NVCA Report – How Immigrant Entrepreneurs Contribute To U.S. Economy
Report Commissioned by the National Venture Capital Association Shows Impact of Immigrants on American Jobs, Markets, and Innovation, Confirming Broad Support for High-Skilled Immigration Reform
American Made 2.0: How Immigrant Entrepreneurs Continue to Contribute to the U.S. Economy finds that immigrants are having an even greater impact on U.S. competitiveness today, despite high-skilled immigration policies that many believe harm job creation, innovation and capital creation. The analysis concludes the contributions of immigrants to the United States would be even greater if Congress adopted the right policies on startups and high skill immigration.
“As Congress debates comprehensive immigration reform, understanding the contributions of high-skilled, foreign born entrepreneurs to our country is imperative to ensuring meaningful changes to our system,” said Mark Heesen, president of the NVCA. “These individuals have founded many of America’s most successful companies, keeping jobs, market value and innovation here in the United States. Our policies must not only accept but welcome the next generation of immigrant entrepreneurs who are making even greater strides in starting and growing amazing companies.”
The report was authored by Stuart Anderson of the National Foundation for American Policy, former head of policy at the Immigration and Naturalization Service, and commissioned by the NVCA. American Made 2.0 determined the nativity of the founders of U.S. venture-funded companies that became publicly traded both before and after 2006. In addition, privately-held venture-backed companies were surveyed for their views on current immigration policy and potential reforms to the immigration system.
Highlights from the study include:
– An increasing number of public companies have immigrant founders. Of the U.S. venture-backed companies that became publicly traded between 2006 and 2012, 33 percent have at least one immigrant founder. These companies include well-known names such as Facebook, LinkedIn, Zipcar and Tesla Motors. This compares to 20 percent of venture-funded companies with an initial public offering prior to January 1, 2006. Before 1980, only 7 percent of U.S. publicly traded venture-funded companies had an immigrant founder or co-founder.
– The value created to date by immigrant-founded venture-backed companies is extraordinary. Venture-backed, publicly traded immigrant-founded companies have a total market capitalization of $900 billion (as of June 2013), an increase of approximately $400 billion since 2006 when the market value of these companies was in the $500 billion range.
– Immigrant entrepreneurs create jobs. Immigrant-founded venture-backed, public companies employ approximately 600,000 people worldwide, the majority in the United States. Among the largest employers are Intel, Google, Sanmina, eBay, PAREXEL, and Yahoo! Immigrant-founded companies that went public since 2006 employ 65,450 people, with annual sales of over $17 billion.
To provide greater insight into privately-held venture-backed companies, NVCA also sent surveys on immigrant entrepreneurs and immigration policy to venture capital members, which forwarded them to companies in which they have invested. NVCA received over 600 responses. Of those surveyed, thirty-three percent of the entrepreneurs were foreign-born, with top countries of origin being India, the United Kingdom, Canada, France, Israel and Germany. Sixty-one percent of the privately-held immigrant-founded companies held one or more patents.
The survey results indicated that company executives believe America’s immigration system needs to be reformed. Among all private company founders, both native-born and foreign-born, 79 percent believed “the process for a foreign-born entrepreneur to enter and remain in the U.S. to start a business is too difficult.”
Overall, 74 percent of companies agree “current U.S. immigration laws for skilled professionals harm American competitiveness.” Finally, 90 percent of both native-born and foreign-born company founders believe a startup visa category would benefit the U.S. economy. Two-thirds of immigrant entrepreneurs indicated that “a startup visa category would have been helpful when starting their company in the United States.”
Under U.S. immigration law today, American employers can hire skilled foreign nationals on an H-1B temporary visa, but for more than a decade the supply of H-1B visas has been exhausted before the end of the fiscal year. Fifty-seven percent of the companies replied that “projects had been delayed because of the lack of H-1B visas.” Forty-three percent of the companies said the lack of H-1B visas influenced the company’s decisions to place or hire more personnel in facilities located outside the United States.
“The study demonstrates not only the contribution of immigrant entrepreneurs but also broad-based support from the entire U.S. start-up community for meaningful immigration reform that allows high skilled and entrepreneurial foreign born professionals to start and grow companies in America,” said Anderson. “If Congress enacts the solutions proposed by today’s cutting-edge companies – a startup visa category as well as more temporary visas and green cards for highly skilled foreign nationals — then we are likely to see more jobs and innovations created in the United States.”
About the National Venture Capital Association
Venture capitalists are committed to funding America’s most innovative entrepreneurs, working closely with them to transform breakthrough ideas into emerging growth companies that drive U.S. job creation and economic growth. As the voice of the U.S. venture capital community, the National Venture Capital Association (NVCA) empowers its members and the entrepreneurs they fund by advocating for policies that encourage innovation and reward long-term investment. As the venture community’s preeminent trade association, NVCA serves as the definitive resource for venture capital data and unites its nearly 400 members through a full range of professional services.