A few weeks back, I had the pleasure of doing a panel discussion at a TiE DC event focused on strategies for growing and financing entrepreneurial ventures. TiE now stands for "The Innovative Ecosystem" and is a not-for-profit global network of entrepreneurs and professionals, although when the organization was originally founded TiE stood for The Indus Entrepreneurs and was focused on entrepreneurs primarily from India. Befitting this heritage, most of the entrepreneurs I spoke with had Indian roots and as many of them reached out to me to discuss their ideas for their new ventures, i was struck – as i often am at TiE events – by the quality of the entrepreneurs, their passion for their new businesses, and the general level of aggressiveness in networking and seeking advice on how best to move their business forward. All good signs for the local DC entrepreneurial community!
As I was speaking to everyone, I was also reminded of a study that was commissioned by the NVCA on the impact of immigrant entrepreneurs and professionals on the U.S. economy. In short, what this study found was that over the past 15 years, immigrants have started 25% of US public companies that were venture-backed and that the market capitalization of these firms exceeds $500 Billion. Further, 40% of US publicly traded venture-backed companies in high-tech manufacturing today were started by immigrants, including companies such as Intel, Solectron, Sun Microsystems, eBay, Yahoo! and Google. For those of us in the venture industry, this is not new news as we see this in our daily lives as we meet with new companies, but it is interesting to think about why this is the case.
From my perspective, there are three reasons immigrants to the US make up a disproportional amount of the start-up companies backed by venture capitalists. First, most of the immigrant founders were drawn to the US for either college or graduate studies in technology driven fields, so they are well trained technically and are no strangers to innovation. Second, as I saw when I lived for a couple of years outside the U.S., being in a culturally different place tends to lead one to be more curious and to take less for granted, resulting in a proclivity to identify something that "just does not make sense" and therefore is in need of a solution. Finally, immigrants tend to have a lower fear of failure and seem to be much more open minded to take the calculated risks that are required by entrepreneurs. From my lens, I think this is because the shear act of leaving one's homeland to study and live outside of what is naturally comfortable is, in and of itself, a significant risk and that those who succeed in thrive in having taken that risk realize that with such decisions often come great rewards.
The frustration with this analysis is how hard the US immigration policy makes it for these talented folks to stay in the US, especially as they are leaving university programs. If you want to stay in the US post university and work at a company, immigrants quickly discover the H1-B visa program is an annual mess and if you want, heaven forbid, to start a company, it is even more complicated. It makes no sense that as a nation we do a great job attracting the best and the brightest to our world-class universities and then make it incredibly hard for people to stay, something that is exacerbated in today's world when the idea of returning home for an immigrant from India, China or the like is far more attractive for an entrepreneurially minded individual than it would have been 15 or 20 years ago. I am not alone in seeing this as a lost opportunity for the US – both Brad Feld and Paul Graham blogged on this in a far more eloquent way earlier this year – but I wanted to throw my hat into the ring of pushing our policy makers to think more creatively about driving entrepreneurship and the associated job creation opportunities in this country. I recognize this is not a politically popular stance for our elected officials, in fact one Congressman in a discussion of the visa issue recently remarked to one of my partners, "try telling that to the gas station attendant", but if they hear from enough people, perhaps the tide can change.