40% Hi-Tech Startups Started by Immigrant Entrepreneurs; $500B in Market Cap

Over the past 15 years, immigrants have started 1 in 4 or 25% of U.S. venture-backed public companies. Within the high technology sector, that percentage rises to 40%. The aggregate market capitalization of these companies, which includes Intel, Google, Yahoo!, Sun Microsystems and eBay, exceeds $500 billion, according to a study (pdf) "American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness", commissioned by the National Venture Capital Association (NVCA). Among today's private, venture-backed start-up companies in the U.S., 47% have immigrant founders or co-founders. 

While immigrant founders of U.S. public companies come from across the globe, the most common countries of origin are India, Israel and Taiwan. When aggregating countries into regions, immigrants from Europe represented more than 25% of all company founders.

The study also found that immigrant founders are responsible for building a high percentage of the most innovative American companies, with 87% operating in sectors such as high-tech manufacturing, information technology and life sciences. These companies are headquartered across the country but are concentrated in five states: California, Massachusetts, New Jersey, Washington and Texas.

Of the more than 400,000 worldwide jobs created by immigrant-founded ventured-backed public companies, 70% are in the high-tech manufacturing sector. Given the high-tech nature of the businesses started by immigrant entrepreneurs, these companies often pay higher salaries but employ fewer people overall than companies in other sectors.

56% of the emerging companies founded by immigrants were headquartered in California, followed by Massachusetts and New York. 62% of the companies were in the high technology or life sciences sectors. India was the most prevalent country of origin with 28% followed by the United Kingdom (11%), China (5%), Iran (4%), and France (4%).

Nearly half of the immigrant entrepreneurs in the survey (46%) arrived in the U.S. as students. More than half of the founders started their businesses within 12 years of entering the United States. They hold an average of 14.5 patents. 69% of these individuals have become American citizens.

Two-thirds of the private companies surveyed who use H-1B visas (temporary visa to hire skilled foreign nationals) say that current immigration laws harm U.S. competitiveness. 40% stated that current immigration policies have negatively impacted their companies when competing against other firms globally. One-third of the private companies said that the lack of visas had influenced their company's decision to place more personnel in facilities abroad. The current quota on H-1B visas stands at 65,000 per year. 

"A key lesson of the study is the importance of maintaining a more open, legal immigration system," said Stuart Anderson, co-author of the report. "Few of these impressive immigrant entrepreneurs could have started a company immediately upon arriving in the U.S. -- many were just children, international students or H-1B professionals -- but it's clear that America helped shape them into entrepreneurs as much as they have helped shape America..."

The study was authored by Stuart Anderson of the National Foundation for American Policy and Michaela Platzer of Content First, LLC and commissioned by the National Venture Capital Association (NVCA) as part of its MAGNET USA initiative (Maximizing America's Growth for the Nation's Entrepreneurs and Technologists).

Methodology: To conduct the research, the authors examined the Thomson Financial database of all publicly traded venture-backed companies founded since 1970. After eliminating those that had merged, been acquired, or were otherwise no longer publicly-traded (or in business), they used public records, Internet research, e-mails, and phone calls to identify the nativity of the founders for the remaining companies. Since information on privately-held venture- backed companies is not as readily available as it is for public companies, the authors conducted a survey through the NVCA, which targeted its member firms' portfolio companies, and through the American Entrepreneurs for Economic Growth. More than 340 responses were received.

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