DECEMBER 2015

Entrepreneurship and Innovation at MIT

Continuing Global Growth and Impact
Edward B. Roberts, Fiona Murray, and J. Daniel Kim
MIT Sloan School of Management

Entrepreneurship andInnovation at MIT
Continuing Global
Growth and Impact

Edward B. Roberts, Fiona Murray and J. Daniel Kim

© Edward B. Roberts and Fiona Murrayiii

Contents
ABOUT THE AUTHORS...............................................................................................................................................iv
ACKNOWLEDGMENTS...............................................................................................................................................iv
INTRODUCTION.............................................................................................................................................................5
ECONOMIC IMPACT OF MIT ALUMNI ENTREPRENEURS.............................................................................6
Geographic Impact..............................................................................................................................................6
Survival Statistics..................................................................................................................................................8
Impact on Employment and Revenues.......................................................................................................8
Company Funding and Outcomes.............................................................................................................. 10
Serial Entrepreneurship.................................................................................................................................. 11
TRENDS IN MIT ALUMNI ENTREPRENEURSHIP ........................................................................................... 13
Growth Rate of New Company Formation.............................................................................................. 13
Declining Age of Founders............................................................................................................................ 15
Industry Shifts in MIT Entrepreneurship.................................................................................................. 15
Gender Differences........................................................................................................................................... 16
International Students..................................................................................................................................... 22
OTHER CONTRIBUTIONS TO MIT ENTREPRENEURSHIP AND INNOVATION................................... 22
CONTINUING DEVELOPMENT OF THE MIT ENTREPRENEURSHIP ECOSYSTEM............................ 23
Entrepreneurship Education at MIT........................................................................................................... 24
Internal Entrepreneurship Development Programs........................................................................... 25
MIT’s Global Entrepreneurial Outreach.................................................................................................... 25
Other Key MIT Organizations....................................................................................................................... 26
ENTREPRENEURSHIP AND INNOVATION AT MIT: CONCLUSIONS AND IMPLICATIONS........... 28
Implications of our Research........................................................................................................................ 28
APPENDIX. SURVEY ANALYSIS AND EXTRAPOLATION............................................................................ 32
Main Approach................................................................................................................................................... 32
Robustness Checks............................................................................................................................................ 33

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | iv

ABOUT THE AUTHORS
Edward B. Roberts is the David Sarnoff Professor of Management of Technology at the MIT
Sloan School of Management, and the Founder and Chair of the Martin Trust Center for MIT
Entrepreneurship.
Fiona Murray is Associate Dean for Innovation at the MIT Sloan School of Management; William Porter(1967) Distinguished Professor of Entrepreneurship; Co-Director of the MIT Innovation Initiative;
Faculty Director, Trust Center for MIT Entrepreneurship; and Faculty Director, MIT Legatum Center
for Development & Entrepreneurship.
J. Daniel Kim is a PhD candidate at the MIT Sloan School of Management.

ACKNOWLEDGMENTS
We thank the MIT Office of Institutional Research and MIT Alumni Association for their cooperationin developing and implementing the underlying MIT alumni survey upon which this work is based.
Jon Daries was especially helpful in carrying out the follow-up telephone survey. We also thank the
Lord Foundation of Massachusetts and Deans Ian Waitz of the MIT School of Engineering and David
Schmittlein of the MIT Sloan School of Management for providing the financial resources to undertake
this work. We appreciate the assistance of MIT Sloan PhD student Joshua Krieger. Finally, we deeply
appreciate the assistance of the MIT Reference Publications Office for their contributions to the editing
and production of the report, in particular Kimberly Mancino, who led that effort.

5

INTRODUCTION
Leading research-based universities play a significant role in stimulating and sustaining U.S. economic
growth. These institutions educate not only productive workers who create value as employees of large
established firms but also entrepreneurs who commercialize ideas—often research-based—and build
innovation-driven enterprises. These company founders (and their early employees) exert a major
ripple effect in both local and global economies, as new companies have the potential to scale rapidly
and thus create jobs. This is especially true for companies based on emerging science, technology, orother sources of innovative concepts, whether in manufacturing process, distribution approaches,or newly defined markets.1 U.S. economic data demonstrate that start-up businesses are the primary
driver of job growth and are responsible for a disproportionately high share of job creation, with newand high-growth young firms accounting for roughly 70% of gross job creation.2
In 2003, in the first study of its kind, Professor Edward Roberts along with then PhD student Charles
Eesley developed a survey to explore the entrepreneurial activities of MIT alumni, in particular therate, location, and success of their new enterprises.3,4 Since then, other universities, including Stanford,
Tsinghua (China), the Technion (Israel), and University of Virginia, have conducted similar studiesof their own alumni entrepreneurs. Several studies limited to the entrepreneurial alumni of businessschools have been carried out as well.
The findings from the initial MIT survey indicated that MIT alumni were significantly engaged in newenterprise formation. Over 20% of respondents had started one or more for-profit ventures that werestill in business in 2006, the year of final data collection. More than 26% of those firms were locatedin Massachusetts, with the next largest concentration (22%) in California. Nearly 40% of those whoreported founding a company were “serial” entrepreneurs (i.e., had started more than one company),
with an average of 3.25 start-ups per person.
In 2014—a decade later—we updated the survey to explore the continuing contribution of MIT alumni
to innovation and entrepreneurship in the United States and worldwide.5 This update is particularly
salient given the burgeoning interest in the role of universities in economic growth and the fact thatstudents who graduated between 2004 and 2014 faced a more difficult economic climate. On the one
hand, fund raising and capital access became more challenging as the U.S. economy entered a period
of deep recession starting at the end of 2007, and venture capital assets and investments declined. On
the other hand, entrepreneurship concurrently became a potentially more appealing career choice dueboth to structural and perceptual changes in traditional employment and occupations, as well as toan apparent groundswell in young people’s interests in entrepreneurial endeavors. For instance, theproportion of MIT undergraduates selecting employment in venture capital–backed start-ups upon
graduation increased from less than 2% in 2006 to 15% in 2014.6

1

http://www.oecd.org/sti/young-SME-growth-and-job-creation.pdf

2

Ryan Decker, John Haltiwanger, Ron Jarmin, and Javier Miranda, “The Role of Entrepreneurship in U.S. Job Creation andEconomic Dynamism,” Journal of Economic Perspectives 2014 28(3):3–24. doi: 10.1257/jep.28.3.3
3
Edward Roberts and Charles Eesley, “Entrepreneurial Impact: The Role of MIT.” Kauffman Foundation, Kansas City,
MO; 2009.
4
Edward Roberts and Charles Eesley, “Entrepreneurial Impact: The Role of MIT—An Updated Report,” Foundations andTrends in Entrepreneurship 2011 7(1–2):1–149. doi: 10.1561/0300000030
5
The survey was sent to all MIT alumni in February 2014, resulting in 104,169 survey invitations and 19,730 responses (19%
response rate). A follow-up telephone survey of the initial non-respondents was carried out in October–November 2015 to checkfor response bias in business formation response statistics; 1,650 U.S. alumni were randomly selected and called, and 254 (15.4%)of them responded to the brief telephone questionnaire.
6

J. Daniel Kim. “Early Employees of Venture-Backed Startups: Selection and Wage Differentials,” Working Paper.
Cambridge, MA; 2015.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 6

Overall, our new findings indicate that MIT alumni are engaged in entrepreneurship and innovation(E&I) at ever increasing rates, and at earlier and earlier stages in their lives.
The MIT Admissions Office informs us that this trend continues: the dominant percentage ofundergraduate applicants to the Institute want to contribute significantly to important global
challenges at all stages of the idea-to-impact process—from invention and patenting to venturecreation projects within large corporations to launching their own start-ups. Our results confirm thatmany act on these aspirations once they leave MIT. The following findings have particularly important
implications for how we educate the coming generation of global innovators:•

Of our alumni survey respondents, 31% have filed patents and 34% consider themselves
inventors.7,8•Twenty-five percent of the online survey respondents have engaged in new company formation.
(Thirty-five percent of alumni who responded to a follow-up telephone survey had started one
or more businesses.)•

The proportion of respondents who founded a venture within five years of graduation rose from
4% among those who graduated in the 1960s to 8% among those who graduated in the 1990s.
The study also revealed another growth trend in MIT entrepreneurship over time: The numberof companies founded per 100 active alumni increased from 6 among those who graduated in
the 1970s to 12 among those who graduated in the 1990s.

•

Twenty-two percent of our alumni respondents have worked as employees of early-stage
ventures, indicating their engagement not only in the formation but also in the growth of new
firms; 38% of these early employees later went on to start their own company.

•

Our alumni have increasingly engaged in funding innovation projects: 16% of respondents
have invested in new companies (that they did not found). Seventeen percent have participatedin crowdfunding to support the invention of a new product or service, a new phenomenon inwhich graduates from the 2000s in particular have engaged.

•

Of the alumni surveyed, 17% serve as board members of for-profit companies; and 11% serve ona firm’s scientific advisory board.

ECONOMIC IMPACT OF MIT ALUMNI ENTREPRENEURS
Our new study reveals that MIT alumni contribute greatly to the global innovation economy and toparticular regional innovation ecosystems. While MIT innovators contribute to companies large andsmall, as well as to and through governments, universities, and other public sector organizations, weare best able to measure the impact of those alumni who start and build for-profit firms.

