Why aspiring entrepreneurs shouldn’t dismiss the MBA

Entrepreneurship has become a wildly popular MBA specialisation. But the degree alone is not a guarantee of success

THE VALUE of an MBA for a career in entrepreneurship remains hotly contested. On the one hand, plenty of successful entrepreneurs obviously don’t have MBAs. Programmes cost in the region of £50,000 a year – and one of the worst things you could do as an entrepreneur is saddle yourself with debt before you’ve even started. Wouldn’t that money be better spent renting office space, or building a prototype?

Nonetheless, MBA students are increasingly turning to entrepreneurship. A recent Graduate Management Admissions Council survey found that 11 per cent of MBA alumni (who graduated between 1959 and 2013) now run their own businesses. And business schools are tailoring MBA programmes to ensure they engender the specific skills necessary to start your own company. As Aled Owens of QS Top MBA points out: “schools now offer many more organised extra-curricular options, including entrepreneurship clubs, venture clubs and pitching competitions.”

THE TOP TALENT
London Business School, for example, has a portfolio of eight different courses which take students through the entire life-cycle of a startup. And Cass Business School’s Centre for Entrepreneurship offers recent alumni access to a venture fund. Already, the fund has invested in seven startups – the largest of which, Alva, now turns over £2m a year and employs 25 staff.

But reasons to do the MBA extend beyond the programme itself. These courses are attracting the world’s top talent: the top 10 programmes have an acceptance rate of less than 10 per cent. And the people you rub shoulders with could become your future business partners, or your future go-to network. “This is where entrepreneurship happens,’ says Jim Hall, executive director of the Entrepreneurship Centre at Said Business School.

As for criticisms that these institutions are no substitute for the school of life? Schools like Warwick are bringing in faculty with real-life entrepreneurial experience to hand over their knowledge to budding entrepreneurs.

THE INITIAL SPARK
Yet Taavet Hinrikus – the first employee at Skype, co-founder of peer-to-peer money transfer business TransferWise, and Insead alumnus – is less convinced. “People skills are critical when working in a startup. Yet the classes at the typical school do not teach enough of them, instead setting team projects and tasks that merely allow natural interpersonal skills to flourish.” What’s more, he says, while you’re busy studying, you risk someone else beating you to the punch. You’re giving up a chunk of time, there’s pressure (and the risk of groupthink mentality), and as Peter Chen of StartUp Nation argues, “MBAs are taught to be fed, not to hunt.”

Even business school faculty acknowledge that no workshop or lecture can give a student their eureka moment. “You have to have a basic itch or spark that needs to be ignited,” says Nick Badman of Cass. But if you’ve had that flash of inspiration, business schools can increase your chances of success by equipping you with the skills needed to start your own venture (time management, innovation and design, entrepreneurial finance) and the confidence to take the idea and run with it.

Fundamentally, however, MBAs are broad-based degrees, teaching the basics of everything – from finance, marketing and risk to law. So even if you conclude that you’d rather work for a big corporate, the MBA will give you (up to) two risk-free years. “The worst outcome is that you graduate and get a good job,” Chen notes.