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From the President: 30,000 Alumni Companies

“MIT Nation” is equivalent to world’s 10th-largest economy.

February 23, 2016

The entrepreneurial energy that moves new ideas from the Institute’s labs to the marketplace has always been a defining feature of the MIT community. Now, thanks to Professor Edward Roberts, ’57, SM ’57, SM ’60, PhD ’62, Associate Dean for Innovation Fiona Murray, and graduate student J. Daniel Kim, we have a fresh picture of its impact on the world.

Based on their latest research, Roberts, Murray, and Kim estimate that as of 2014, living MIT alumni have launched more than 30,000 active companies, or nearly one company for every four living MIT graduates. These companies provide jobs for 4.6 million people. And with roughly $1.9 trillion in annual revenue, this “MIT Nation” is equivalent to the 10th-largest economy in the world—right between Russia and India.

The rate of company formation is increasing, too—from a total of 9,000 alumni firms founded in the 1990s to 12,000 in the first decade of this century to a predicted 18,000 by the end of this decade, given the current pace. Even students not ready to be founders themselves are now far more likely to seek out the startup life. In 2006, only 2 percent of MIT undergraduates looked for work after graduation with a VC-backed startup. By 2014, that figure jumped to 14 percent.

MIT president L. Rafael Reif

By far the greatest concentrations of MIT alumni firms are in Massachusetts (31 percent) and California (21 percent); perhaps it is no coincidence that in a recent Bloomberg assessment of the “most innovative states” in the nation, Massachusetts and California also came in first and second, respectively.

Bloomberg based its assessment on six measures: R&D intensity, productivity, high-tech density, concentration of STEM employment, science and engineering degree holders, and patent activity. Yet there is another factor, harder to measure, whose impact is equally real: the sheer creative intensity we feel in the MIT ecosystem every day. That energy is a powerful attraction. This winter, when General Electric announced that its headquarters would move to Boston, chairman and CEO Jeff Immelt explained that GE “is leading the digital transformation of industry.” He added, “We want to be at the center of an ecosystem that shares our aspirations.” To which we say, welcome aboard!

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