Geographic Impact
Extrapolating from our survey results (see Appendix for methods and information about the followup survey of non-respondents), we estimate that MIT alumni of both undergraduate and graduate
programs have been among the founders of at least 30,000 currently active companies. We estimate
7

This can be compared to a 2012 study by Shu that found that 16% of MIT undergraduate alumni produce at least one
patent. Pian Shu, “The Long-Term Impact of Business Cycles on Innovation: Evidence from the Massachusetts Institute ofTechnology,” July12, 2012. http://economics.mit.edu/files/7363
8
We found a 24% patenting rate among undergraduate alumni during the same time frame as the Shu study [1980–2005]
Our finding of a higher patenting rate is most likely attributable to response bias in favor of innovators, as well as thepotential of Type I Error in Shu’s approximate name-matching process (i.e., respondents identified as non-inventor if they
are ambiguously matched to inventors).

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 7

that these enterprises employ 4.6 million individuals and generate annual global revenues of $1.9
trillion, which is roughly equivalent to the GDP of the world’s 10th largest economy as of 2014. Thesefigures are based upon an extrapolation method that scales according to the entrepreneurship activities
by MIT School, gender, and decade of graduation. This is similar to the scaling approach used in the
recent Stanford alumni survey,9 but different from our 2009 and 2011 assessments of MIT alumni
entrepreneurial impact, which scaled only the totals rather than estimating by specific cohorts.10
Entrepreneurship is a strong marker of MIT’s global impact: 23% of MIT alumni’s new firms arefounded outside the United States. This in part reflects the international nature of the alumni
themselves (some 30% of our current undergraduate and graduate students were born outside theUnited States), as well as our students’ global aspirations.
Though many alumni are engaged in international entrepreneurial activity, our survey results echo theglobal movement toward the agglomeration of innovation-driven economic activity (Figure 1): While
only 8% of undergraduates were admitted to MIT from Massachusetts, roughly half of U.S.-based MIT
alumni–founded companies represented in our survey have located in the Northeast.
Figure 1. Location of US-based MIT alumni-founded companies.
Figure 1. Location of U.S.-based MIT alumni–founded companies.

California
21%

Massachusetts
31%

New York
7%
Florida
4%
Texas
3%

Other
28%
28%

Virginia
3%
New Jersey
3%Note: Repondents reported current company location or last location if no longer operating; includes
companies founded between the 1940s and April 2014.

Massachusetts accounts for the highest portion of MIT alumni companies at 31% (1,691 companies
among the survey responses), which translates into an estimate of roughly 7,000 companies using our
extrapolation method.11 California comes in second at 21%, in large part reflecting the return of thoseat MIT who had come originally from the West Coast (17% of undergraduates surveyed were admitted
from California). At the city level, although San Francisco typically attracts the highest number of

9Charles Eesley and William Miller, “Impact: Stanford University’s Economic Impact via Innovation and
Entrepreneurship.” Stanford University, Stanford, CA; 2012.
10
Our estimates published in 2009 were of approximately 3.3 million employees worldwide and revenues of nearly$2 trillion for the year 2006. The estimated 25,800 living MIT-alumni-founded companies in that survey ranged acrosssectors with the most highly represented industries being software, electronics and telecommunications. Using the earlier
methodology on our 2014 survey data produces well over 30,000 living companies and considerably higher employment
and revenue statistics. The limited data from the telephone survey suggest even higher numbers. (See Appendix for
additional detail.)11

Estimates are derived using the same extrapolation method mentioned earlier and with the additional assumption that
77% of all MIT-related companies are based in the U.S.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 8

technology start-ups in the United States,12 our results show that Cambridge boasts the highest shareof MIT alumni companies at 8%. These companies have a direct impact on the local and regional
economies, and their presence has been influential in attracting the significant biotechnology andinformation technology (IT) industry clusters that have emerged in the greater Kendall Square area in
Cambridge. These trends are consistent with results from the 2009 survey.

Survival Statistics
Of course, the formation of new enterprises does not necessarily indicate or ensure their contributions
to economic growth. Measurable impact depends on the companies’ abilities to serve customers andbuild products and services that solve important problems, as well as their capacity to scale and groweffectively and efficiently. Our data show that, as a whole, MIT alumni–founded companies exhibit
strong performance in comparison with baseline U.S. statistics. One common metric that sheds lighton start-up performance is their survival rate over time. Survival is a major challenge for nascent firms
because of the risks inherent in entrepreneurship.
The MIT alumni–founded companies represented in our survey results exhibit superior performancein terms of survival relative to new U.S. firms as a whole. While roughly 50% of U.S. newly formed
businesses survive for five years or more and 35% last for 10 years, approximately 80% of newcompanies founded by MIT alumni survive for five years or more and 70% last for 10 years according
to our results. As shown in Figure 2, the survival rate for the MIT-alumni companies is higher at every
stage of the company life cycle. Overall, the survey results suggest that about two-thirds of all MIT
alumni–founded companies—from those that started as far back as 1945 to those recently founded—
continue to exist today. This is consistent with the follow-up telephone survey, which found that 72%
of all companies founded are still active.

Impact on Employment and Revenues
Other salient metrics of entrepreneurial success include employment and revenues. As mentioned
earlier, MIT alumni–founded companies have a substantial impact on our economy throughemployment and revenues. Nonetheless, it is worth highlighting that MIT alumni companies are
significantly heterogeneous in firm size as well as the magnitude of their economic impact. Table 1a
indicates that roughly half of MIT companies represented in this survey employ fewer than 10 people.
Contrary to high-growth entrepreneurship, many are probably lifestyle businesses that generate steadystreams of income, such as personal consulting companies.
Like the economy as a whole, a small fraction of entrepreneurial ventures is responsible for adisproportionately high share of employment and revenues. (Most small business in the United States
never intend to grow or innovate in any major way.13) For instance, while companies with more than
1,000 employees make up only 2.3% of total MIT alumni–founded companies in our survey data,
they account for 68% of total employment as well as 42% of total revenues. This is comparable to ourfindings in our earlier report of concentrated sources of entrepreneurial economic impact.

12“Top 20 US Cities for Tech Startup Funding,” Inc.com, October 23, 2014. Accessed March 30, 2015, http://www.inc.com/
associated-press/top-20-cities-for-tech-startup-funding.html. These rankings do not take into account the relative population
sizes of the states or regions in which the cities are located.
13

Erik Hurst and Benjamin Wild Pugsley, “What Do Small Businesses Do?” NBER Working Paper No. 17041. Cambridge,
MA; May 2011. http://www.nber.org/papers/w17041.pdf

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 9

Figurecompanies
Figure2.2.Survival
Survivalrates
ratesofofMIT
MITalumni-fundedalumni–founded
companies
versusnewbusinesses,
1994–2014.
versusall
allUS
U.S.
new
businesses,
1994–2014.
100%

Survival rate

80%

60%

40%

20%

0%

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

Years since founding
All US businesses

MIT Alumni–founded companies

MIT alumni-founded companies

Sources: Edward B. Roberts, Fiona Murray, J. Daniel Kim. Entrepreneurship and Innovation at MIT:Continuing Global Growth and Impact. Cambridge, MA: Massachusetts Institute of Technology; 2015.
US Bureau of Labor Statistics, Business Employment Dynamics, Entrepreneurship and the US Economy,“Chart 3. Survival rates of establishments, by year started and number of years since starting, 1994–2010,
in percent,” http://www.bls.gov/bdm/entrepreneurship/bdm_chart3.htm.
Note: Data for MIT alumni–founded companies are from the period 2004–2014. Data for all US new businesses
are from the US Bureau of Labor Statistics (BLS) for the period 1994–2010. In order to follow the BLS data format,
each year represents a unique set of companies; 2014 is normalized to year 0. In other words, at 10 years
since founding, only companies that are founded in 2004 are represented while at 9, only those founded in2005 are shown; no companies overlap in the two subsets.

Table 1a. Reported Employment and Revenue Distribution of MIT Alumni–Founded Active
Companies, 2013
Employment
Employment
category

Percent ofcompanies

Revenues ($ Millions)MedianMean

Percentof totalMedianMean

Percent of
total

1–10

51.0%

4

4.5

1%

0.1

4.6

4%

11–50

27.8%

24

26

4%

3

7.4

3%

51–200

12.6%

100

116

8%

16

67

13%

201–500

4.6%

325

354

9%

50

248

18%

501–1,000

1.8%

825

819

8%

110

756

21%

1,001–5,000

1.8%

2,500

2,750

30%

450

900

26%

5,001–10,000

0.3%

7,000

7,600

12%

600

1,302

6%

10,000+0.2%

15,00021,429

26%

2,000

2,743

10%

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 10

In addition to firm size, age is another useful measure of the firm’s growth prospects. Recent studies
also show that young—not necessarily small—firms drive much of the employment growth.14
Therefore, the distinction between small and young firms is meaningful.
Table 1b shows the breakdown of MIT alumni–founded companies by their founding decade. As
expected, most of the firms founded in the past 15 years employ 10 or fewer employees. For earlier
decades, around 30%–40% of the companies continue to stay small despite being in operation forseveral decades, reinforcing the notion that many small businesses never intended or were able to
grow. Also, mean employment numbers show the continuing growth of the surviving firms over theirfirst 40 years.
Table 1b. Selected Employment Statistics for MIT Alumni–Founded Companies,
by Decade Founded, 2013
Percent with 1–10
employees

