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(Corrects spelling of Textaurant in fifth paragraph.)
After six frenetic years, credit analyst Jennifer Wright watched her industry cool off overnight. What had been a bustling area prior to mid-2007—collateralized loan obligations—went into shutdown mode. Firms liquidated, investors grew leery, deals dried up, and suddenly "there wasn't any significant career potential," says Wright. It was a perfect excuse to go back to school. By January of 2008 she had enrolled in Columbia Business School's Executive MBA program with the aim of switching to another area of finance, like capital markets. But with Wall Street reeling and on-campus recruiting down, Wright, 39, decided to start a business of her own.
A friend's idea for a cleverly perforated pizza box, which divides into plates and a storage container, was the catalyst. Wright honed the "Green Box" idea (it's made of recycled materials) in entrepreneurship classes and entered it in B-school competitions across the country. By graduation last May she had seed funding and had decided to make a go of it. Says Wright: "The feedback I'd gotten was so incredibly positive I felt I'd be crazy not to pursue this."
MBA students who in years past may have easily snagged jobs in finance or consulting are turning to entrepreneurship as their plan B. At top schools like Columbia and the University of Michigan's Ross School of Business, record numbers of students are drawing up business plans. Driving the trend are risk-tolerant members of the millennial generation, ages 18 to 29, who are entering B-schools in droves but don't want traditional careers. "It's a sea change," says Thomas Kinnear, director of Michigan's Zell Lurie Institute for Entrepreneurial Studies.
One sure sign that entrepreneurship is taking off: surging interest in business plan competitions, where moguls-in-the-making present ideas to angel investors and venture capitalists. Applications for Rice University's MBA competition, which offers $800,000 in prizes and is the world's largest, are up 40%. Ross' Michigan Business Challenge had a record 85 applications, while submissions to the Wharton competition are up 22% this year.
One of the Wharton semifinalists is Brendan McCorkle, 29. He was laid off by Sunoco before starting school last August, and in school decided to focus on a business plan he and a friend had toyed with. The idea, Textaurant, is software restaurants can use to alert diners via text message when tables are ready. Says McCorkle: "The economy galvanized my decision to work on it full-time." He's testing the concept at a Chili's in Burlington, Mass., and courting investors.
For some students, entrepreneurship isn't a lifeline but is a fallback. When Reed Shelger, 27, at Rice's Jesse H. Jones Graduate School of Business, couldn't find a summer consulting internship last year, he used his background as a former NCAA Division 1 college wrestler to open a wrestling and martial arts gym in Houston. Nearly a year later, he says the business is thriving. His career prospects have improved, too—he's fielding consulting job offers. "In hindsight, it couldn't have worked out better," he says. "I have the best of both worlds."