Study Finds Immigrant Entrepreneurs Drive U.S. New Business Formation

One out of four public, venture-backed companies started since 1990 were founded by entrepreneurs who immigrated to the U.S. before starting their company, according to a recent study commissioned by the National Venture Capital Association. Immigrant-founded companies are even more common within high-tech industries, where 40 percent of all new publicly traded firms in the past 16 years have had immigrant founders, including widely-acclaimed IT success stories like Google, Yahoo! and eBay. The aggregate market capitalization of new immigrant-founded tech companies since 1990 exceeds $500 billion.

 

The authors of American Made: The Impact of Immigrant Entrepreneurs and Professionals on US Competitiveness conclude that immigrant entrepreneurs play a vital role in U.S. economic prosperity and that continued growth may depend on maintaining an open system of immigration that encourages entrepreneurs and skilled professionals to relocate to the U.S.. Few immigrant entrepreneurs came to the U.S. to start company. Most arrived as children, students or workers in their early- to mid-20s hired on H-1B visas for workers with specialized knowledge.

 

The current immigration law, and especially the unavailability of H-1B visas, is cutting the U.S. off from this source of new business opportunities, the authors argue. In a survey of 342 immigrant founders of private venture-backed companies, a third claimed that the cap on H-1B visas has caused them to place personnel overseas rather than in the U.S. Two-thirds of these entrepreneurs believe current U.S. immigration policy has made it more difficult to start a business in the U.S. than in the past, and almost that many said current U.S. immigration laws on skilled professionals harm American competitiveness.

 

Despite restrictions, the U.S. continues to benefit from foreign-born entrepreneurs. More than 95 percent of survey respondents reported that they would still start their companies in the U.S. if given the choice today, and a third have already started or intend to start additional companies in the U.S. California is the greatest beneficiary of immigration, with 62 percent of public company headquarters and 56 percent of private company headquarters. In both cases, India was the most common country of origin for the founder, followed by Israel and Taiwan for publicly traded companies and the United Kingdom, China, Iran and France for private companies.

 

The study also includes profiles of select immigrant entrepreneurs and immigrant-founded companies from across the U.S.

 

Access American Made: The Impact of Immigrant Entrepreneurs and Professionals on US Competitiveness at: http://www.nvca.org/pdf/AmericanMade_study.pdf