Mean
employment

Medianemployment

Pre-1960s

35%

307

22

1960s

34%

356

30

1970s

33%

464

25

1980s

30%

412

26

1990s

38%

207

20

2000s

40%

119

15

2010s

85%

14

3

Founding decadeCompany Funding and Outcomes
The range of company outcomes, or “exits,” provides another key metric to understandentrepreneurial performance, especially for investors and other stakeholders (even though not all
profitable private companies seek to exit). Some very successful companies choose to remain privately
held by their founders, employees, and private investors. Nonetheless, for many entrepreneurs andinvestors who seek liquidity and/or returns on their earlier investments, an initial public offering (IPO)of company shares is a sought-after outcome. While IPOs frequently mark some degree of growth andinitial success, acquisitions of one company by another are another exit measure. These may include
profitable mergers and acquisitions (M&As) as well as unprofitable liquidation events such as “firesale” acquisitions or asset sales. In Table 2, we label these fire-sale acquisitions as “Acquired, closed”(suggesting the closure of the company post-acquisition). Bankruptcy is also included in our definitionof company failures.
Overall, 2% of MIT alumni companies in this survey experienced an IPO while 8% were bought out
through an acquisition. The majority of the companies in our “live” survey sample remain privatelyheld.
To put these rates into perspective we compare them to the IPO/acquisition rates of a comprehensive
venture capital (VC)-backed sample: A 2010 analysis of 22,000 VC-backed companies found that 9%
achieved an IPO while another 25% were acquired.15 In comparison, of the MIT alumni companies
represented in the survey from the same time frame (1986–2008) that we could identify as venture14

John Haltiwanger, Ron S. Jarmin, and Javier Miranda, “Who Creates Jobs? Small Versus Large Versus Young,” The
Review of Economics and Statistics 2013 95(2):347–361. doi: 10.1162/REST_a_00288
15

Robert E. Hall and Susan W. Woodward, “The Burden of the Nondiversifiable Risk of Entrepreneurship,” American
Economic Review 2010 100:1163–1194.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 11

based, 7% experienced an IPO and 19% were acquired.16 The IPO rate for MIT alumni companies inthis survey is lower than our earlier study of MIT alumni, where we documented 11% of their firms as
having had IPOs.
Table 2. Selected Outcome Measures of MIT Alumni–Founded Companies, 1940s
through April 2014
Company outcome

Non VC-backed*

VC-backed*

Proportion of MIT companies

96%

4%

Successfully exited

10%

20%

Public2%

6%Acquired, open

7%

14%

Failed34%

32%

Acquired, closed

10%

17%

Closed23%

15%

Still privately held

57%

49%

*VC=Venture capital

It is worth noting that young enterprises can generally be categorized into two distinct types: small
and medium-sized enterprises (SMEs) and innovation-driven enterprises (IDEs).17,18 The distinguishingfeature of new IDEs is that they are based on bringing to customers innovations that exhibit highgrowth potential and competitive advantage. As a result, external capital to support growth is theircharacteristic financing, whereas SMEs usually support their investment by “bootstrapping” or bytaking on small business loans. According to the Small Business Administration, about 600,000 new
businesses are started in the United States each year. Some 300 of them are backed by venture capital,
resulting in an estimated rate of 0.05%.19 In contrast, our survey approximation shows that around
4% of MIT alumni–founded companies are funded through venture capital. These large differences
highlight that MIT entrepreneurs are much more likely to launch innovation-driven enterprises whencompared to the baseline population of U.S. entrepreneurs.

Serial Entrepreneurship
One final observation regarding economic impact is that many MIT alumni founders become “serial
entrepreneurs.” Roughly 40% of MIT alumni entrepreneurs in our current survey (and 49% of
telephone survey respondents) have already launched two or more companies during their careers.
In reality, the overall proportion of serial entrepreneurs is necessarily higher due to the “right-handcensoring effect”; i.e., alumni who graduated more recently and those who are first-time entrepreneurs
are observed here as one-time founders though they may go on to found more businesses in the future.

16
Unfortunately, we do not observe whether companies in our data are affiliated with venture capital financing. We
identify which MIT companies are VC-backed by “fuzzy matching” against the CrunchBase dataset based on company
name and location. For comparison with Hall and Woodward (2010), our sample is restricted to companies founded between
1986 and 2008.
17
Bill Aulet and Fiona Murray, “A Tale of Two Entrepreneurs: Understanding Differences in the Types of Entrepreneurshipin the Economy.” Kauffman Foundation: Kansas City, MO; 2013.
18
Antoinette Schoar refers to these two types of new companies as “subsistence” and “transformational” in her paper,“The Divide between Subsistence and Transformational Entrepreneurship,” in Innovation Policy and the Economy, Vol. 10.
National Bureau of Economic Research; Cambridge, MA; 2010. 57–81.
19

Dileep Rao, “Why 99.95% of Entepreneurs Should Stop Wasting Time Seeking Venture Capital,” Forbes, July 22, 2013.
Accessed July 20, 2015, http://www.forbes.com/sites/dileeprao/2013/07/22/why-99-95-of-entrepreneurs-should-stop-wastingtime-seeking-venture-capital/.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 12

The prevalence of serial entrepreneurship among MIT alumni (Table 3) highlights that a single
persistent entrepreneur can have a disproportionately large economic impact over time, with each ofher/his new firms potentially employing numerous people and generating substantial revenues overextended periods.
Table 3. Serial Entrepreneurship by
MIT Alumni, 1940s through April 2014
Companies
founded (no.)

MIT alumni

1

61.7%

2

21.1%

3

9.1%

4

4.5%

5

2.1%

6+

1.5%

Our serial entrepreneurs also provide some empirical insights into an enduring question: Are
successful entrepreneurs born or made? How much of the success in entrepreneurial endeavors resultsfrom luck or birth-based characteristics as opposed to learned knowledge and skills? Results shownin Table 4 indicate that the firms in our sample founded by first-time entrepreneurs (compared toexperienced founders) have a slightly lower probability of successful exits (IPO or M&A), and have amuch higher chance of failed outcomes (bankruptcy or fire sale) when compared to the same subjects’
subsequent entrepreneurial attempts. These results are slightly stronger in regard to the successesof later firms founded in the same industry. Overall, the survey results suggest that entrepreneurial
practice and experience improve outcomes.
Table 4. Comparative Performance of First versus Subsequent Companies Founded by
MIT-Alumni Serial Entrepreneurs, 1940s through April 2014
Company outcome

First-timefounder

Experienced
founder

Experienced founder infamiliar industry

Still privately held

52.5%

62.1%

59.4%

Public

2.1%

2.4%

2.5%

Acquired, open

7.6%

7.8%

9.0%

Acquired, closed

12.1%

8.7%

10.4%

Closed

25.7%

19.0%

18.8%

Rate of successful exit (IPO,
open acquisition)

9.7%

10.3%

11.4%

Rate of failure (bankruptcy,
closed acquisition)

37.8%

27.7%

29.2%

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 13

TRENDS IN MIT ALUMNI ENTREPRENEURSHIP
Growth Rate of New Company Formation
The rise of entrepreneurship among MIT alumni can be explored using the entrepreneurshipparticipation rate in the period immediately after graduation. The percentage of surveyed alumni whohave founded a venture within five years of graduation has risen from 4% among those who graduatedin the 1960s to approximately 8% among those graduating in the 1990s. The rate drops to 7% in the first
decade of the 2000s, possibly due to the dot-com crash. For the 2010s, the five-year entrepreneurshipparticipation rate rose again to 11%. This new high is particularly interesting given that the most recent
alumni have had limited time to explore their career options (i.e., right-censoring bias) and none ofthem was a full five years past graduation when the survey was administered. We do not know how
many of these early start-ups actually began prior to graduation! These trends are robust to three- and10-year windows, as shown in Figure 3.
Figure 3. Estimated entrepreneurship participation rate of MIT alumni,
by decade of graduation, pre-1960s through April 2014.

Next, we assess the increasing trend in MIT alumni entrepreneurship at the firm level. As shown in
Figure 4, our estimates, based on extrapolation from the survey respondents to the entire alumni population,suggest that MIT alumni founded roughly 5,300 for-profit companies during the 1980s.20 By the 1990s,
that number increased by roughly 50%. During the decade of the 2000s—the peak 10-year period thus
far for MIT alumni entrepreneurship—extrapolation suggests that MIT alumni created approximately
12,000 new companies. It is important to note that these measurements are based on gross firm creation.
In other words, these numbers do not take into account firm survival (meaning that many of thesecompanies may have operated for only a short span of time before going out of business).

20

See Appendix for a more detailed description of the extrapolation method.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 14

FigureFigure 4.
4. EstimatedEstimated number
number ofof MIT
MIT alumni-foundedalumni–foundedcompanies,
companies,by
by founding
founding decade,decade, pre-1960s
pre-1960s throughthrough April
April 2014.
2014.
12,00012,000

Number of companies

10,000

9,100
8,000

8,000

6,000

5,300

4,000
2,200

2,000
1,000
0

200
Pre-1960s

1960s

1970s

1980s

1990s

2000s

2010s

Founding decade

Growth is evident in absolute numbers, but also in the proportional rates (Figure 5), normalizing toaddress differences in the size of the alumni base over time. (We divide the number of companies
founded by MIT alumni in each decade by the number of existing alumni in that decade.) We estimatethat approximately 3.5 active companies were founded per 100 alumni during the 1960s; by the 1980s,
this figure had jumped to some 10.7, and rose again in the 2000s to 13.4. The expected figure for the
2010s is 18 companies per 100 active alumni based on an extrapolation of this growth rate. In annual
terms, this suggests that in the 2000s, around 1,300 firms were founded each year by MIT alumni
entrepreneurs.

