Immigrants Fuel Entrepreneurial Boom

Nearly half of private companies that receive venture capital funding were started by entrepreneurs born outside the United States.

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While legal immigrants constitute approximately 8.7 percent of the population, an estimated 47 percent of private venture-backed firms in the United States were founded by immigrants, according to a new study.

Researchers commissioned by the National Venture Capital Association studied all U.S. publicly traded and more than 340 privately held venture-backed companies founded since 1990 to obtain demographic data on their founders.

Researchers also found that immigrants started 25 percent of public venture-backed companies, which generate more than 400,000 jobs and represent a market capitalization of roughly $500 billion.

"As a nation of immigrants, the United States has harnessed the intellectual power of the best and brightest minds from abroad for 300 years," Mark Heesen, president of the National Venture Capital Association, said in a statement. "Foreign-born entrepreneurs have contributed significantly to our economy and our global leadership in innovation."

Some 87 percent of venture-backed companies started by immigrant entrepreneurs are technology related, in such sectors as high-tech manufacturing, information technology, and life sciences. In the field of high-technology manufacturing, immigrant-founded companies constitute 40 percent of publicly traded venture-backed companies.

The United States has attracted immigrant entrepreneurs from across the globe, but the study showed that the most common countries of origin for public company founders are India, Israel, and Taiwan. For private start-up companies, the most prevalent countries of origin for founders are India (28 percent), the United Kingdom (11 percent), and China (5 percent).

Nearly half (47 percent) of the private firms surveyed were founded by one or more immigrants, nearly half of whom (46 percent) arrived in the United States as students.

More than two-thirds of immigrant entrepreneurs surveyed agreed that current immigration policy has made it more difficult to start a company in the United States than it has been in the past.

"Current quotas on highly-skilled immigrants are insufficient and these great minds are beginning to look elsewhere to build their businesses," Heesen said. "There is no question that the U.S. must remain a magnet of foreign-born talent if we are to maintain our competitive edge."