When Daniel Callaghan started forming a business plan for a recruitment start-up during the financial crisis, he had no idea that his MBA pet project would turn into such a success.
“When we founded in 2009 everyone was working with reduced headcounts and limited budgets,” said Daniel, who earned his MBA degree from IESE Business School in Spain.
In 2008, while still completing his studies, Daniel wrote his business plan with two co-founders. They had just £1,000 in capital between them. Today his start-up, MBA & Company, has raised millions and employees 18 people in two countries.
He didn’t see the timing as a challenge. “Not so much. We raised funds relatively quickly and it caused us to be more inventive about how we got the business off the ground,” said Daniel, whose recruiting website now has more than 20,000 registered users. Last month his team netted another £800,000 in VC funding, bringing the total above £2 million.
The firm, which operates in the UK and America, was selected as one of the best start-ups in the European Business Plan of the Year competition in 2009. They have various other awards to their name.
“They are nice to have but none have been game changers,” said Daniel. But proof of his entrepreneurial spirit can be traced back to IESE’s Barcelona campus.
Far from hindering his start-up ambition, forming a business while still at business school was a masterstroke; after two professors invested in the fledgling company, Daniel quickly raised €200,000.
“That whole network of people – and from a credibility point of view – [it] does help,” he said. “It will never replace the persistence and work ethic you need to get it off the ground – but makes it easier and you make fewer mistakes.”
Despite what surveys suggest, business schools continue to breed entrepreneurs, who have the time and resources to test start-up ideas. By striking the right balance between MBA study and brainstorming, entrepreneurs are giving themselves a head-start.
Thanks to more available support, it can also be done on the cheap. B-schools are only too happy to dish out funding and advice.
“We offer them the workspace for free but additionally we have a Doctor of Entrepreneurship that comes in every Tuesday and does a drop-in surgery,” said Parveen Dhanda, who runs Cass Business School's incubator, The Hangout.
Parveen, an MBA alumnus, added: “It’s great to think big and have ambition, but you need to test your idea to see if there is a market for it. Test the idea, get traction, look at investment – but the key thing is to have a prototype and to listen to your customers to see what they want.”
At the Tuck School of Business in the US, MBAs compete for $10,000 in start-up funding through the Tuck Summer Start-up Award.
Joaquin Villarreal, who runs the school's entrepreneurship initiative, said Tuck provides financial support, legal advice and all the mentorship MBAs can get from alumni and professors.
“We identify their needs and craft a timeline for them to execute their plans, and provide space for them to work in,” said Joaquin. “Tuck also subsidies 50% of compensation for a first year student internship if they work in a start-up, based on market pricing. That’s a huge boost for students.”
Developing a plan while on campus allows you to test the idea in a safe environment. When Michael Brice enrolled on an MBA program at Melbourne Business School in 2012, he spent the first year getting his start-up off the ground.
“In the early stages I’ve been able to do a great deal of thinking during the MBA,” said Michael, who set-up advisory firm Howcanwe? at about the same time as starting his MBA. “I’ve kept it low-key for the first year while testing it out.”
The business advises SMEs on digital strategy and innovation. Michael self-funded the company with one other co-founder. He has been approaching large firms in a bid to secure business post-graduation.
Michael added: “I’m constantly trying to work out what the best model is. I’ve slowly been taking the lessons learnt over time and re-incorporating them into the business.”
As well as forming business plans to get start-ups up and running, entrepreneurs often find their co-founders while still at business school.
Eduardo Costa joined forces with Julia Arno, Jimmy de Koning and Mohamed Rachid after meeting the group at ESADE Business School. They launched The Meaningful Institute, a split between a consulting and personal development and coaching business, while still enrolled on MBA programs.
The four co-founders hope to help young people with a three-week coaching program to develop personal and business skills in disadvantaged areas in Brazil.
“Most MBAs that have an idea follow a set-path: create a project, develop it, look at partners and then raise funds,” said Eduardo, who ran two separate start-ups before beginning his MBA. “But what we did was create a team first, and then look for an idea.”
The start-up is focused on social entrepreneurship. The team’s first project was in Jua, a small Brazilian village with 5,000 inhabitants.
“I thought the MBA would be the perfect environment to not just benefit from knowledge, but to find partners for a new business idea,” said Eduardo.
“ESADE has the entrepreneurial mind-set which is something I was looking for and on top of that, it's a school that fosters social business. I wanted to find peers that would allow me to start-up a social business in an international environment.”