Number of companies (per 100 active alumni)

Figure 5.
Estimated
numbernumberof MIT alumni-founded
companies,
per 100 active
Figure5. Estimatedof MIT alumni–founded
companies,
by founding
decade,decade,pre-1960s
through
April 2014.
per 100alumni,
active alumni,
by founding
pre-1960s
through
April 2014.
18.0

18
15

13.4
12.0

12

10.7

9
6.0

6
3

9.2

6.9

3.5

0
Pre-1960s

1960s

1970s

1980s

1990s

Founding decade
ActualProjected

2000s

2010s

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 15

Declining Age of Founders
The declining age of MIT alumni founders, shown in Figure 6, is another notable trend in MIT
entrepreneurship. The median age of first-time founders has decreased over the last eight decades.
While the median age during the 1940s was 39 years old, it decreased slightly to 37 in the 1970s andeventually to 30 in the 2000s. Although the median age for first-time founders who graduated during
the 2010s is even lower at 27, the accuracy of this particular snapshot is unclear since this figure
is downward biased due to right censoring. A similar steady decline in median age of first-time
MIT alumni entrepreneurs was also reported in the earlier MIT study. These results do not include
companies already formed by MIT students who had not yet graduated at the time of the survey.
Figure 6. Median age of first-time MIT alumni company founders,
by decade of graduation, 1940s through April 2014.

The factors contributing to the falling age of first-time entrepreneurs are not well known. One possible
contributor is the declining cost of starting an innovation-driven enterprise (e.g., cloud computing andapplication program interface (API) tools have lowered the IT costs of starting a company), which inturn reduces the opportunity cost of entrepreneurship. Moreover, enhanced access to alternative formsof capital may also be a factor. For example, our own data show the increasing engagement of recent
MIT alumni in crowdfunding to support the invention of a new product or service.
More specific to our student body, applications to MIT—at the undergraduate level and the MIT Sloan
MBA—indicate a strong shift over the past decade toward entrepreneurial career interests by young
people. This is also evident in the rapidly increasing enrollments in MIT’s entrepreneurial courses, aswell as in the number of student teams entering MIT’s various business-plan and venture-formationcompetitions.

Industry Shifts in MIT Entrepreneurship
Notable shifts have taken place in the composition of entrepreneurship at the industry level. Similar
to the broader U.S. economy and OECD nations, MIT start-ups have become increasingly servicesoriented and correspondingly less manufacturing-focused. Until the 1980s, the breakdown of MIT
alumni–founded firms in the survey responses was evenly split between manufacturing and services.
However, the services sector gained traction in the 1990s, during which 70% of the companies wereservices-oriented (Figure 7). The services-manufacturing split still appears to be 70-30 in recent years.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 16

Figure7. MIT
alumni–founded
companies,
by decade,Figure7. MIT
alumni-founded
companies
founded,by decade,manufacturing
versusservices,
pre-1960s
throughApril
2014.
manufacturing versus services*, pre-1960s through
April
2014.
70%

Alumni-founded companies

63%

62%
60%

60%

52%
50%

52%
48%

48%

53%
50%

50%
47%
40%

40%

30%

38%

37%

Pre-1960s

1960s

1970s

1980s

1990s

2000s

2010s

Founding decade
Manufacturing

Services*Manufacturing and services do not necessarily add up to 100% because “Other” industry is coded as neither category.

At a more granular level, a few industries have experienced large, persistent trends. Most notably, thesoftware industry has experienced the largest gain in the share of MIT alumni–founded companies
over a 60-year period, perhaps comparable to the United States as a whole. While software comprised
6% of alumni companies before the 1960s, the industry’s share among MIT alumni–founded firms
peaked in the 1990s at 20% and has since stabilized at around 18%, making it the most popularamong the start-ups in our survey data. Furthermore, as Professor Fiona Murray has pointed out,
the healthcare, medical, and pharmaceutical industries have also seen considerable growth that has
accompanied, and no doubt contributed to, the recent rise of the biotech cluster within the Kendall
Square area, where 120 biomedical companies have located within a little over a one-mile radius.21
In contrast, engineering and hardware have experienced sharp declines in the share of MIT alumni–
founded companies. These trends are illustrated in Figure 8.

Gender Differences
As with broader trends in the U.S. economy, the overall rate of entrepreneurship is considerably lower
among female MIT alumni survey respondents than among their male counterparts. Overall, the rateof entrepreneurship in our sample is 12% for women versus 29% for men—a more than two-folddifference. This finding is consistent with the fact that roughly only 30% of U.S. businesses are womenowned.22 As shown in Table 5, we also find variations in the rate of female participation in other
innovation-related activities.

21

Heidi Ledford, “Start-ups fight for a place in Boston’s biotech hub,” Nature, June 8, 2015. Accessed July 20, 2015, http://
www.nature.com/news/start-ups-fight-for-a-place-in-boston-s-biotech-hub-1.17721.
222007 Survey of Business Owners, U.S. Census Bureau. Accessed at http://www.census.gov/econ/sbo/getsof.
html?07women.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 17

FigureMIT alumni–founded
companies,
by industry
Figure8. MIT8.alumni-founded
companies,
by industry
and andfounding
decade,pre-1960s
through
April 2014.
founding
decade,pre-1960s
through
April 2014.
25%

Alumni who founded
service companies

20%
Computer software
15%

Health/Medicine
Energy and utilities
Pharmaceutics(Biotech, medical devices)

10%

5%

0%

Pre-1960s 1960s

1970s

1980s

1990s

2000s

2010s

Founding decade

Alumni who founded
manufacturing companies

25%

20%
Computer hardware/
Electrical engineering

15%

Engineering
Manufacturing(industrial and consumer)

10%

5%

0%

Pre-1960s 1960s

1970s

1980s

1990s

Founding decade

2000s

2010s

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 18

Table 5. MIT Alumni Participation in Innovation-Related Activities, by Gender,
1940s through April 2014
Male participation

Female participation

Yes

Rate

Yes

Rate

For profit

4,181

29%

585

12%

Non-profit

1,747

12%

484

10%

Early employee

3,577

25%

643

13%

Inventor

5,524

39%

871

18%

Patentor

5,160

36%

762

16%

Product development

8,464

59%

1,963

41%

Board of directors, private

2,893*

20%*

364*

8%*

Board of directors, public

531*

4%*

81*

2%*

Scientific advisory board

1,717*

12%*

334*

7%*

In a start-up by MIT alum(s)

967

7%

161

3%

Friends and family (angel)

2,388

17%

656

14%

968

7%

90

2%

Entrepreneurship

Innovation

AdvisorInvestor

Venture capital*Alumni serving in this role at time of survey; the total number or percentage of alumni who have
served in this role at some point in their careers may be higher.

A simple hazard model in Figure 9 shows whether gender correlates with a respondent’s decision to
become an entrepreneur in a given year after graduating from MIT. Kaplan-Meier risk curves display
a significant level difference (thus confirming the overall percentage differences for male and female
alumni).

0.30
0.20
0.10
0.00

Hazard rate

0.40

0.50

FigureFigure
9. MIT9.
alumnihazardhazard
rate ofrate
entrepreneurship
post-graduation,*
MIT alumni
of entrepreneurship*postbygender,1940s
throughApril
2014.
graduation, by gender, 1940s through April 2014.

0

20

40

60

Years since graduation
Male

Female*The likelihood of an individual’s decision to become an entrepreneur, calculated using a Kaplan-Meier risk
estimate model with a maximum of 60 years following graduation.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 19

Figure 10 illustrates entrepreneurship rates in the five years since graduation by gender for eachgraduating decade. Although the first woman was admitted to MIT in 1871, the first event of female
entrepreneurship observed in our sample took place in 1962. Though the rate of entrepreneurship has
risen for male MIT graduates in the survey, the rate has remained steady since the 1960s at around 3%
for female alumni in their first five years after graduation.23
Figure 10. MIT alumni entrepreneurship rates within five years ofgraduation, by gender and decade of graduation, 1940s through April 2014.

In terms of company exits, women-founded firms in our survey are less likely to go public or becomeacquired. Interestingly, they are also less likely to fail. Overall, firms founded by MIT alumnae appear tobe less volatile, as a significantly higher proportion of them continue to operate as privately held firms.
The exact mechanisms behind the differences in gender and company exits cannot be interpreted fromthe data. However, compositional differences may be salient: MIT alumnae are more likely to launchbusinesses in services sectors (e.g., education, consulting) as opposed to manufacturing (e.g., energy andutilities, industrial engineering). For instance, the proportion of female-founded firms in the education
sector in the survey is three times that of male-founded education firms. Similar patterns hold for law,architecture, and urban planning. Figure 11 shows the services versus manufacturing compositional
breakdown by gender, and Table 6 shows entrepreneurship rates and outcomes by gender.
While entrepreneurial participation of alumnae is strikingly low, this is clearly a national phenomenon
and not specific to MIT. Indeed, a recent compilation by a database firm concluded that, when adjusted
for student-body size, MIT is second only to Stanford in the number of female founders who received
venture capital funding during the period 2009–2014.24

23
24

The same pattern holds for three and 10 years within graduating year.

