MIT Entrepreneurs Produce $2 Trillion - The Equivalent of the 11th Largest Economy in the World

"If the companies founded by MIT graduates formed an independent nation, their revenues would make that nation at least the seventeenth-largest economy in the world...Globally, a less conservative estimate of their annual world sales would equal $2 trillion, producing the equivalent of the eleventh-largest economy in the world."

The recent study, "Entrepreneurial Impact: The Role of MIT," released by the Kauffman Foundation and conducted by MIT Sloan School of Management, demonstrates the importance of entrepreneurship and the critical role that universities play in shaping and growing our economy. Entrepreneurial ecosystems within univeristies help to:

1. Commercialize new technologies
2. Create hundreds of thousands of jobs
3. Bridge science, technology, and engineering with the business world
4. Generate billions of dollars in revenue
5. Foster innovation and competive markets
6. Spur entrepreneurial growth
7. Challenge existing systems with new, efficient ones
8. Educate students with real world experiences instead of textbook boilerplate lessons
9. Propose solutions to global problems
10. Grow local and macro economies

The MIT $100k competition alone has given birth to over 85 companies over the past 19 years during its existence. These companies have aggregate exit values of $2.5 billion with a market cap north of $10 billion. Together, they have attracted $600 million dollars in venture capital funding. It's beginnings were comparatively small with its starting prize of $10k when the competition first launched in 1990. Now, It's business plan competition awards $100,000 dollars while the MIT Clean Energy Prize will award over $500,000 in cash and other prizes.

Lesa Mitchell, a vice president of the Kauffman Foundation, explained that "MIT's significant economic impact is of particular interest because it provides an important model for universities interested in helping their students become more effective entrepreneurs."

Here are some highlights:

MIT Alumni...

1. Employ about 3.3 million people

2. Through 25,800 currently active companies

3. These companies generate annual world sales of $2 trillion

4. Which produce the equivalent of the eleventh-largest economy in the world

5. 2% of these companies account for more than 80% of total sales

6. And account for 70% of employees for all MIT companies combined

7. 6,900 of these MIT alumni companies are located in Massachussets

8. These Massachussetts companies bring in approximately $164 billion in worldwide sales

States benefiting most from jobs created by MIT alumni companies:

1. Massachussetts :: <1 million jobs
2. California :: 526,000 jobs
3. New York :: 231,000 jobs
4. Texas :: 184,000 jobs
5. Virginia :: 136,000 jobs

Percentage of high-growth, high-tech MIT alumni firms loacted in California and Massachussetts:

1. Electronics firms :: 66%
2. Software firms :: 62%
3. Drug and medical firms :: 62%
4. All other industries :: 36%

What factors influenced these location decisions? (in order):

1. Where founders lived
2. Network of contacts
3. Quality of life
4. Proximity to major markets
5. Access to skilled professional workers

"High-tech startups depend heavily on the availability of skilled professionals to build reliable, high-quality, innovative products. The startup companies locate where these professionals like to live."

"Importing" Company Founders:

"As a result of MIT's presence, Massachusetts is "importing" company founders. More than 38 percent of the software, biotech, and electronics companies founded by MIT graduates are located in Massachusetts, while less than 10 percent of arriving MIT freshmen are from the state."