Commentary

US immigration policy tries to make America uncompetitive!


The US immigration policy stinks for entrepreneurs and startups. I believe that the US has confused and confounded two separate and distinct immigration issues: high tech entrepreneurs from outside the nation who want to stay in the US and innovate, grow their startups and create wealth vs. border issues. I won’t touch the latter issue; I don’t know much about that. But, I do know something about immigration as it relates to entrepreneurship, or at least the need for immigration in entrepreneurship.

Recently, the Immigrant Learning Center, Inc. outside of Boston issued a fantastic report entitled “Immigrant Entrepreneurs: Creating Jobs and Strengthening the Economy,” by ILC Public Education Institute Director Marcia Hohn. The paper was published by the U.S. Chamber of Commerce and the Immigration Policy Center of the American Immigration Council and details the contributions of immigrant entrepreneurs and provides policy recommendations to increase the pool of immigrant entrepreneurs who can help boost sagging U.S. employment and economic growth. On the ILC website is the Hall of Fame, which profiles some of our great foreign-born immigrants who have contributed mightily to the US economy.

The American Immigration Council hosts a blog called Immigration Impact with a lot of relevant posts. I also highly recommend Richard T. Herman and Robert L. Smith’s book, Immigrant, Inc. Why Immigrant Entrepreneurs are Driving the New Economy (and How They Will Save the American Worker). Richard Herman has a Cleveland Law Firm specializing in immigration for entrepreneurs; aptly, his website is greencardpeople.com. Much of the information in this post is from his 2010 book as well as from the ILC article. Thank you Richard! Thank you Marcia! I also learned about this subject from talking with Shane Parker, an immigration attorney with the Law Offices of J. Gregory Clare in Louisville Kentucky. Thank you Shane!

Immigrants have founded more than half the companies in Silicon Valley. That speaks for itself. Think of Vinod Khosla (co-founder of Sun), Sergey Brin (co-founder of Google) and Andy Grove (co-founder of Intel). Think of Yahoo, Paypal, YouTube, eBay, iRobot, and LinkedIn. A 2011 report by the Partnership for a New American Economy found that immigrants founded 18% of all Fortune 500 companies. They generate $1.7T in annual revenue and employ 3.7M workers worldwide.

Many of these immigrant entrepreneurs came here for their education. We have high percentages of foreigners in our universities, yet, by and large, once they’ve completed their degrees, we send them home to innovate there. Does this make sense to you? Because it doesn’t to me. Particularly when you think that many PhD students are supported by us – taxpayers – through stipends and grants.

We aren’t doing our job in both educating our own citizens in the STEM fields (Science, Technology, Engineering and Mathematics). And those that we do educate (foreigners) now believe that their own countries offer better opportunities. This is validated over and over. For example, a January article in the Baltimore Sun about manufacturing chastises America for not educating enough of its citizens in industrial technology, declaring that: “…too many foreign engineering students return to their own countries to spur manufacturing there.” The US immigration system is part of the problem.

Did you know that more immigrants start businesses in the US than native-born Americans? Why? Because they are motivated to do that here – the Horatio Alger, rags to riches tale of opportunity. The immigrants I am talking about don’t take jobs from Americans – they create them! A 2010 report by the Immigrant Learning Center found that over one-quarter of the biotech companies in New England had at least one immigrant founder, and that those companies employed over 4,000 workers and produced over $7B in sales in 2006. In 2010, there were more than 18,000 Asian-owned businesses in Massachusetts employing more than 37,000 people. A 2006 report done by the National Venture Capital Association found that the market capitalization of public, VC-backed, immigrant-founded companies was $500B.

Let’s face it: the US is a country of immigrants. More than 40M Americans like to claim Irish heritage, even though Ireland is a country of only 6.4M people (4.6M in The Republic Ireland; 1.8M in Northern Ireland). Today, at least half of our country’s population is immigrant, child or grandchild of an immigrant, or married to one. Nearly one-third of US Nobel Laureates are immigrants. A 2009 study by Jennifer Hunt of Rutgers McGill Universities and Marjolaine-Gauthier of Princeton University found that immigrants patented ideas at double the national rate, due to their disproportionate number of degrees in science and engineering. And they are highly educated. Duke University’s Vivek Wadhwa reported that 96% of immigrant founders of high-tech companies held graduate or post-graduate degrees. Almost 50% had masters degrees and 30% held PhDs. Indian-born Americans have the highest education level of any identifiable ethnic group. In March, 2009, the National Center for Education Statistics reported that 68% of PhD economists graduating from US universities were international students. One-quarter of America’s scientists and engineers (and half at the doctorate level) were born outside of the US. Foreigners make up two-thirds of graduate students at US colleges concentrating in engineering and computer science.

