A month ago, a mentor strongly advised that I do an MBA. The mentor, a corporate attorney who has his own firm, asked me to consider a part-time remote MBA to get the qualification, and gain the accompanying knowledge. Anyone who is serious about the MBA will realize that the decision goes beyond these two factors – There’s the opportunity cost (two years full time typically), cost of the degree (anywhere from $60-150k), network and alumni (especially for brand-name schools) etc. It’s a tough draw as well. Dee Leopold, Managing Director of Admissions and Financial Aid at Harvard Business School (HBS) was recently interviewed, and she gave the hard statistics that only 20% of the 9500 that applied would get an interview, half of whom would be made an offer. That’s a low percentage.
Having studied a dozen Harvard Business School case studies at the inaugural Keck Graduate Institute Bioscience Management Bootcamp in 2013, taken a Wharton Coursera course on Finance (1st year MBA, taught by Frank Allen), and numerous informational interviews with graduates from most of the top business schools (HBS, Wharton, Kellogg, Booth, INSEAD, Anderson etc.), I am pretty certain that I would enjoy the material covered at b-school.
But will the MBA get me where I want to be, as a VC in the life sciences? At the recent BIO International Convention, I had the fortune to speak with a few VCs who shared their thoughts with me. One thing stood out clearly – many either had a business background (MBA), or a technical background (PhD/MD). A quick search on the internet (our favorite resource) didn’t reveal much either (this paper is closest thing I found), because most “VC advice” wasn’t specific for the life science industry.
So as any good scientist would do, I set forth to do a quantitative review of the life science VCs, to answer the question, “Is an MBA necessary to become a life science VC?“
Methodology
I surveyed around 20 active (having made an investment in the past year or so) life science VCs in the US. Fierce Biotech came up with a top 15 VCs list in 2013, so I used that with a starting point and added a few more.
I identified all the partners (excluding associates, principals, EIRs etc., but including the various “partner” titles such as Partner, Senior Partner, General Partner, Managing Director) and tallied those with (i) an MBA, (ii) a PhD or MD, and (iii) a PhD or MD, and MBA.
I did not count the Kauffman Fellowship as an MBA program, although I think it could be almost equivalent.
Edit on July 1, 2014: Simon Bayly of Epiphany Capital was kind enough to point out that I need to indicate those with consulting background.
(Disclaimer: I’m usually a wee bit more rigorous when writing scientific papers. See here for examples.)
Results
I identified about 120 partners. 40% had MBAs, 30% of which came from Harvard. The rest graduated from Wharton, Booth, and others, mostly top-tier b-schools. 40% had PhDs or MDs. Of the total 80%, 10% (i.e. 12 partners) from the above two groups were double counted, as they had both a PhD or MD, and an MBA. The remaining 20% had some sort of a finance/business/economics bachelors degree.
Discussion
I wasn’t surprised at the spread of MBAs, and PhD/MDs. I’ve always been told that there are two main routes to get into VC, via the business side or via technical expertise. The percentages here are indicative. What surprised me is the small percentage (10%) of VC partners who graduated with both degrees.
From my informational interviews with VCs, I gather that many derive their operational business experience from working in a VC-backed startup, in lieu of an MBA. This is the “opportunity cost” that I mentioned earlier, and probably accounts for the career path of the low number of technical VCs who pursued the MBA path.
The obvious next step to verify this is to trace the 36 or so VCs who pursued the PhD/MD program but not the MBA, and became a VC. I hypothesize that this group decided that operational experience was more important than spending the time in a classroom learning about the fundamentals of business. It’s probably easy to trace this out by analyzing their bios one by one, but I chose not to do so (someone else could do it).
Conclusion
I think there’s a lot of value in an MBA. I’ve had the fortune to learn from numerous mentors who have gone through the program. I know many PhD/MDs who have taken it as well. But keep in mind that only a small percentage of those who pursue the career path as a VC (a very difficult profession to get into, I must say), have done the dual-degree path. Experience is sometimes more desirable (30%>10%, n = 120).
In the meantime, I’m just going to talk to more people, and continue leveling up my experience. After all, I still need to complete that PhD.
If you would like more information about the raw data in excel form, please send me a contact request. I’ll be happy to provide it to you.
Good analysis, but insufficient. 120 is still a small number, there are other biases.
1. Business Schools teach other aspects apart from basic finance and marketing that is important for assessing value of the company. As you pointed out the School brand counts (for PhD/MD and/or MBA), of course there are outliers.
2. For PhD/ MDs take atleast 4-5 years more to get into Venture capital firm as compared to an MBA (of PhD/MD+MBA) who has worked in Consulting/Investment Banking/ M&A/etc.
3. Very important aspect, Venture capital firms usually hire candidates who have ‘actually’ started companies (i.e. been entrepreneurs) or lead such startups through rounds of funding, understand the ecosystem and have experience in that particular investment area.
4. Attending forums, conference is second hand knowledge, but still good to raise awareness and gain insight
Hi Andy,
Thanks for a great comment. You are right to say that 120 is a small number; biases include how I even chose the top 20 VCs… and this is US alone. Not the same around the world, and differs for corporate vs private VCs.
1. Yes there are some MBA programs that focus on commercialization as well. School brand and alumni network could probably help with deal flow and syndicate formation. The Kauffman Fellowship really helps learning the VC ropes, and with the peer network too.
2 and 3. Operational experience in a venture-backed startup appears to be highly sought-after. Consulting, like what Simon Bayly mentioned (and what Stan Fleming of Forward Ventures told me a few years ago), is a common route to quickly gain breadth and depth of analyses. But “4-5 years more” – and which position would they land up as? Principal? I consciously omitted the process of becoming partner (some work their way up, some get invited…), because I myself am still familiarizing with how this works.
4. I think any entrepreneur/VC/part of the community should consistently be engaged in forums and panel discussions.
Thanks again for great feedback.