Gené Teare and Ned Desmond, “CrunchBase Report: Harvard, Stanford and MIT Top the List of Schools for Female
Founders,” TechCrunch, August 5, 2015. http://techcrunch.com/2015/08/05/stanford-harvard-and-mit-top-the-list-of-schoolsproducing-female-founders/.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 20

Figure 11. Proportion of services-oriented companies founded by MIT alumni,
by gender of founder and decade of graduation, 1940s through April 2014.

Table 6. Gender and MIT Alumni Entrepreneurship, 1940s through April 2014
FemaleMale

Rate of entrepreneurship

12%

29%

Rate of serial entrepreneurship among entrepreneurs*

25%

40%

Percentage of overall MIT alumni

25%

75%

Percentage of MIT overall alumni entrepreneurs

12%

88%

Percentage of MIT alumni–founded companies

10%

90%

Successfully exited

5%

11%

Public1%2%Acquired, open

4%

8%

Failed27%

35%

Acquired, closed

6%

11%

Closed21%

23%

Still privately held

69%

55%

Firm Outcome*Conditional on founding at least one company

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 21

We also observe differences in firm size for female versus male entrepreneurship. Figure 12 shows the
distribution of MIT alumni–founded company size by gender. Relative to males in the survey, female
entrepreneurs from MIT are significantly more likely to own small firms. While 49% of male-foundedfirms report employing fewer than 10 workers, the figure for female-founded firms is 72%. (See Table
1b for further analysis of the size distribution.)
While bias in access to funding may play a role (as noted in prior research by Professor Fiona
Murray25), the difference in firm size for a similar cohort of accomplished MIT graduates suggests thatfemale entrepreneurs have generally been more likely to start small and medium-sized enterprises
rather than innovation-driven enterprises (see the section on Company Funding and Outcomes forthe distinction). This distinction, together with the observed sectoral patterns, largely explains theobserved differences in company exit patterns.
Figure 12. Size distribution of MIT alumni–founded firms,
by gender of founder, April 2014.

25

Alison Wood Brooks, Laura Huang, Sarah Wood Kearney and Fiona. E. Murray, Investors Prefer Entrepreneurial
Ventures Pitched By Attractive Men, Proceedings of the National Academy of Science 2014 111(12):4427–4431.
http://www.pnas.org/content/111/12/4427.full.pdf

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 22

International Students
International students (defined here as individuals born outside the United States) in our MIT alumni
survey were as likely to start their own ventures as the domestic students. However, they were more
likely to be serial entrepreneurs, meaning that foreign-born students account for a disproportionately
high proportion of MIT alumni–founded companies. Companies founded by international students
exhibited both a lower failure rate and a lower likelihood of achieving a successful exit.
These differences in serial entrepreneurship and performance likely result in part from location
decisions. Whereas 94% of the companies founded by U.S. student respondents are located in the
United States, the figure is only 45% for companies launched by international students. These observed
differences have important policy implications regarding immigration policies focused on science,technology, engineering, and mathematics (STEM) and on recipients of U.S.-based higher education.
Table 7 shows the entrepreneurship rates and outcomes by alumni birthplace.
Table 7. MIT Alumni Entrepreneurship and Birthplace, 1940s through April 2014
Foreign-born students

U.S.-born students

Rate of entrepreneurship

26%

24%

Rate of serial entrepreneurship among entrepreneurs*

44%

35%

Percentage of overall MIT alumni

37%

63%

Percentage of overall MIT alumni entrepreneurs

38%

62%

Percentage of MIT alumni–founded companies

41%

59%

Successfully exited

9%

11%

Public2%2%Acquired, open

7%

8%

Failed28%37%Acquired, closed

8%

12%

Closed20%

25%

Still privately held

63%

52%

Firm Outcome*Conditional on founding at least one company

OTHER CONTRIBUTIONS TO MIT ENTREPRENEURSHIP AND INNOVATION
While founders attract much of the limelight in the world of entrepreneurship, other activities androles contribute to the economic impact of entrepreneurship and innovation and drive the innovation
economy. In terms of direct contribution to innovation, 31% of the MIT alumni responded that they are
named as an inventor on a patent.26 Furthermore, more than half of MIT alumni noted that they were
responsible for new product development at a firm of which they were not a founder (Table 8).

26This figure may underestimate the true level of patenting among younger MIT alumni due to the “right-censoring bias.”
That is, younger alumni have had so little time out of school to create and patent their inventions. Compared with the 39%
patenting rate for survey respondents graduating in the 1970s, the rate for those graduating in the 2000s is only 25%, but we
expect that percentage to rise as their careers progress.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 23

Table 8. Participation of MIT Alumni in Entrepreneurship andInnovation Activities, 1940s through April 2014
Activity

Alumni participating (%)

Entrepreneurship
Company founder

25%

Early employee

22%

Innovation
Inventor

34%

Patentor

31%

Product development

55%

AdvisorCompany board of directors, private

17%*

Company board of directors, public3%*

Scientific advisory board

11%**Alumni serving in this role at time of survey; the total percentage of alumni
who have served in this role at some point in their careers is no doubt higher.

MIT alumni are early (non-founding) employees in entrepreneurial teams. Unsurprisingly, MIT has
produced many talented workers and innovators who joined early-stage companies and significantly
contributed to the growth of these firms. Specifically, 22% of MIT alumni in the survey have been
early employees, which we defined as among the first 10 non-founder employees to join a company
within its first two years of operation.27 Among this group, 38% eventually moved on to launch theirown business, which is a higher proportion of alumni entrepreneurs than those without early-stage
company employee experience.
Early employees are particularly important because acquiring high quality human capital is crucial
for nascent firms. For innovation-driven start-ups, the ability to enter and potentially disrupt a market
requires not only innovative ideas, but also productive workers to commercialize and execute thoseideas. Therefore, early employees are perhaps the most important assets for nascent companies,
supplementing the co-founder teams.

CONTINUING DEVELOPMENT OF THE MIT ENTREPRENEURSHIP ECOSYSTEM
Entrepreneurship among MIT alumni has been increasing at an impressive pace, matching and evenoutpacing trends that can be observed throughout the U.S. economy and worldwide. The support ofinnovation ecosystems in the key areas where many of MIT’s entrepreneurial alumni are located—within the United States in Kendall Square/Massachusetts, Silicon Valley, New York City, and outside
the United States in Israel, London, and Singapore—is critical as our alumni develop entrepreneurial
companies after they leave the campus.
Nonetheless, the support for innovation—bringing ideas to impact and, in particular, the role ofentrepreneurial start-up ventures as the organizational vehicle to accelerate impact—is consistent
with MIT’s enduring culture of innovation and its long-standing commitment to a practical, hands-on
27

This level is consistent with the MIT Graduating Student Survey, which suggests that in the past few years, around 20%
of graduating seniors have joined early-stage companies. A related analysis shows that 14% have joined venture-backed
start-ups in 2014 (see Footnote 5).

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 24

approach to education.28 One important force has been the extensive collection of centers and programs
that support MIT’s innovation culture and enable the entrepreneurial ambitions of our students.
From its earliest beginnings in the post–World War II period, the educational activities, networking,mentoring, and celebrating of entrepreneurship has proliferated significantly in the past three decades.
Additionally, the overall increases in research funding, faculty members, and graduate students haveincreased the opportunities for entrepreneurial activities.
This growing emphasis was symbolized by the 1990 launch of the MIT Entrepreneurship Center(now the Martin Trust Center for MIT Entrepreneurship). At that time, MIT offered only one
entrepreneurship course. In the 2014–2015 academic year, MIT’s entrepreneurship offerings included a
total of 63 courses from departments across the Institute on a variety of topics, attracting thousands ofregistrants from all five MIT Schools.

Entrepreneurship Education at MIT
MIT’s ambitious entrepreneurship educational program rests upon three principles: (1) Mens etManus, (2) teams, not individuals, and (3) cross-disciplinary collaboration. The first of these, “Mindand Hand,” stems from William Barton Rogers’ founding conception of linking theory and practice.
The entrepreneurship curriculum is focused on moving ideas to action, invention to the marketplace.
The spirit of this motto also manifests in the co-mingling of academicians with practitioners todeliver courses. MIT academic faculty in entrepreneurship bring their research findings and rigorous
discipline into their subjects. They are matched by experienced and successful entrepreneurs
and investors who bring their “practice” into the classroom. Whenever possible, academics andpractitioners co-teach entrepreneurship subjects, to the benefit of teachers and students alike.
MIT research on entrepreneurship determined years ago that solo entrepreneurs were considerably
less likely to build successful companies than were teams, thus forming the basis for our second
educational principle. A team-based approach to student learning and activities has therefore been
adopted throughout most of our curriculum design. Entrepreneurship Lab (E-Lab) and Global
Entrepreneurship Lab (G-Lab) are problem-solving courses that place student teams with companies
in Greater Boston and around the world to focus on critical early-stage growth challenges. MIT’s many
venture courses, described below, depend upon teams as the working and learning units in the class.
The third educational principle also stems from early MIT entrepreneurship research that showed thatteams of co-founders from complementary or different disciplines (e.g., engineering and management)
did far better in creating and developing strong roots for later achievement. Indeed, the most successful
start-ups were co-founded by technologists and individuals who had marketing or sales experience.
The MIT Entrepreneurship Center (E-Center) set out in 1990 to engage students from across all Schoolsat MIT. This design concept was implemented in our first effort to link MIT faculty research to student
learning, the collaborative Innovation Teams (i-Teams) course launched by the E-Center and the
MIT Deshpande Center. Mixed teams of students drawn from the MIT Sloan School of Management
and the School of Engineering undertook semester-long commercialization projects involving earlystage faculty studies. The integration of engineering students with management students was a clear
success in the classroom and has led to countless formations and launches of new innovation-driven
companies over the years. The initial i-Teams successes in involving interdisciplinary student teams
with early-stage faculty research projects were replicated over the next several years with comparable“venture” courses in energy, linked-data systems, developmental ventures, neurological and brain
sciences, and others (led by faculty from several different departments and Schools), with extensive
participation from students across all five of the MIT Schools.

