Convincing business students to launch companies instead of seeking jobs is less of a hard sell but it is still striking how many MBA graduates have taken to start-ups.
As the effects of the global economic squeeze still linger, there are myriad ventures being launched.
Large listed companies Staples, the retailer, financial software group Intuit, and marketplace lender Lending Club were founded by MBAs. Michael Bloomberg, founder of the financial media empire Bloomberg, is also a business school graduate.
Successful founders are increasingly being brought onto campus to share their market wisdom. Venture capital funds have long had in-house entrepreneurs, but business schools too are beginning to invest heavily in their own mentors.
Cambridge Judge Business School employs 16 volunteer “entrepreneurs in residence”, through its Centre for Entrepreneurial Learning (CfEL). These include James Urquhart, co-founder of ARM, the UK-based semiconductor maker whose chips power iPhones and which is listed on the London Stock Exchange.
Hanadi Jabado, director of Accelerate Cambridge, the school’s incubator, says: "The key to success in Silicon Valley… Is that everyone is generous with their time and wants to give back. Successful entrepreneurs can share their experience and can relate more powerfully to the needs of entrepreneurs."
Cambridge’s entrepreneurs in residence provide about a week’s worth of time to business students. But there is also a wider network of founders that the CfEL calls upon, who aid stuents with advice and provide summer internships.
Harvard Business School has 16 founders, 14 of whom are alumni, delivering one-to-one advice and developing course content with faculty in sectors including e-commerce and private equity. They are connected by Harvard’s Innovation Lab, its multi-school incubator.
Elsa Sze is a Harvard MBA graduate and iLab tenant who previously worked at McKinsey & Company and the IMF. Now she is a start-up founder, profiting from the mentorship iLab provides for Agora, her online platform that seeks to connect politicians with voters.
“It’s great to always have someone there, an adviser who cares about what we do,” she says.
Elsa has been able to benefit both from a mentor who specializes in social entrepreneurship and the other Harvard residents. “We strive together. It’s a community,” she says.
Roughly 50% of Harvard’s MBA graduates describe themselves as entrepreneurs 10 to 15 years after leaving the business school, according to Harvard.
But other schools are graduating MBA students straight into entrepreneurial ventures, with high average survival rates.
At Babson College nearly 40% have launched businesses, and at MIT’s Sloan School of Management the figure is 36%, according to data compiled for 2015’s MBA rankings.
There is a benefit to clustering of nascent entrepreneurs together with experienced mentors, says Nick Badman, chairman of the Centre for Entrepreneurship at Cass Business School in London.
“Mentors are helpful – they can’t make people succeed, but they can be invaluable in helping them avoid the mistakes of those who have gone before,” he says.
Business schools also form tight-knit groups and many MBAs find their co-founders while studying.
Cass teams up with experienced business people who typically become non-executive directors or chairpersons of students’ companies. “Help from those who have either done it [before], parts of it, or observed it very closely, tends to be of most value,” says Nick.
Successful student ventures include that of Peter Cullum CBE, a Cass alumnus who founded Towergate Insurance, Europe's largest independently owned insurance intermediary.
Peter donates up to £10 million in funding to Cass each year to help develop the next generation of high-potential entrepreneurs. This flows through the Cass Entrepreneurship Fund, which provides investments of up to £500,000 to student and graduate entrepreneurs.
Other business schools have similar venture funds that typically take equity stakes in the businesses in which they invest.
The iLab houses venture capital funds including Xfund, a seed fund set-up by Harvard students which recently raised $100 million in funding from backers including Accel Partners and New Enterprise Associates, a large Silicon Valley venture capital group.
Justin Jansen, professor of corporate entrepreneurship at Rotterdam School of Management, says: “Their relationships provide a springboard for many of our start-ups to get customers and funding,” he says.
The Netherlands-based business school has more than 25 entrepreneurs involved in coaching and mentoring students, through the Erasmus Centre for Entrepreneurship (ECE).
While more business students are turning to entrepreneurship, many in the start-up community feel they have little to learn from academics who have no prior start-up experience.
As well as mentorship, experienced entrepreneurs are in some cases involved in the teaching of MBA programs.
Manchester Business School in the UK employs both enterprise lecturers and business coaches, according to James Hickie, a lecturer in entrepreneurship at the school.
"There is a role for both academic teaching about business with a practical focus, and talks by entrepreneurs as guest speakers," he says.
At Cambridge course frameworks are delivered by academics and also practitioners and entrepreneurs, rather than teaching using just case studies, says Hanadi.
However this remains a point of contention globally. Goncalo de Vasconcelos founded SyndicateRoom, a leading UK-based equity crowdfunding platform, after developing his business plan while studying for an MBA at Cambridge Judge.
He says his company has benefited from the experience – the classes, network and support – but he is unashamedly sceptical about the value of business school for entrepreneurs who already have a business plan.
“True entrepreneurs that have an idea, and who know what they want to pursue, why should they do an MBA?” he says. “They should just go straight to starting a business. You will learn a lot more by doing that than sitting down in a class.”
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