Educated, entrepreneurially-oriented immigrants are an asset to our nation! We should, as some have suggested, hand a green card to anyone who graduates with a PhD in this country. And, instead of closing our doors to these bright sparks of the future, we should – as past immigrants ourselves – embrace immigration and support the next wave of new venturists!

The solution. Both Hohn and Herman provide helpful suggestions of how to reform our immigration system. I won’t repeat what they say here, but I will list a few things that the federal government should immediately consider in order to reverse the brain drain from our universities and to encourage and support entrepreneurship, which, no matter where you look, IS the answer to our economy:

  1. Green cards for students. Seriously consider giving green cards to foreign-born nationals who get advanced degrees, such as doctorates, in the US.
  2. Educate our own. Institute some kind of equal opportunity for US-born students in the STEM fields for getting into the top technical US universities, particularly at the graduate level (or reverse that and attempt to impose limits on funding and support for foreign-born nationals getting PhDs in the US).
  3. Grant visas and green cards to entrepreneurs. Foreign entrepreneurs who want to build business here and create jobs and wealth should have plenty of opportunity to do so – give them visas and eventually green cards! Allow for them to sponsor themselves the visas so that these folks don’t have to work for Google to get sponsorship!

Profiles of Immigrant New Venturists. Many of the startups that have been profiled in New Venturist have foreign-born nationals as co-founders, including LearnBop, BlackLocus, Rapportive, and Crowdbooster. Many others are sons and daughters of immigrants.

Many future blog posts and profiles will feature immigrant entrepreneurs. Because that’s the right thing to do. And it’s important to recognize the past and future contribution of this important segment of our entrepreneurial culture!

Commentary
Funding: structure, post #7 of “Startup Briefs”
Profiles
Luke Skurman: College Prowler
Profiles
Sam Yagan: OkCupid
  • Great article! I can’t agree with you more! As a foreign PhD myself, the No. 1 bottleneck for me to start the company now is immigration issue. My partner and I have worked hard to prepare the business but eventually we may have to postpone our schedule, because I need to find a job first in order to stay in the U.S.
    Time is critical for high-tech company. Not being able to work full-time to develop our company at the beginning may be the factor that kills our business 🙁

  • Juan Pedro Rodriguez

    Interesting post, then what has to do a non-US citizen to start a business in the US? Can they do it while on the tourist visa? do they have to apply first for some kind of visa? Thanks for your help.

    • babscarryer

      I really am not in a position to give you advice on this. I think that you should talk to an immigration attorney. I gave you one name in the post!

  • Claudio G

    I am Italian and actually working in the US as a transferee to the US branch of the company and, just to tell you, because I often looked how to start my own business here in the US, Visas and Green cards for entrepreneurs already exist. EB-5 Immigrant Visas (lead to green card) for entrepreneurs who invest 500000$ in economically depressed areas or 1000000$ in non depressed areas and employ a certain number of US citizen or permanent residents, or E-2 non-immigrant visas (no green card unless you reach the above levels, but can be renewed forever), they allow entrepreneurs to start small size businesses that project to employ US citizen or permanent residents in the near future.

    • babscarryer

      You are right, Claudio. That is an avenue that more and more people are employing in order to stay in the US!

      • Claudio G

        What really bothers me about immigration is that me, legally working for 5 years now, have a baby and another one is coming in, both US citizens according to the actual law, and I cannot give them a stable US future if for any reason the project the company started here will end. How can a child develop a strong allegiance to his/her country or the country he/she was born in and raised for many years if in the end his/her parents are not allowed to stay. If you look in deep it’s easier for illegals to find a path to stay (hardship, condones, LIFE acts, etc) than for a legal.
        I wish there was a path for people getting in legally with non-immigrant visas but end up staying and paying taxes for 10-15 years because their companies or projects lasted for long time.

        • babscarryer

          Claudio – I can only hope that the changes in immigration law that were passed last week will work in your favor. Good luck!
          -babs