By Bianca Licitra
What do Bill Gates, Steve Jobs, and Mark Zuckerberg have in common? Each founder of a multi-billion-dollar tech company somewhat notoriously dropped out of college to pursue their companies, managing to achieve success without a degree.
Contrary to the popular myth of the successful billionaire college dropout, though, a new study from the Stanford Venture Capital Initiative shows that most so-called “unicorn founders” of billion-dollar startups are significantly more educated than the general population.
The study analyzed the educational backgrounds of the founders of more than 1,000 private, venture-capital-backed companies valued at more than $1 billion, also known as unicorns. According to the study, unicorn founders are six times more likely than an average American over the age of 25 to hold a doctoral degree, three times more likely to hold a master’s degree, and twice as likely to hold an undergraduate degree.
“The dropout-to-billionaire path, while possible, remains a captivating outlier rather than a reliable template for entrepreneurial success,” the study stated.
Analysis of the founders’ undergraduate degrees identified the top 20 universities in the United States at producing unicorn founders; all 20 are AAU institutions. Stanford University is in the top spot, with 122 founders. It is followed by the Massachusetts Institute of Technology (87 founders); Harvard University (73 founders); the University of California, Berkeley (60 founders); and Yale University and Cornell University (45 founders each).
The study also analyzed "unicorn production rate," which measures the likelihood that a graduate who has founded a venture-backed company will go on to become a unicorn founder. Here some “unexpected leaders” emerged from the pool of universities (including the University of Cincinnati in the top spot and AAU member the University of Utah in the second spot).
Utah alumni who have founded a venture-backed company, the study found, are 3.2 times likelier to have become the founders of a unicorn than average. Other AAU member universities with high unicorn production rates include Vanderbilt University (2 times likelier); Michigan State University and the Georgia Institute of Technology (1.6 times likelier); and the University of California, San Diego (1.5 times likelier).
The study also found that public and private universities have nearly identical unicorn production rates after accounting for graduate population sizes. “What matters more than the type of institution is the depth of education itself: the typical unicorn founder is highly educated,” the study stated.
The researchers also highlighted the “global nature of unicorn creation.” Using a separate data set of 531 U.S. unicorns, they found that 266 founders, or 21%, completed their educations internationally prior to founding a unicorn company in the United States.
A recent report from the National Foundation for American Policy determined that immigrants founded or co-founded 50% of all current U.S. unicorn startups, with nearly a quarter of those founded by individuals who first came to the country as international students.
Despite the immense success of immigrants in founding unicorns, the United States currently does not have a dedicated “startup visa.” Entrepreneurial immigrants looking to move here for jobs or to start new businesses face a number of bureaucratic hurdles. Meanwhile, recent changes to immigration policies have made it harder for international students to pursue education in the United States and, after graduation, remain in the country and contribute to our workforce. If the country continues on this path, it risks pushing valuable talent away.
Though the study conceded that “the democratization of knowledge” has offered alternative paths to “developing deep expertise,” the data nonetheless suggest that entrepreneurial success “often benefits from the knowledge, research mindset and specialized networks developed through formal education.”
It’s clear that, just as America’s research universities prepare future scientists to address the nation’s greatest challenges, they also support the innovators and entrepreneurs of tomorrow.
Bianca Licitra is editorial and communications assistant at AAU.