28

Further detail on the early history of the MIT entrepreneurship educational programs, the many student clubs, andrelated MIT organizations and programs that provide support can be found in Roberts and Eesley, 2009 and 2011, as
previously cited.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 25

Internal Entrepreneurship Development Programs
Faculty and staff from the Martin Trust Center and many of the other centers and programs across
campus (including the Legatum Center for Development and Entrepreneurship, the Tata Center,and the IDEAS Global Challenge), as well as student-led clubs and activities, have gone beyond theclassroom to generate engaging co-curricular programs that attract students from across the Institute tostrengthen their entrepreneurial practice and skills.
These include a variety of MIT hackathons that engage students in problem-solving efforts in fields
ranging from medicine to the arts, and the Global Founders Skills Accelerator (GFSA). GFSA, initiatedby Martin Trust Center Managing Director Bill Aulet, provides a three-month summer capstone
educational experience to move student teams from interesting ideas and/or proofs of concept tolaunch-ready enterprises. In 2015, GFSA received 50% more team applications than the previous year’s
120, with student representatives from 21 different MIT academic departments and programs andseveral collaborating countries. In 2014, the Trust Center integrated these types of activities through theappointment of five sector practice leaders charged with developing year-long sets of activities in fivedifferent “technical” areas, including creative arts. These efforts brought more MIT students together inline with their primary interests and stimulated the formation of new student teams, resulting in suchactivities as hackathons as well as team applications to GFSA and to the MIT $100K Entrepreneurship
Competition (MIT $100K).
MIT’s entrepreneurship-related student clubs and activities are diverse and ever expanding. They
include the MIT $100K, the first substantial student organization in entrepreneurship, which started
in 1990 and celebrated its 25th anniversary in 2015 with over 1,000 students participating in morethan 300 teams. For many years, the competition had six tracks for competing, judging, and awards:
Energy; Life Sciences; Web/IT; Mobile; Products and Services; and Emerging Markets. The first-prize
winner in each track receives $50,000. This past year, Creative Arts was added as a seventh track,
bringing the domains of organized entrepreneurship coaching and competition into the reach of evenmore students. This key student activity has been complemented by the nationwide Department ofEnergy–supported Clean Energy Prize, the Water Innovation Prize, the E&I Club, and many others.
All of these clubs tied to entrepreneurship are student organized and operated, without faculty or staff
oversight. However, they are all based in the Trust Center, facilitating student integration across clubs
and Schools in an environment where informal coaching and mentoring by Trust Center staff members
and others are readily accessible.

MIT’s Global Entrepreneurial OutreachIn 1998, the student leadership of the MIT $100K decided to help students around the world stimulate
entrepreneurship at their own campuses, and formed the MIT Global Startup Workshop. The
workshop meets in a different country each year and attracts hundreds of students and faculty, withgovernment representatives from as many as 50 countries or more also attending. Its best-known
spinoff, formed by one of its former student chairs, is the MassChallenge, a six-month “acceleration”
program that attracts thousands of applicants each year to compete for $1,000,000 in total prizes.
This past year the MassChallenge initiated the MassChallenge Israel and the MassChallenge UK
competitions, working with those countries to spread entrepreneurial development into their midst.
One of MIT’s earliest educational initiatives in global entrepreneurship was its launch of G-Lab, theGlobal Entrepreneurship Lab course led by Professors Simon Johnson and Richard Locke (later joined
by Yasheng Huang) in which students examine the issues involved in growing new firms in countries
other than the United States. Student teams then work for three weeks in a young company of choiceoutside of the U.S. on a problem designated by its management, helping to define and implement
solutions. G-Lab has been expanded with the creation of the country-targeted venture courses ofChinaLab, IndiaLab, and, most recently, IsraelLab.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 26

These efforts, together with the MIT International Science and Technology Initiatives (MISTI) program(which matches more that 750 students each year with tailored internship, research, and teaching
opportunities abroad), the Tata Center, D-Lab programs worldwide, and MIT’s engagement in E&I in
Singapore, Russia (through the Skolkovo Institute of Science and Technology), Portugal, China, andTurkey, have broadened MIT’s commitment to sharing its particular approach to entrepreneurship andinnovation education more globally. Additionally, MISTI’s Global Startup Labs give MIT students achance to go into the field and share their entrepreneurship education and passion with young people
in a range of developing countries.
Several other major entrepreneurial outreach efforts, developed and operated by the Trust Center,reach beyond current MIT students and staff to the global community of innovators and entrepreneurs.
First is the Entrepreneurship Development Program, an intensive weeklong executive education course
aimed at individuals from around the world who want to learn about starting and developing theirown companies or about facilitating entrepreneurial development in their corporations or regions.
Second is the MITx course “Entrepreneurship 101,” which has used the edX online platform to reachalmost 100,000 entrepreneurs worldwide, bringing the most committed among them to campus for anin-person boot camp.
More recently, a group of MIT entrepreneurship faculty (including the authors of this study, alongwith colleagues Professor Scott Stern and Bill Aulet and Phil Budden) have collaborated in developing
the Regional Entrepreneurship Acceleration Program (REAP). This two-year educational program
brings together teams of stakeholders from eight regions of the world—including entrepreneurs,leaders of large corporations, government officials, university faculty, and risk capital providers—
for four workshops over a two-year period to work collectively on policies and actions needed toenhance their own regions’ economic growth through innovation-driven enterprise formation. It is
built off the considerable research and educational expertise in innovation and entrepreneurship ofMIT’s community, as well as MIT’s growing expertise in policies and programs to shape innovation
ecosystems, and constitutes a unique, evidence-based, hands-on approach to economic growth.

Other Key MIT Organizations
A wide range of infrastructure to support innovation broadly, but particularly entrepreneurship,
has grown along a continuum from the earliest stages of commercialization and proof of concept toprototyping and venture creation at MIT over the past decade. Its role is to help members of the MIT
community move ideas beyond fundamental research to impact through a combination of patenting
and licensing, as well as through the provision of mentoring and other support for venture building.
•Translating research: Since 2002, the Deshpande Center for Technological Innovation has
supported faculty and students in MIT research laboratories as they seek to translate theirresearch from ideas to application and impact. The center brings in entrepreneurs and venture
capitalists to help faculty judge the potential commercial attractiveness of research proposals
and advise in the award of grants from $50,000 to $150,000. It has become a role model forgovernment “translational research” programs in various fields, and has assisted many otheruniversities to establish similar entities.

•

Intellectual property licensing: MIT’s Technology Licensing Office (TLO), created in 1932, isamong the earliest organizations at the Institute that have contributed to MIT entrepreneurship.
It was reorganized in 1945 and was largely redirected toward its current activities in the
1980s with the passage of the Bayh-Dole Act. Its role is to help move MIT research towardcommercialization, and it engages large corporations, local medium-sized companies, andstart-ups by licensing patented MIT research. For years, TLO has helped MIT rank number
one among U.S. universities and research institutions in licensing start-ups to build upon its“invented” technologies, averaging 21 new companies annually throughout the 2000s. That

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 27

number rose slightly in the period between 2011 and 2014, with 27 start-ups in 2011 and 22 ineach of the following three years. TLO also provides consultation to students, staff, and faculty
to assist them in their own independent pursuit of commercialization.
•

Mentoring: A range of entities and programs provide mentoring to the MIT community in theirventure development. In addition to the student-focused Trust Center and Legatum Center (forthose with a developing world focus), the Venture Mentoring Service (VMS) provides guidance
to current MIT students, staff, faculty, and local alumni. Through the VMS, a diverse groupof 160 current mentors advise more than 250 MIT would-be entrepreneurs—free of charge
and of any MIT equity holdings, often well in advance of formal company start-up. Also, theDeshpande Center provides mentoring for earlier stages of translational research, while otherprograms such as the MIT IDEAS Global Challenge and the MIT $100K provide other mentoring
opportunities.

In October 2013, President Rafael Reif challenged the MIT community to build on its strong history
and take steps to better serve as one of the world’s most powerful engines of innovation andentrepreneurship. Calling for the creation of an MIT Innovation Initiative (MITii), President Reif
recognized that MIT has the capacity—and the responsibility—to carry the advancements of humanity
forward and to devise imaginative and innovative solutions to the world’s most daunting problems.
In the newly created posts of associate deans for innovation, Professors Vladimir Bulović (Schoolof Engineering) and Fiona Murray (School of Management) lead MITii in collaboration with manycolleagues. This initiative is an Institute-wide, multiyear agenda to educate the next generation of
global innovators and prepare them to move their ideas more effectively toward impact by combining
hands-on opportunities to build expertise in the innovation process with insights developed from theevidence-based science of innovation. In practical terms, MITii’s activities are intended to enhance
the connectivity among the rich and varied educational opportunities around entrepreneurship andinnovation at MIT (for students at all educational stages). MITii’s small team of staff and its broad
faculty leadership team also target specific projects that are best undertaken in collaboration with all
five of MIT’s Schools.
The following strategic activities drive MITii’s programmatic focus:•

Support Capability-building Programs: Support and connect existing on-campus programs
while creating a small number of select new Institute-wide innovation and entrepreneurshipprograms of interest to MIT students and faculty. The key focus for 2015–2016 is to finalize a
new undergraduate minor in entrepreneurship and innovation.

