March 09, 2018
Jason D. Rowley is a venture capital and technology reporter based in Chicago.

In a recent exploration of the educational backgrounds of professional venture capital investors for Crunchbase News, here’s what we found:

  • Investment partners at VC firms, themselves a small and exclusive coterie, tend to call an equally tight-knit group of colleges their alma mater. In a finding that will shock almost nobody, Ivy League and Ivy-Plus schools are heavily favored in the top rankings.
  • 73 percent of the investment partners had some sort of graduate education. An impressive 16 percent of the population we analyzed held an MD, PhD, or equivalent doctoral degree.
  • By just the barest margin, a majority (51 percent) of the investment partners in our dataset held an MBA.

It was this latter figure concerning MBAs that prompted a set of follow-up questions we intend to address here today. If we expand the pie a bit to include angel investors as well, which business schools produced the most startup investors in recent history? Are different types of startup investors—in this case, individual/angel investors versus professional investment partners—more or less likely to have gone to business school? And, within each investor type, are there differences between men and women’s educational patterns?

One Rank Of MBA Programs

Let’s start with a variation of what we did in our prior evaluation of startup investors’ educational backgrounds. Coming up with a definitive ranking of business schools—as determined by the number of graduates who enter the world of startup investing—is easier said than done for reasons we’ll get into in a bit.

So let’s start with the numbers. In the chart below, you can find a list of the top ten business schools for American and Canadian investors, ranked by the number of investors each turned out since the year 2000.

To make the chart above, we started with a large dataset of angels and investment partners from the U.S. and Canada. Using the educational data tied to these investors’ profiles we were able to narrow down where these folks went to business school.

What we found here is generally representative of a similar trend we identified when looking at where investment partners went for undergrad. To wit, a relatively small set of business schools can account for a relatively large proportion of the investors in our data. And just like with undergraduate findings, there is a very long tail to this distribution, which the surpassing majority of MBA holders who didn’tgo to one of these schools should find heartening. That said, the odds are heavily stacked in favor of business school grads who managed to get into the elite schools at the top.

Are Angels Or Professional VCs More Likely To Hold MBAs?

Individual angel investors tend to be successful founders or high-net-worth folks who accumulated their startup investing bankroll by other means. So one might guess that they’re less likely to hold MBAs than the comparatively more buttoned-up class of institutional VC investment partners. Let’s see if that hypothesis holds up.

In the chart below, you can see a side-by-side comparison of these two investor types.

As data from a fairly large set of investors suggests, our hypothesis seems to hold up, at least by this cursory analysis. Just like we found in our earlier analysis, we identified that a slim majority of professional venture capital investors hold MBAs. Remember, that’s just the proportion of folks who went to business school; many of these MBA-holding investment partners have one or more other graduate degrees to their name.

Individual angel investors, on the other hand, are probably much more representative of the population of so-called “accredited investors,” which is just the SEC’s way of saying that someone is rich enough to bet their own money on whatever risky proposition they want to, ranging from startup equity to exotic hedge fund strategies. Sure, many have gone to business school – certainly in larger numbers than the general population – but a business school diploma appears to be less of a prerequisite for this type of investor.

And this is a convenient segue to our final question: is having an MBA more or less of a prerequisite for each investor type depending on the gender of the investor involved?

Is Gender A Factor In Valuing An MBA Degree?

Let’s start this section out by acknowledging an unfortunate reality: women are vastly underrepresented in many fields, perhaps acutely so in venture capital and startup investing. Although progress is being made toward parity, the going is painfully slow.

And what’s true in life is true in data. And at first blush, our findings are rather bleak. Out of over 5,500 investors—including angels and institutional investment partners‚just 8.3 percent are women. (Crunchbase captures genders beyond just male and female. However, all but four investors in this dataset were listed as male or female. The other four were not provided.)

But does this gender disparity have knock-on effects related to rates of business school attendance? Let’s see.

The chart below shows the ratio of female and male MBA-holders among angel investors.

Slightly more female angel investors have MBAs than their male counterparts. It’s still in the realm of statistical noise, but only just. The above chart could be read as showing that there’s a higher bar for women who want to make angel investments.

And what about VC investment partners? The chart below shows the breakdown.

Here too, in this segment of the investor population there are more women with MBA degrees than without, but not by much. With such a small sample size, we’re talking about a margin of seven individuals. But rounding errors aside, the uniformity between female and male professional investors is quite remarkable. The higher bar argument one could make about angel investment is much less convincing here. In other words, there’s something that’s driving gender inequality among professional VC investors, but it’s not whether one gender is more or less likely to get an MBA.

For Startup Investors, When Does Having An MBA Matter Most?

In the informal world of angel investing, the legitimacy of investors is almost entirely tied to their networks, the well-being of current and past portfolio companies, and their professional accomplishments, which includes academic achievements. Bias—no matter whether it’s implicit or explicit—makes the underrepresented group need to perform at a higher level just to be seen as equal to “the establishment.”

However, in the case of the professional investment partners, we see an instance of institutions exerting a set of norms and standards fairly equally, at least where educational background is concerned. Because the partnership association with an institutional investment group conveys the authority in this case, there’s less competition on the margins where differences in educational background and professional accomplishments provide a serious competitive edge.

However, in both cases, we also see the importance of reputation and alumni networks of alma maters. So if you want to get into startup investing and are banking on the cachet of your business degree, your choice of schools is severely limited to the most competitive options.

Illustration: Li-Anne Dias