MIT grads often choose Cambridge for startups

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CAMBRIDGE – While Boston’s colleges and universities are thought to provide engines for much of the city’s urban and economic development, across the Charles River, the Massachusetts Institute of Technology has, of course, backed up assertions of its impact with numbers.

In an updated Entrepreneurship and Innovation at MIT report, the school says its alumni have started 30,000 active companies since the 1930s, and nearly a third of the domestically based enterprises were set up in the Bay State. Respondents to a survey of more than 100,000 alumni reported starting 1,691 companies in Massachusetts, which indicates MIT grads have founded about 7,000 businesses in the state over the years, according to the report.

While MIT alumni have flocked there, California trails Massachusetts in terms of the number of companies grads have started, at 21 percent of the total. The report notes that 17 percent of undergraduates surveyed came from the West Coast, while just 8 percent were from Massachusetts. And although San Francisco lands the most tech startups among cities nationwide, Cambridge has the biggest proportion of firms started by MIT grads at 8 percent.

“These companies have a direct impact on the local and regional economies, and their presence has been influential in attracting the significant biotechnology and information technology (IT) industry clusters that have emerged in the greater Kendall Square area,” the report notes, referring to the city’s iconic innovation district.

MIT moved into the neighborhood from Boston in 1916 and in the past 25 years has ramped up activities aimed at spurring startup activity, beginning with the formation of a campus entrepreneurship center in 1990.

The Cambridge Innovation Center, for example, is located in a Kendall Square building owned by MIT, and campus administrators have been negotiating with the city to add six buildings with more than 500 residential units and new research space to the area, according to the school.

Although the MIT study cautions that “formation of new enterprises does not necessarily indicate or ensure their contributions to economic growth,” it points to statistics that alumni-founded companies survive longer than the national average. About half of new U.S. companies survive for five years, but 80 percent of those started by MIT grads last that long, and more than 70 percent are still going at 10 years, compared with 35 percent nationally. Still, the report notes that about a third of alumni-founded startups ultimately fail.

Overall, the 30,000 still active alumni-founded companies worldwide employed an estimated 4.6 million people and generated about $1.9 trillion in annual revenue in 2014, according to the study, published in December. It doesn’t provide an estimate of jobs and revenue produced by local companies, but the numbers suggest both are substantial.