•

Develop a Collaboration Infrastructure: Create additional infrastructure by expanding makerand collaborative spaces across campus and by creating digital tools that connect them into a
unified “innovation-centric” campus accessible to the innovator community from all five MIT
Schools.

•

Build Innovation Communities: Cultivate innovation communities across MIT andworldwide by connecting the MIT community more deeply with corporations, governments,
and innovation hubs in Cambridge and around the world, with an emphasis on creatinga small number of innovation nodes as focal points for expanding global innovation andentrepreneurship education.

•

Formalize the Science of Innovation: Create and build the Lab for Innovation Scienceand Policy as a nexus for MIT faculty and scholars across many disciplines interested in
rigorous analysis of the conditions that shape desirable innovation outcomes and innovationdriven economic growth, disseminate evidence-based knowledge about innovation andentrepreneurship, and translate that knowledge into tools and frameworks for use bypractitioners.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 28

ENTREPRENEURSHIP AND INNOVATION AT MIT: CONCLUSIONS AND IMPLICATIONS
Well into the second decade of the 21st century, the growth and impact of MIT alumni
entrepreneurship continues unabated. This report has reviewed the key findings arising from our 2014
survey of MIT alumni to determine the extent and nature of their innovation and entrepreneurship
activities. The new data supplement information gathered in our earlier MIT study. In addition to
tracing the entrepreneurship and innovation activities and contributions of MIT alumni, we haveupdated the progress being made on the MIT campus to strengthen these forms of impact. Below we
review some of our key findings and the important questions that they raise for the Institute and forthe economy more broadly.
The number of new firms formed each year by MIT alumni is growing. Our rough estimate is thatapproximately 12,000 new firms were started in the first decade of the 2000s, and at current rates offormation we project the emergence of 18,000 new MIT alumni–founded companies in the current
decade. Twenty-five percent of the alumni in the survey (and 35% of follow-up telephone survey
respondents) report having started one or more companies. Where will this entrepreneurial energy bedirected in coming years; which locations and sectors will benefit?
The median age of first-time founders has been dropping continuously, from 39 years old 40 years ago
to about 29 years old today. Much of this is due to the increase in the number of alumni who create
their first firm within five years of graduation, rising from 4% among those who graduated in the 1960s
to 11% among those graduating in this decade. How will this expanding crop of young entrepreneurs
perform? Will fewer years of formal work experience change their outcomes? How should our
education change to support these changing career paths?
Joining and starting new companies has become a more frequently chosen career path. More
individuals are starting second and third companies. These serial entrepreneurs now comprise 40%
or more of all MIT alumni entrepreneurs, and that number is expected to grow. In addition, 22% ofalumni are joining early-stage companies shortly after graduation and then many of them becomefounders themselves. Do these changes reflect broader economic trends and changing patterns of
employment (and self-employment) among highly educated young people?
Female alumni have a much smaller but growing presence as founders, but their firms have relatively
limited economic impact. Changing this pattern of impact is a significant challenge but represents animportant opportunity for MIT to enhance its overall contribution to society. How best can this beaccomplished on campus and worldwide?
Beyond entrepreneurship, the evidence is strong that up to one-third of MIT alumni have become
inventors, with similar numbers filing patents on their novel ideas and developments. In addition,
more than half of reporting alumni identified primary roles in new product development for bothyoung and old existing firms. Is our innovation-oriented education adequate for them to be as
successful as possible in these critical roles, and how else can these contributions be supported?

Implications of our Research
Universities with a deep commitment to basic research develop ideas that are at the knowledge
frontier. Some, like MIT, also emphasize the application of their ideas to critical problems of global
significance, and focus on the ways in which ideas can be developed and scaled up for maximum
impact. When the university is able to couple this capability for research with the inclination
and resources needed to connect problems and solutions, it generates impressive possibilities forentrepreneurship-based economic impact at the local, regional, national, and global levels.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 29

A commitment from university leadership to build and maintain attitudes and an institutional culturethat rewards and supports taking ideas to implementation at increasing scale is key to achieving thistransformative economic impact. Numerous elements must reflect and align with this culture, the mostimportant of which is a set of contractual rules and regulations covering issues ranging from conflictof interest and sponsored research arrangements to technology licensing and consulting; none ofthese can be accomplished without strong, determined leaders. Lastly, universities need the physicalinfrastructure, such as maker spaces, collaborative meeting spaces, and traditional laboratories, tosupport start-ups, spinouts, and corporations.
MIT’s history provides numerous examples of how one major academic institution achieved significant
entrepreneurial impact over its first 155 years, and especially in the 100 years since its move to theCambridge/Kendall Square campus in 1916.
Emphasizing our cultural focus on impact and engagement with real-world challenges, we point toways that other universities can move toward enhancing their own entrepreneurial impact in theirregions. Early examples of engaging the academic with the “real” world, such as the 1916 “Tech Plan,”
did much in the mid–20th century to legitimize the idea of technology transfer and commercializationin academia. Big differences between institutional histories of entrepreneurial output can no doubt
be explained to a great extent by this distinction in MIT’s founding mission, leadership roles, andbehavior.
MIT’s history suggests that every university needs to assess its rules and regulations to ensure thatthey do not present barriers to faculty participation in industrial consulting and, more vitally, thatthey do not hinder initiatives taken by faculty and students in new company formation. A shift from
impediments toward incentives will take time to accomplish in most academic organizations but will
be accelerated if advocates for entrepreneurship pay strict attention to establishing and enforcing
strong guidelines against conflicts of interest.
In designing and implementing such rules, the MIT Technology Licensing Office serves as a proactive
and supportive-of-entrepreneurship program office that has contributed much to technology transferfrom the research labs. The TLO was realigned in this direction 30 years ago and has had the time
to mature in its effectiveness. More recently, MIT’s creation of the Venture Mentoring Service, its
own form of volunteer “lightweight” but quite effective “incubation,” with clear rules for avoiding
conflict of interest, has generated a model of helping that is clearly possible in many other university
communities. Additionally, direct, targeted funding of faculty research that has commercial potential,
as the MIT Deshpande Center does, is certainly possible elsewhere.
Interestingly, until quite recently, MIT had followed a “hands off” approach toward entrepreneurial
engagement and the provision of more resources and infrastructure, in contrast with many otheruniversities in the United States and abroad: MIT has neither created an internal physical incubator
space for ventures nor a venture capital fund to enable prospective start-ups. That approach has
permitted MIT to avoid the internal conflicts and occasional embarrassments that have plagued
other academic institutions that have tried to hasten the entrepreneurship development process.
However, MIT has been an active contributor to the vibrant surrounding community that hasessentially provided those functions as well as other aspects of a supportive infrastructure for new
enterprises. The role of the MIT Investment Management Company in the development of Kendall
Square’s start-up and corporate-friendly real estate is worth noting. In less well-endowed regions (orin times of financial constraint), a university may have to provide more proactive support to help getentrepreneurial ventures off the ground.
Beyond the role of MIT’s leadership, the Institute has relied upon growing faculty, student, andalumni initiatives. This has been especially true over the past two-and-half decades. These key
developments contributed to the vibrant innovation ecosystem that took root in Kendall Square andEntrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 30

spread into Boston and Somerville, helping to foster the formation and growth of new and young
companies. The formation of the MIT Entrepreneurship Center in 1990 (now the Martin Trust Center
for MIT Entrepreneurship) kicked off these activities and change at MIT. Educational opportunities inentrepreneurship for students Institute-wide have expanded, the support and nurture of numerous
student clubs linked to entrepreneurship have deepened, and a robust academic and practitioner
faculty in entrepreneurship and innovation has been built. These have, in turn, significantly increased
the number of people interested and participating in entrepreneurship and innovation, withcorresponding growth in their activities and positive outcomes. For institutions deliberately attempting
to become rapidly more entrepreneurial, the MIT approach would take a significant amount ofpatience and self-restraint.
This report demonstrates the extent to which a university’s alumni are the primary drivers for moving
its knowledge base to the marketplace for economic impact and social progress. Indeed, the first MITlinked activities to encourage and assist entrepreneurs were the MIT Alumni Association Seminar
Series on how to start a new business (in 1969), followed by alumni-created MIT Venture Clinic in
New York City and the MIT Enterprise Forum in Cambridge. Outreach to alumni can be achieved
easily in the form of these self-organized seminars, and through faculty visits and lectures, facilitatedincreasingly by direct distance learning classes and conferences. Organizations such as the MIT Alumni
Association and the MIT Enterprise Forum often can be accessed in local communities, perhaps justby joining or partnering instead of needing to replicate the organization, reaching critical mass muchsooner along with greater community-level interaction.
Students are increasingly seeking to access strong entrepreneurship and innovation education. Indeed,such education is being extended well beyond the traditional purview of the MBA classroom toundergraduates and even high schools at one end, and to doctoral students and postdoctoral fellows
at the other. Such educational programs require long-term investment in faculty who have expertisein the innovation process and the ways in which entrepreneurship can be successfully undertaken.
Unfortunately, effective and well-trained academics in these areas are still relatively scarce.
Fortunately, two additional avenues provide opportunities to leverage this small faculty core.
First, successful practitioners are available everywhere and MIT’s history indicates that they are often
willing and enthusiastic about sharing their time and experience with would-be student entrepreneurs.
MIT provides many platforms through which practitioners can engage effectively with students,
including student clubs, the VMS, informal seminars, and mentoring and judging the MIT $100K,
Clean Energy Prize, and IDEAS Global Challenge. Other mentoring opportunities include serving as“catalysts” on i-Teams, as “board members” in the Global Founders Skills Accelerator, and as advisors
to the Translational Fellows Program.
Furthermore, entrepreneurship faculty and practitioners and science and engineering faculty cometogether to provide a strong educational foundation in entrepreneurship and innovation for students
across disciplines.
Today MIT provides various ways for students, leaders, and other stakeholders around the world tobecome part of our global innovation and entrepreneurship community. For example, MIT students
increasingly travel worldwide, sharing their passion for innovation and entrepreneurship andserving as “innovation diplomats” for the Institute, as well as sharing their expertise in competition
planning and the start-up process. MIT faculty also are delivering entrepreneurship education beyond
traditional student audiences. For instance, the MITx introductory entrepreneurship course has
been accessed by over 100,000 people, and among a number of programs in entrepreneurship andinnovation education, the aforementioned weeklong intensive Entrepreneurial Development Program
can be helpful to those attempting to encourage entrepreneurship, as can Legatum Center and D-Lab
workshops in Africa, India, and elsewhere. These efforts are complemented by the MIT Regional
Entrepreneurship Acceleration Program, in which teams from more than 25 regions have participatedEntrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 31

