Just in case you need more proof that America's immigration policies are damaging to innovation, a new report shows that immigrant entrepreneurs have founded nearly half of America's top venture-backed companies.
The report, Immigrant Founders and Key Personnel in America’s 50 Top Venture-Funded Companies, was released by the National Foundation for American Policy (NFAP), a non-profit research group based in Arlington, Virginia. The research was conducted by analyzing a list of 50 of America's top private venture-funded companies, as ranked by VentureSource, a research firm owned by Dow Jones.
Among the more recognizable companies in the list with immigrant co-founders were Etsy, an online marketplace for handmade goods; Chegg, a textbook rental service; and Glam Media, an online publisher.
Stuart Anderson, NFAP's executive director, said in a call today that he decided to conduct the interviews with each of the 50 company founders to determine how many were foreign born, and to gauge the role of immigrants in today's high-growth firms.
"If I saw that 25 percent [were immigrants] I thought that would be a significant finding," Anderson says. "But what I found astonished me."
Among his findings, Anderson found:
- 46 percent of America's top venture-funded companies had at least one immigrant founder
- 74 percent had at least one immigrant holding a top-level management position (including CEO, CTO, and VP were most common)
- Each company founded by an immigrant has already created, on average, about 150 job. And the companies in the study are still in their high-growth stage.
- The most common country of origin for immigrant founders was India, followed by Israel, Canada, Iran, and New Zealand.
Yet foreign entrepreneurs struggle to obtain visas to start companies. Alex Mehr, the co-founder and co-CEO of Zoosk, an online dating site that was selected as one of the country's top venture-funded firms, recounted his early struggles on today's call.
In 2002, Mehr, who had moved to the Unites States from Iran to pursue a graduate degree in engineering at the University of Maryland, wanted to start an engineering software company with his two friends. Both had moved to the United States on student visas from Iran. But they were immediately stymied.
"I'll never forget the day we went to the immigration lawyer," says Mehr. "He looked at us and shook his head, and said, 'You better stop doing this and get a real job.' We couldn't sponsor ourselves through our own startup.”
Mehr ended up taking a job at NASA, and enrolled in the MBA program at Berkley. His business partner, Shayan Zadeh, took a job at Microsoft.
They each worked for about three years, and had all but given up on their entrepreneurial ambitions until 2006, when Mehr was selected in the lottery for a diversity visa, and was granted a green card. Shortly after, Zadeh's green card application came through. In 2007, the co-founders quit their jobs and started Zoosk.
Today, Zoosk, based in San Francsico, has raised more than $40 million in venture capital, and has 110 employees. It's a global enterprise, with users in 70 countries. Half its revenue comes from overseas. Despite Zoosk's success, Mehr is critical—if not bitter—about his experience with United States immigration system, which, he says, snubs innovative and would-be entrepreneurs like himself.
"You're losing them to Canada, or Germany or the U.K.," he says. "They're going elsewhere because of the immigration policy. These are the type of people who would be entrepreneurs. To me, that's a loss for this country."
Mark Heesen, executive director of the National Venture Capital Association, added that the bureaucratic hurdles are discouraging, especially during a time when America needs job-creators.
"The characteristics of immigrants are extremely entrepreneurial," he says. "It's interesting how many obstacles they have to overcome."
However, Anderson believes momentum in Congress is beginning to build to make it easier for immigrant entrepreneurs. For instance, H.R. 3012, The Fairness for High-Skilled Immigrants Act, passed the House by a 389-15 margin. That bill does not increase the number of available entrepreneur visas, but it would increase the number of employment-based visas. Anderson says it's unlikely that 2012 will welcome a complete overhaul of the immigration system, but that small steps such as H.R. 3012 can ultimately help carve a path for immigrant entrepreneurs to flourish in the U.S.
"There's a possibility that we can move on smaller measures that would be less controversial that don't involve comprehensive immigration reform," Anderson says. "That small success may breed larger success."
Right now, foreign investors can receive a visa in exchange for investing at least $500,000 in an American venture. It's a policy that many, including NFAP, argue amounts to a pay-for-play program that does nothing to create jobs.
Earlier this week, The New York Times released its own indictment of the $500,000 investment scheme, noting that New York City zoning officials may have fudged census numbers in order to create safe investment opportunities for investors that have funds—but not necessarily talent.
A senior federal immigration official, Alejandro Mayorkas, The Times noted, "acknowledged in an interview…that the program might need more scrutiny."
Stuart Anderson's conclusion is much the same.
"The status quo of rewarding cash but not talent is a rejection of America's heritage as a nation of immigrants and a nation of entrepreneurs," he says.