Original research on gender diversity and fundraising amongst HBS founders
Historically, there has been a general bias against MBA founders — a skepticism around their grit and hustle. The taboo has largely faded, though, as many MBA-founded startups have bubbled to the top, and we at NextView even validated that there is no conflict between attending business school and founding a company with a previous blog post about Harvard MBA founders.
From that dataset, we noticed something else interesting: at a high level, founding teams coming out of HBS tend to over-index relative to gender diversity benchmarks for startups at large.
Gender diversity in entrepreneurship has been a high-visibility topic of late, in both the media and venture community. In 2017, 34 female VC’s formed All Raise with the mission of fueling diversity by offering their own time and expertise as investors. Yet, despite the attention and efforts in 2018, funding to female-founded startups continued to plateau:
- 2.2% of venture capital went to companies with only female founders (Pitchbook, October 2018)
- 17% of venture capital went to companies with at least one female founder (Crunchbase, January 2019)
As NextView’s MBA Associate, and a first-year HBS student, I decided to look further into the trend amongst MBA founding teams, in particular those companies forming out of Harvard Business School. I created an updated dataset of HBS founders from the last five classes, a total of 325 entrepreneurs who have raised $180MM in venture capital.* While Harvard is by no means a proxy for all MBA’s, it is one of the largest graduate business schools and therefore has a high quantity of alumni founders relative to other programs. We see it as a good sample from which to detect a directional trend.
What I found from this sample size was that Harvard MBA founders who have fundraised are in fact more gender diverse than average:
- 3.1% of funding for companies from HBS classes of ‘15-’19 went to those with only female founders
- 32% of funding for companies from HBS classes of ‘15-’19 went to those with at least one female founder
While the sample size does not give me confidence to draw conclusions from the female-only founder data, most noteworthy from the findings is that the percent of funding going to HBS companies with at least one female founder is 85% higher than the 2018 benchmark of 17%, at 32%.
I am careful not to confuse correlation with causation, but the delta between funding for startups with at least one female founder and funding for startups with at least one HBS MBA female founder is enough to at least give me pause.
It begs some interesting questions: What about MBA programs could be aiding gender diversity in entrepreneurship? Do MBA programs have any sense of responsibility in influencing gender diversity in today’s startup ecosystem?
This data made us think hard about the immense value in business school alumni networks
Many MBA’s go to business school to build deeper and wider connections, which prove invaluable when you initiate a round of fundraising. Business schools offer a pool of both potential co-founders and investors — VC is a notoriously referral-dependent industry, perpetuating the risks of homophily. Nicole Ivey is a first year HBS student working on her childcare startup, Village. She echoes the importance of an institutional community: “Going to Harvard was a way to open up doors that otherwise may have remained closed… I’ve gotten access to a world that I fear would have been hard to gain entry to without the Harvard network.”
In addition, as the taboo around MBA founders fades, the reverse-effect is even more powerful — an MBA offers credibility to female founders when fundraising. Isabel Khoo, HBS ‘19 and solo-founder of Noodie Foods, spoke to the direct impact of an MBA’s legitimacy on her interactions with investors: “As a woman, and a minority, credibility is always an issue. Building your brand, such that there isn’t a shred of doubt when you walk into the room about your capability, track record, and commitment means more air time pitching your company, rather than proving your worth.”
Karina Akib, a second year student at MIT Sloan School of Management working on a venture in the maternal health space, sums up the value of her MBA well: “I don’t know that I would have had the confidence to go out and found a company without my co-founder (a fellow Sloan MBA,) the MIT network and stamp of credibility, and the time I’ve had during the MBA to build up my leadership capacity.”
That said, there is still more work to do in business school class makeup. While many graduate programs have achieved gender parity, business schools have a gap to close:
- HBS class of 2020: 41% women
- Wharton MBA: 44% women
- Stanford GSB class of 2020: 41% women
Our observations from this dataset of HBS founders provide an opportunity to think about if and how business schools are encouraging open-mindedness and heterogenous connections. Our early read is that they are. This goes for both their future entrepreneurs and investors — as evidenced by the goals of All Raise, gender diversity in entrepreneurs is inextricably linked to gender diversity in venture capitalists.
We are intrigued by the idea that MBA founders could tip the scale, and are excited to continue watching current and future MBA founders thrive.
*A note on my methodology:
- I defined entrepreneurs as self-identifying founders and co-founders using LinkedIn
- I sourced funding data from publicly disclosed rounds on Pitchbook and Crunchbase