Go to business school, get an MBA and take the fast track to success in finance or consultancy. It’s been a popular route for students and employers alike for decades, and in 2021 more than half of graduates took this path.
But business students have begun to shun this, as the lure of working for big-name firms is gradually replaced by a hankering to build a company of their own. Graduates increasingly want to reap the rewards and satisfaction that come from either being a founder or joining a start-up that they can help to scale.
The best business schools have started adapting to this. While classrooms are still a powerful component offering valuable components and methodologies, students need to be able to experience what it is to create a venture of their own or be part of a small founding team.
Like pancakes, your first startup is almost always a throwaway. How much better to accelerate the learning that comes from that first venture by creating immersive and experimental programmes in the safe and supportive environment of the business school?
The same applies to STEM students – they need to be coaxed out of their comfort zones and encouraged to solve real problems with their technologies.
When it comes to creating unicorns, only the US and China bound ahead of the UK. But since 2020, the number of UK companies ranking among the world’s leading 100 businesses has fallen. This is despite more money than ever flowing into UK tech – £29.4bn last year, more than double the previous year’s figures of £11.5bn.
The main limiting factor is that, as an ecosystem, we have trouble translating UK startup success into listed company success. The UK remains weak when it comes to scale-up funding, particularly for private investment rounds above £100m. A weakness that saw such funding come in at nine times lower than that of the US in September last year.
Business schools can play a critical role in acknowledging the changing needs and desires of students, through internships, experiential projects and immersive programmes, to help entrepreneurs start – and scale.
The entrepreneurial challenge itself is evolving. Even when product-market fit has been achieved, entrepreneurs will need to redesign and refinance the venture to deliver at scale. Doing so should be fertile ground for ambitious MBA graduates who want the opportunity to make a real difference.
This also means developing a deeper understanding of entrepreneurial finance, helping to develop venture investors who are comfortable with the risks of early-stage startups.
The best schools will put the underlying methodologies for valuation, due diligence and deal structuring into practice. Increasingly students are able to “practice” on investment-ready ventures created by previous cohorts of students – structuring and pitching investments to established VCs, who may use the opportunity to recruit the next generation of talent.
What happens after people finish their MBAs is also just as important. Over the past year alone, alumni from London Business School raised $3.8bn for their tech startups. To put this into perspective, these startups raised more than the total amount of VC investment into Ireland, Romania, Poland, Italy, Croatia and Portugal added together. Harnessing this ready-made ecosystem of connections for the future leaders of the City is in the interests of London as a whole.