MIT-Trained Entrepreneurs Create Businesses With $2 Trillion a Year in Sales, Kauffman Report Says

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a 2003 survey of all living MIT alumni, combined with revenue and employment data current through 2006 from Compustat and Dun & Bradstreet.

A few of the report’s highlights:

* Together, Massachusetts and California claim just under two-thirds of the high-tech firms founded by MIT alumni. Those two states are home to 66 percent of MIT alumni firms in the electronics industry, 62 percent in software, and the same percentage in pharmaceuticals and medical devices.

* Out of the 493 life sciences faculty at MIT (counting the Broad and Whitehead Institutes), 66 have founded or served on the board of directors of at least one venture-funded company. Another 50 serve on scientific advisory boards.

* MIT is an efficient magnet that draws company founders to Massachusetts. Only one-tenth of MIT undergraduates grew up in the Bay State, but more than one-third (38 percent) of all software, biotech, and electronics companies formed by MIT alumni are located in Massachusetts.

* About 30 percent of the foreign students who have attended MIT have gone on to form companies. At least half of these—some 2,340 firms, employing more than 100,000 people—are headquartered in the United States.

The report credits MIT’s influence on the local and national economies to a vigorous “entrepreneurial ecosystem.” This network includes organizations and initiatives like the Deshpande Center, the MIT Enterprise Forum, the MIT Entrepreneurship Center (which Roberts chairs), the MIT Technology Licensing Office, the MIT $100K Business Plan Competition (whose winners have gone on to form at least 120 companies), and the MIT Venture Mentoring Service (which has helped give birth to 88 companies since it was formed in 2000).

While MIT’s ecosystem of entrepreneurship may be unique, that doesn’t mean it can’t be emulated, says Mitchell. “The Kauffman Foundation just gave the largest grant it has ever given to the University of Kansas to develop a Deshpande-type model,” she says. “We’re also working with universities in California and Arizona to create venture-mentor models. Frankly, part of the reason we’re so supportive of a report like this is that it’s finally somebody else besides the Kauffman Foundation saying that it’s important to have this data and to build these models.”

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Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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