The B-schools at U Penn, Chicago, and Columbia trailed behind with three startups each. (We did not adjust the numbers to account for either class size or the percentage starting businesses at graduation. But if we did, Harvard would still come out on top. Harvard graduates about 900 MBAs a year and Stanford GSB graduates just under 400. But a much higher percentage of Stanford MBAs go the entrepreneurial route: In the Class of 2013, a record 18% of Stanford MBAs started their own companies vs. just 7% at Harvard, 7.4% at Wharton, 7.3% at MIT, and just over 6% at Columbia Business School. In the past five years–the period of our analysis–Stanford had about 280 MBAs start their own companies vs. Harvard’s 270. Essentially, 12.6% of the MBAs who founded companies at Harvard made our top 100 list vs. 11.4% of those at Stanford.
The results weren’t entirely surprising from the standpoint of traditional B-school rankings–Harvard and Stanford frequently rotate in and out of the top spots. However, these results represent a sharp division from conventional entrepreneurship rankings that have been severely flawed. And they show the profound importance of alumni networks in funding new companies.
For years, the Princeton Review and U.S. News & World Report have published their own orderings of the best graduate programs in entrepreneurship. Interestingly, the B-schools at MIT, UC-Berkeley, Northwestern, and Wharton are conspicuously absent from Princeton’slisting because they decline to cooperate with a ranking school officials say has little credibility. In fact, 2013 marks the first year that Harvard and Stanford participated. Top schools also question the publication’s “black box” methodology, which relies on surveys sent to school administrators and some 30 vague data points.
U.S. News & World Report adopts a more open approach–the publication surveys deans and MBA directors for their opinions on top programs. However, critics contend that the process invites bias, allowing schools’ past reputations to boost or hinder their numbers. Besides, most deans have little to no knowledge of how entrepreneurship is taught at other business schools.
Michigan’s Ross topped Princeton’s listing, while Babson’s Olin nabbed the No. 1 spot in theU.S. News ranking. Both schools made the cut for Poets&Quants‘ top 20, coming in at No. 13 and No. 12, respectively. Harvard,Poets&Quants‘ top startup school, came in third inPrinceton’s assessment and fourth in U.S. News’ report. Stanford’s status was a bit more stable across rankings–it scored the No. 2 spot on both Poets&Quants‘ and U.S. News’ranking. The more unpredictable Princeton assessment put the school at No. 6.
Investment is another key metric in startup success. While many new enterprises abide by the Lean Startup methodology, which calls for bare-bones businesses that adapt to customer feedback, they still need funding, according to Tom Eisenmann, who co-chairs Harvard’s Arthur Rock Center for Entrepreneurship. “The whole premise of lean is once you’ve got validation, you’ve proved you’ve got a business model that works, a customer value proposition that works, then you scale. And for many, if not most, of these businesses, scaling is still expensive,” he says.
As for Harvard’s successful showing on Poets&Quants‘ ranking, Eisenmann ticks off a variety of factors: “It’s courses, it’s the entrepreneurship center, it’s the ecosystem, it’s role models, it’s admissions–it’s a whole bunch of things,” he says. In particular, student entrepreneurs at the school have unparalleled access to funding sources. “It’s pretty straightforward: If you’re working on a business and you can push it far enough while you’re in the MBA program, you’re in a place where you’re rarely more than a phone call or an email away from somebody in several VC firms,” he adds.
Interestingly, Stanford’s startups raised a whopping $980.91 million–nearly twice as much as Harvard’s funding figure. Stanford’s close proximity to Sand Hill Road, a strip saturated with venture capital companies in Menlo Park, CA, no doubt contributes to this sum. The school’s emphasis on interdisciplinary startups certainly helps, too. By grouping MBAs with engineering, education, and computer science students, the B-school cultivates an atmosphere ripe for collaborative businesses.
Consider Skybox. Stanford MBA John Fenwick joined forces with two Stanford aerospace engineers and a master’s student in management science and engineering to found the satellite imaging company. To date, they’ve raised some $91 million.
Even the best B-schools can only go so far. The ultimate success or early demise of a startup depends largely on the MBA founder behind it. But certain schools are certainly better at inspiring entrepreneurs, putting them in touch with eager investors, and guiding them through avoidable pitfalls. Entrepreneurial MBA applicants would do well to consider these 20 schools with a successful track record in startups.
To see our complete list of the top 20 schools in entrepreneurship, go to Poets&Quants.com: