Kevin Mann is a Briton and Thanavath Jaroenvanit a French citizen, but the two co-founders knew where their start-up, the online comic-book marketplace Graphic.ly, stood its best chance for success: the United States. For one thing, the majority of readers and publishers are here. For another, U.S. venture capitalists have proved far more interested in e-commerce start-ups than their United Kingdom counterparts.
After months trying to find the best way to connect with U.S. consumers and investors, Mann came across TechStars, a mentoring program in Boulder, Colorado. Mann and Jaroenvanit arrived in Boulder in the summer of 2009 to participate in a three-month program at TechStars. The finale was a presentation to some 150 venture capitalists; Graphic.ly received an enthusiastic reception. But the next day, Mann and Jaroenvanit were on a plane back to the U.K. Why? Their 90-day visas had expired.
Graphic.ly has since raised $1.2 million, nearly all of it from U.S. investors. But the company remains based in the British city of Middlesbrough -- where the founders live and work and half of their company's 20 employees are based (the others are in Boulder). Mann expects hiring will continue to be split between the two locations. "It's extremely frustrating," says Mann. If not for the visa issues, he says, "I would have moved to the U.S. and kept the whole business there."
One of the greatest sources of entrepreneurial successes in the U.S. has been the steady stream of immigrants who come here to find opportunity. Unfortunately, an overly restrictive immigration system fails to reflect that. This has to change.
The solution: a visa program aimed at attracting foreign-born entrepreneurs. According to a 2007 paper by researchers at Duke University and the University of California, Berkeley, there was at least one immigrant founder in 25 percent of all engineering and technology companies formed in the U.S. from 1995 to 2005. And those companies generated an estimated $52 billion in 2005 sales and nearly 450,000 jobs. Allowing more entrepreneurs to come to the U.S. or permitting students to stay here after they have finished their studies at an American university is a logical way to harness that entrepreneurial firepower. "This doesn't cost us anything," says Robert Litan, vice president for research and public policy at the Kauffman Foundation.
Fortunately, such thinking has gained momentum. Earlier this year, Senators John Kerry and Richard Lugar introduced legislation to create a new visa for those who intend to form U.S.-based start-ups. "Our country should strive to attract the most talented and highly skilled entrepreneurs," Lugar says. Under the proposal, a foreign-born entrepreneur who has secured at least $250,000 in funding from qualified U.S. investors would be permitted to stay for two years. At the end of that period, if the business has generated at least five full-time jobs, attracted $1 million in additional capital, or hit $1 million in revenue, the founder would be granted a green card. The proposed legislation is backed by more than 160 venture capitalists and seed capital investors, including Khosla Ventures and Mohr Davidow Ventures. Brad Feld, managing director at Foundry Group, an early-stage venture capital firm in Boulder, estimates that the program could create up to 5,000 new companies a year.
Litan wants to go further. He proposes granting short-term visas to would-be entrepreneurs who are here under H-1B or student visas. If, after six months to 12 months, they have hired one nonfamily member, they would be able to stay another three to five years. And if after that they have generated a predetermined number of jobs, they would receive green cards. Litan figures this could generate some 100,000 new companies over the next several years.
Bottom Line Entrepreneurs from all over the world want to start companies in the United States. Our immigration policy should reflect that.