Some MBA students have always ended up being entrepreneurs. Lately they’ve been even more optimistic about startups.
This is according to a new study by Illuminate Ventures, a start-up that shows MBA students are extremely optimistic about entrepreneurship as a career path. Illuminate surveyed 500 business school students in more than 20 schools in the first half of 2020, including Carnegie Mellon’s Tepper School of Business, the Yale School of Management, and the University of Chicago’s Booth School of Business, and released their findings 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,” said Cindy Padnos, founder and managing partner of Illuminate. Your company regularly accepts MBA students as interns. These students had repeatedly mentioned a high level of interest in entrepreneurship among their colleagues. Padnos wanted to know if the feeling was widespread or if it was confined to her interns and friends, which led Illuminate to start this study.
It’s hard to tell if more MBAs are interested in entrepreneurship right now because the survey only captured current sentiment. However, it showed a dramatically higher level of interest than other similar surveys. In 2018, a study of prospective MBA students around the world found that only about 25 percent viewed entrepreneurship as a post-graduate career path.
Among the students who said they had no interest in entrepreneurship, financial security was the top concern after graduation. This was the primary concern for men and the secondary 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 Illuminate study MBA students don’t wait to graduate to work on their entrepreneurial dreams: 23 percent said they have already started a business and another 36 percent said they worked in an early-stage company. In addition, 48 percent of men and 34 percent of women said they were already working on an entrepreneurial project.
You don’t need an idea of your own to be successful.
In the survey, a significant proportion of MBAs indicated that they don’t necessarily have to have their own disruptive idea in order to be successful in entrepreneurship. About half said they were interested in working for an early stage company or starting a business based on someone else’s idea. Of those who wanted to start their own company, around a third of the men and a quarter of the women said they already had an idea.
In contrast to venture capitalists, students seemed to have great confidence in the immediate availability of excellent ideas. In 2018, Illuminate conducted a study with venture capitalists and entrepreneurs to compare their perspectives. In this study, Illuminate asked the students some of the same questions they asked the other entrepreneurial ecosystem participants. When asked what the biggest barriers to business success are, the students rated “Having a unique idea” at the bottom. Venture capitalists disagree: women venture capitalists ranked this as the top potential obstacle to success, and male venture capitalists ranked it second. “The students have the confidence that a great idea will arise,” says Padnos.
Women could focus more on building a great team.
There were also some differences in the way male and female MBA students approach entrepreneurship and the factors they cite as significant hurdles. The biggest thing is the importance of attracting a team. Previous research shows that both current founders and female venture capitalists say this is the most important success factor for entrepreneurship (male venture capitalists rank it second after domain knowledge). Male MBA students rate it as secondary after “resilience / endurance”. However, female MBA students rank fifth among factors such as “Networks for Access” and “Smart Risk Taker”, which are not rated highly by venture capitalists. The only factor that female MBA students rate lower than “ability to attract teams” is expertise. This is a big difference from most venture capitalists – especially those who say domain knowledge is the most important factor in their success.
“I don’t know if female MBAs are confident they will attract a great team or if they think it doesn’t matter,” says Padnos. “There is research showing that one of the main causes of startup failure is basically the wrong team. Women should think about it – even if they are very confident, they still have to prioritize it.”