U.S. immigration policy discourages foreign-born entrepreneurs

Nov 24 2006 by Brian Amble Print This Article

As a new report highlights the enormous contribution made to the U.S. economy by immigrant entrepreneurs, fears are growing that restrictive immigration policies will hinder the ability of future foreign-born entrepreneurs to start American companies today.

Intel, eBay, Sun Microsystems, Yahoo and Google are just a few of the companies that would not exist today if their foreign-born founders had not migrated to the United States.

In fact, as a new study commissioned by the National Venture Capital Association (NVCA) has highlighted, immigrants have had a profound impact on company creation, innovation and market capitalisation.

Immigrants have started a quarter of all public venture-backed companies in the U.S. since 1990 and are founders of almost half of all current venture-backed tech startups.

These enterprises represent a market capitalisation of more than $500 billion and employ some 220,000 people in the United States alone and some 400,000 worldwide.

Immigrant founders of U.S. public companies come from across the globe, the NVCA found, with India, Israel and Taiwan the most common countries of origin. Overall, Europeans make up more than a quarter of all company founders.

But the study also found that two-thirds of the immigrant founders surveyed believe that current U.S. immigration policy hinders the ability of future foreign-born entrepreneurs to start American companies today.

The study was authored by Stuart Anderson of the National Foundation for American Policy and Michaela Platzer of Content First, LLC and commissioned by the NVCA as part of its MAGNET USA initiative (Maximizing America's Growth for the Nation's Entrepreneurs and Technologists).

"A key lesson of the study is the importance of maintaining a more open, legal immigration system," Stuart Anderson said.

"Few of these impressive immigrant entrepreneurs could have started a company immediately upon arriving in the U.S. - many were just children, international students or H-1B professionals - but it's clear that America helped shape them into entrepreneurs as much as they have helped shape America."

In the arena of private start-ups, immigrant entrepreneurs have an even stronger presence. Looking at 340 venture-backed start-ups, the report found that almost half (47 percent) were founded by one or more immigrants.

What's more, nearly two-thirds of these immigrant entrepreneurs intend to start or have already started additional businesses in the United States

"As a nation of immigrants, the United States has harnessed the intellectual power of the best and brightest minds from abroad for 300 years. Foreign-born entrepreneurs have contributed significantly to our economy and our global leadership in innovation. It's time that we recognize their achievements," said Mark Heesen, president of the National Venture Capital Association.

"There is no question that the U.S. must remain a magnet of foreign-born talent if we are to maintain our competitive edge. However, current quotas on highly-skilled immigrants are insufficient and these great minds are beginning to look elsewhere to build their businesses," he warned.

While advocates of immigration controls have argued that companies are simply using H-1B visas (temporary visa to hire skilled foreign nationals) to hire cheap labour at the expense of American workers, the report found that a third of the private companies they questioned had decided to hire more people in facilities outside the U.S. as a result of a lack of visas.

"The current quota on H-1B visas of 65,000 has not been sufficient to meet the demand for highly skilled professionals," said Chad Waite, general partner at OVP Venture Partners in Seattle and NVCA Board member.

"In nine of the past 11 years, employers have exhausted the entire quota of H-1B's prior to the end of the fiscal year. In the past three years, the quota was used up prior to the start of the fiscal year.

"Perhaps equally troubling, the wait in skilled green card (permanent residence) categories is five years or more, sending a signal to current and future outstanding professionals and researchers that America may not be the place to make a career and raise your family."