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Business Schools Have Produced 40 “Unicorns” — Billion-Dollar Start-Ups

40 companies valued at $1bn trace roots to six top schools

Mon Sep 28 2015

Six of the world’s top business schools have produced 38 “unicorns” — start-up companies valued at or above $1 billion.

California’s Stanford GSB has produced 11 billion-dollar ventures — the highest of any business school. Fifteen Stanford MBAs have raised $3 billion collectively for their unicorns. These include Nasdaq-listed HomeAway, an online marketplace for the vacation rental sector, which went public in 2011 and has a market cap of $2.5 billion; and Prosper, the second-biggest peer-to-peer lending platform in the US, which is valued at $1.9 billion.

The data were compiled by PitchBook, a venture capital and private equity research firm, in a ranking of universities based on fundraising. Collectively the top-25 business schools have produced start-ups which have raised $62.8 billion.

Harvard Business School MBAs have founded ten unicorns that have raised about $2.9 billion. The most noteworthy are Zynga, the video games maker whose games include FarmVille and Words With Friends, and which is listed on Nasdaq with a $2.1 billion market cap; and Uber rival GrabTaxi, which has raised $680 million.

The success of the unicorns comes as business students begin to eek away from corporate careers. Around 36% of MBAs at the top schools are founding start-ups.

“We have seen an increase in youth entrepreneurship,” said Donna Kelley, professor of entrepreneurship at Babson College. The barriers to entry are low and there is growing visibility and excitement around entrepreneurs, she said.

Six MBA graduates of the business school INSEAD produced five $1 billion companies. Among them are BlaBlaCar, the French ridesharing business that this month raised $200 million based on a valuation of €1.4 billion, and MongoDB, a US database company that was valued at nearly $2 billion in a round of fundraising this year.

Elsewhere, around $2.5 billion has been raised by the five unicorns founded at MIT Sloan School of Management, including Rocket Internet, the German e-commerce incubator that floated in 2014 and has a market cap of €3.8 billion.

Warton School at University of Pennsylvania has seen graduates found three unicorns — Jand, Grocery Delivery, and, a Chinese mobile internet company that has raised $1 billion in venture capital.

NYU Stern School of Business has produced four unicorns that include Illumio¸ a Silicon Valley cyber security start-up that is backed by Salesforce chief executive Marc Benioff, and Yahoo co-founder Jerry Yang.

However Vincent Ponzo, director of the Eugene Lang Entrepreneurship Center at Columbia Business School, said: “Although the number of unicorns has proliferated, some will undoubtedly become ‘unicorpses’.”

Ted Zoller, director for the Center for Entrepreneurial Studies at UNC Kenan-Flagler Business School, warned that graduates must withstand the “pressures of the start-up rollercoaster” and the challenges that come with rapid growth.

“[But] this is the type of experience MBAs seek, because pioneering in business is about taking risk,” he added.