Wall Street is throwing $305K pay packages at new Stanford MBA grads—and that still doesn’t match what private equity is offering

BY Sydney LakeJanuary 19, 2022, 7:01 PM
Stanford Cardinal students fill the bleachers for the big rivalry game between the Cal Golden Bears and the Stanford Cardinal, as seen in November 2021 at Stanford Stadium in Palo Alto. (Photo by Douglas Stringer—Icon Sportswire/Getty Images)

Starting salaries for recent MBA grads continue to go up. For the seventh year in a row, the Stanford Graduate School of Business, which Fortune ranks as having the No. 2 full-time MBA program in the country, saw an increase in the starting salaries for members of its 2021 class. The average Stanford MBA grad earned a $158,400 base salary and an additional $67,500 in bonuses, on average, bringing starting pay to more than $225,000.

“The class of 2021 weathered the initial shock of the global pandemic as they pursued their summer internships in 2020, demonstrating grit and resilience,” Jamie Schein, assistant dean and director of the Career Management Center, wrote in the salary report. “Those students then graduated into a robust job market where they found opportunities aligned with their values and where they could make an impact.” 

By comparison, the average Stanford MBA grad in 2020 earned $156,000 in base salary, plus a $35,000 performance bonus and $26,500 signing bonus. During the past decade, Stanford graduates’ base salaries have jumped by about 32%.

The top industries the class of 2021 pursued included finance (33% of the class), tech (29%), and consulting (18%). Finance proved to be the best-paying postgrad industry with Stanford students earning $310,000 starting pay packages in 2021; this includes a $175,000 base salary with $135,000 in bonuses. 

“Students who pursue private equity and venture capital know the importance of solid fundamentals, of having an investment perspective, and of having the ability to develop and sustain relationships,” Schein tells Fortune in an interview. “Their skills and interests, the nature of the MBA program, and the diverse backgrounds of our students make them compelling candidates in these sectors.”

Why finance jobs pay up

Of those students who went into finance from Stanford’s 2021 graduating class, students largely entered investment management, private equity, and venture capital. About 4% of Stanford’s MBA class of 2021 found positions in investment management—think Wall Street—and, on average, earned a $305,000 starting pay package, including a base salary and bonuses.

Private equity and venture capital prove to be extremely competitive but highly lucrative fields for Stanford alumni.

“It’s helpful to take a step back to think about what is happening in these sectors,” Schein tells Fortune. “The amount of capital available in [venture capital] and [private equity] is growing. Additionally, firms are developing investment strategies in areas such as climate and sustainability.”

In 2021, 15% of Stanford’s graduating MBA class went into private equity and earned more than $338,000, including a base salary and bonuses. 

Private equity firms will shell out for MBA grads because the job requires professionals to possess strengths beyond other finance roles. Sameer Kamat, founder of MBA Crystal Ball, previously told Fortune that these jobs require candidates who “have the mind and acumen of a CEO.”

“An MBA degree is probably the only degree that provides such a holistic overview of what it takes to run and, more importantly, grow a business,” he says. “It’s no wonder that [private equity] firms value the skills MBA grads bring into their firm.”

Similarly, venture capital firms are looking for well-rounded candidates, like former MBA students. In 2021, the average Stanford MBA student who went into venture capital made more than $240,000, including a base salary and bonuses.

Only about 1% of all MBA graduates go into venture capital, according to TransparentCareer. Broad-reaching education is necessary because VC jobs are also particularly difficult to come by; there are only about 1,100 funds in the U.S. with a little more than 5,000 people employed in total. 

“Given these trends, GSB students are well-positioned for roles in [venture capital] and [private equity], as those who come to the GSB tend to want opportunities where they can make a significant impact in the world,” Schein tells Fortune.

See how the schools you’re considering landed in Fortune’s rankings of the best business analytics programs, data science programs, and part-timeexecutive, full-time, and online MBA programs.