Why are more Indian startups founded by engineers than MBA grads?

And even within the small number of students that take up entrepreneurship, engineer-founders dominate the landscape. Graduates from the other islands of educational excellence in the country—B-schools, especially the Indian Institutes of Management (IIMs)—have mostly stuck to risk-averse corporate jobs. One would imagine B-school graduates to be at the forefront of setting up new businesses, having soaked up business expertise during their management course. But that’s not the case. Sample this: there are 5,489 start-ups founded by graduates of Indian Institutes of Technology (IITs) — Bombay, Delhi, Guwahati, Kanpur, Kharagpur, Madras, and Roorkee —  while graduates of IIMs (Ahmedabad, Bangalore, and Calcutta) have produced 1,517 start-ups as of October 10, 2022, per Tracxn data. Of India’s 108 unicorns, 60 have founders from the same set of seven IITs mentioned above while 25 have founders from IIMA, IIMB and IIMC. It would be accurate to say that there are way more engineer-founders in the country today than manager-founders. “The number of (management) students who start up on their own [after graduation] may be around 2-3 per cent,” says Rishikesha T. Krishnan, Director of IIMB. Of course, the sheer num ber of engineering graduates far outweighs the number of MBA graduates as India produces an estimated 1.5 million engineers and 300,000-plus MBA graduates per year. 

Also read: Engineers in India found more startups than MBA grads. What are B-schools doing to nudge students towards entrepreneurship?

Then, there’s the overarching emphasis on tech among Indian start-ups. “Anything that is not tech-driven tends to, perhaps, not draw the same level of attention or support from investors,” says Suresh Ramanathan, Dean of Chennai-based Great Lakes Institute of Management. Add to that the average age of engineering graduates versus management graduates, and the variation starts making sense. “A lot of people get married (after completing their post-graduation), and parents ask whether the spouse is earning anything,” says Bhagwan Chowdhry, Faculty Director of I-Venture@ISB, the start-up accelerator and incubator of Indian School of Business (ISB), Hyderabad.

And let’s not forget the hefty loans that most students have to take to fund their Rs 25-30 lakh management courses. “Many times, students have to pay off loans. Even if they have good entrepreneurial ideas, they may not want to pursue them immediately. But if you look at it five-ten years down the line, many of them do go into entrepreneurial roles,” says Krishnan of IIMB. All of these reasons combined certainly delay management graduates’ plunge into entrepreneurship, further shrinking the pool of manager-founders compared to engineer-founders. “Risk-taking ability is higher at the undergraduate level and goes down at the MBA level... So, that makes it a little less feasible for them to end up in entrepreneurship, even though the skill set is higher,” says Vikram Gupta, Founder and Managing Partner of IvyCap Ventures, a home-grown, IIT/IIM alumni-based venture capital (VC) firm, whose portfolio includes Purplle.com and Bewakoof.com.