Immigrants are increasingly important in driving growth and innovation in America, as evidenced by the role played by foreign-born founders and key personnel in the nation’s breakthrough companies. A new study finds that immigrants have started nearly half of America’s 50 top venture-funded companies and are key members of management or product development teams in almost 75 percent of the country’s leading cutting-edge companies.
The study, released on December 20, 2011 by National Foundation for American Policy, is the first to examine the role immigrants play on the management or product development team in leading private companies in information technology, health, energy, business and financial services, and other fields. The study included conducting interviews and gathering information on the top 50 venture-funded companies in the United States, which were ranked in 2011 by the research firm VentureSource based on factors that included company growth, (successful) track record of CEOs, founders and investors, and capital raised. The companies, all privately-held and with the potential to become publicly traded on the stock market in the years ahead, are today each valued at less than $1 billion and have received venture capital (equity) financing within the past three years, an important indicator of the promise seen by investors.
Among the key findings of the study are the following:
• 46 percent, or 23 out of 50, of the country’s top venture-funded companies had at least one immigrant founder. This illustrates the increasing importance and contributions of immigrants to the U.S. economy, as a 2006 study identified an immigrant founder in 1 in 4, or 25 percent, of publicly traded venture-backed companies created between 1990 and 2005.
• 37 of the top 50 companies, or 74 percent, had at least one immigrant helping the company grow and innovate by filling a key management or product development position.
• Chief technology officer, CEO and vice president of engineering are the most common positions held by immigrants in the top 50 venture-backed companies.
• Among the top venture-backed companies, immigrant founders have created an average of approximately 150 jobs per company in the United States.
Companies with immigrant founders include some of Silicon Valley's “hot” start-ups, such as textbook-rental service Chegg, founded by Indian Aayush Phumbhra and Briton Osman Rashid; online craft marketplace Etsy, founded by Swiss Haim Schoppik; and Web publisher Glam Media, founded by Indians Samir Arora and Raj Narayan. Overall, the most common country of origin for an immigrant founder of a top 50 venture-backed company was India, followed by Israel, Canada, Iran and New Zealand. Other founders and co-founders were born in Italy, South Africa, Greece, Norway, Germany, the United Kingdom, Singapore, Switzerland and France.
The report concludes: “America wins when we are open to talented individuals. Policies that help retain talent in the United States are likely to yield both more startup companies and the personnel needed to create more jobs and innovation in America.” Stuart Anderson, author of the study, believes that the U.S. immigration policy should be relaxed to allow foreign-born students to remain permanently in the country after obtaining a master’s or doctoral degree. Venture capital community agrees: "It's a gamble whether an entrepreneur should stay or leave right now, and that's not how the immigration system should work," said Mark Heesen, president of the National Venture Capital Association, on a call with reporters. "What we need is legislation that helps these entrepreneurs from outside the United States." Indeed, Congress has been considering legislations that would make it easier for talented and highly educated foreign nationals to obtain permanent residency in the United States. In addition, the National Foundation for American Policy identified bills pending in the House of Representatives and the Senate that would help aspiring foreign-born businessmen and businesswomen through measures such as lowering the amount of capital an entrepreneur has to raise before being eligible for an immigrant visa.
Attorneys at I.S. Law Firm are dedicated to providing legal assistance for small businesses and entrepreneurs. We have also helped many immigrants to open or expand their businesses in the United States and become permanent residents and citizens. Please contact us for a consultation today: (703) 527-1779 or via e-mail: law@islawfirm.com.