to date. MIT’s other global innovation-focused efforts are considerable and have spanned many
years and many countries. These range from a multiyear commitment to research-led innovation in
Singapore to the more recent announcement of an innovation node for student activities in Hong Kong(providing a platform into Greater China).
In the spirit of research and practice that epitomizes MIT’s approach to education, this report has
systematically documented how MIT alumni who have formed new enterprises over the past 75
years have generated dramatic economic impact. We have observed, via our research and our oncampus activities, how various elements have formed an ecosystem that has contributed to making
entrepreneurship happen and be successful, and have attempted to communicate the many interwoven
components of our university’s entrepreneurial system. In doing so, we also contribute to theburgeoning “science of innovation,” which takes a rigorous approach to the study and analysis of theinnovation process, including venture formation.
We hope that our discussion helps show how other universities may strengthen their own
entrepreneurial ecosystems and, in turn, amplify their contribution to innovation-driven economic
growth in their communities, regions, and nations.

32

Appendix. Survey Analysis and Extrapolation

Main Approach
In early 2014, MIT sent email invitations to all its alumni to ask for assistance in helping to measure theInstitute’s impact on the world through their entrepreneurial and innovation-related activities. Sent
to 104,169 individuals in February, the MIT 2014 Alumni Survey of Innovation and Entrepreneurshipgarnered 19,730 responses by its close at the end of April. Table A1 shows the response rate by decadeof graduation.
Table A1. Response Rate to the MIT 2014 Alumni Survey of Innovationand Entrepreneurship, by Decade of Graduation
Decade ofgraduation

Survey invitations(no.)

Respondents(no.)

Reponserate (%)

1920

2

0

0%

1930

58

2

3%

1940

1,233

179

15%

1950

4,986

941

19%

1960

9,148

2,168

24%

1970

13,522

2,947

22%

1980

17,411

3,330

19%

1990

20,495

3,392

17%

2000

24,243

4,505

19%

2010

10,3682,137

21%

Unknown

2,699

129

5%

104,165

19,73019%

Total

As in many surveys, a large portion of the MIT alumni population did not respond to the survey;
our response rate was 19%—coincidentally the same as the published response rate in the Stanford
University study.
In order to estimate the aggregate impact of MIT alumni, we extrapolated the survey results to accountfor the non-respondents using the following method:
1.

Scaling factors: Using a set of logistic regressions, we determined the three most salient
characteristics in explaining an individual’s propensity to respond to the survey: graduating
decade, MIT School (e.g., Engineering, Management), and gender. These three dimensions
yielded 108 separate subgroups, each of which had a different response rate, typically around
15%–20%. The scaling factor for each cell was simply calculated as (1/response rate). This
extrapolation method allows us to apply the results of the most relevant respondent subgroup in
estimating figures for the non-responders.

2.

Number of currently active companies: All of the currently active MIT alumni–founded
companies in our sample of respondents (5,534) were categorized into the 108 subgroups
according to the founder’s MIT School, gender, and graduating decade. For instance, 930 forprofit companies in our sample were started by male alumni who graduated during the 1980s

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 33
Appendix. Survey Analysis and Extrapolationfrom the School of Engineering. Each cell was then multiplied by the scaling factor explained
above. When summed up, this yielded an overall estimate of 30,200 currently active MIT
alumni–founded companies.
3.

Revenues and employment: Entrepreneur respondents provided information on revenues
and employment as of 2013 for firms continuing to exist as of 2013. We computed the mean
revenue and employment as of 2013 for each of the 108 subgroups. The mean figures were thenmultiplied to the estimated number of currently active firms for each cell. This resulted in $1.9
trillion in total revenues and 4.6 million jobs as our estimated total current economic impact ofMIT living alumni entrepreneurship.

The extrapolation method rests on two key assumptions: (1) The proportion of entrepreneurs among
the respondents is equal to the proportion of entrepreneurs among the non-respondents; and (2) the
distribution of start-up outcomes for respondent entrepreneurs is the same for the non-respondent
entrepreneurs.
Although possible non-response bias (i.e., non-entrepreneurs are less like to respond to a survey
focusing on entrepreneurship and innovation) can create an upward bias in our estimates, there
are also factors that may cause an underestimation of the true economic impact arising from MIT
contributions to entrepreneurship and innovation.
•

First, only firms founded or co-founded by MIT alumni are included. Additional data on firms
in which MIT alumni were early employees, investors, board members, or advisors are notincluded.

•

Second, many large MIT alumni–founded companies are not represented in the data. Companies
such as Hewlett-Packard, Genentech, Intel, Koch Industries, Raytheon, and Texas Instruments
are excluded because their MIT alumni founders or co-founders are now deceased. We also
limited our analyses to currently existing companies, excluding both closures and mergers andacquisitions by other firms.

•

Third, we omitted many other firms that are no longer in business, such as Digital Equipment
and Patni Computer Systems, but which made significant economic contributions during their
existence.

•

Fourth, we are also aware of some successful existing companies founded by current alumni
that are not among the survey responses since their MIT alumni founders were likely too busy
to respond.

Robustness Checks
Our survey approach assumes that entrepreneurial activity among MIT alumni is evenly dispersed. In
this sense, the method of aggregation is “bottom-up” since it assumes that the entrepreneurship ratesof the survey respondents are roughly equal to the rates of non-responders of similar characteristics.
In contrast, a “top-down” approach assumes that entrepreneurial success is disproportionately
concentrated in a small number of very prolific MIT alumni–founded companies such as Intel andBose. Indeed, Table 1a shows that the top 2% of all MIT alumni–founded companies in terms of firm
size accounts for more than two-thirds of the total jobs created by all companies founded by MIT
alumni. The distribution of entrepreneurial success among MIT alumni–founded companies is heavily
skewed to the right. Therefore, it would seem reasonable to deduce that capturing the small portionof companies at the right tail of the distribution would account for most of the total entrepreneurial
activity by MIT alumni.

Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact | 34
Appendix. Survey Analysis and Extrapolation

Our alternative approach focuses on the top public companies founded by MIT alumni as of 2014
—most of which are not included in the survey. We selected the top 18 companies founded by MIT
alumni. If this small group of large public corporations captures most of the total entrepreneurial
activity, then we would expect the combined revenues of these top companies to exceed the total
revenues reported by our survey respondents. In fact, when we sum the revenues of 18 top publiccompanies founded by MIT alumni, they amounted to $247 billion in 2014. In comparison, our survey
respondents provided 5,534 currently active firms, which amount to $204 billion total revenue.
Although the concentrated (“top-down”) view is not equivalent to an approach that estimates thetotal levels of entrepreneurship among all graduates, it provides a baseline comparison to our main
extrapolation method for the overall economic impact. Since the combined revenues of 18 companies
far exceed the aggregate gross sales of all 5,534 observed companies, it is reasonable to conclude that
our main extrapolation method for economic impact yields a conservative estimate given that these18 companies were not included in the survey; inclusion of these 18 giant public companies would
significantly amplify the estimation of the total economic impact of MIT entrepreneurship.
Finally, in October–November 2015, a telephone survey of alumni who had not responded to theonline survey was undertaken to ask how many of them had started new firms, as well as a few
related questions. This was done to confirm the reliability of the results of the broader web survey.
This work was overseen independently by senior staff in the MIT Office of Institutional Research, withthe telephone process conducted by current MIT students who are trained volunteers supervised by
the MIT Alumni Association (MITAA). The MITAA drew 1,999 alumni from its database using thedatabase’s built-in random function, but limited the draw to those from the Class of 1970 or later who
had a U.S. phone number. Of the 1,999 randomly selected, 349 had already responded to the web
survey and were removed from the sample. The remaining selected alumni were called and asked
to participate in a short survey. When alumni didn’t answer the telephone, they were called again at
a different time or on a different day. Of those alumni who were eventually reached by phone, theaverage number of calls before they answered was three. In total, 254 alumni responded to the survey,
resulting in a response rate of 15.4%.