Global Themes

On Globalization & Venture Capital

On Immigration, Innovation and Entrepreneurship…

Red Herring reported on a recent study (available on the NVCA website) which shows how immigration has been one of the major driving forces behind tech innovation in the US. (Hat Tip: Shefaly) 

The study revealed that over the past 15 years, 25 percent of U.S. public companies that were VC-backed were started by immigrants. Together these companies account for an impressive market cap exceeding $500 billion.

Note that legal immigrants account only for 8.7% of the population.Some of these companies include Google, Yahoo, eBay, Sun Microsystems, Intel and Solectron

Worryingly, the study noted that two-thirds of respondents in its survey said “U.S. immigration policy has made it increasingly difficult to start a business in America” and a “a nearly-equal percentage felt that the visa policies, particularly the limited number of H1-B visas allotted to companies “harm American competitiveness.””

The study underlines the immense entrepreneurial capacity (and risk-taking attitudes) prevalent amongst immigrants – something that would hardly surprise anyone who is an immigrant in any country (I count myself as one). 

What will be even more interesting to watch is the effect of some of these immigrants returning back to their countries of origin – particularly in terms of the impact that they will have on their “home” economies…Some of this effect is already in evidence in China and India where innovation and entrepreneurial activity has been catalysed by the “returnees”.

Two other interesting points from the study:

  • Of those responding to the NVCA survey, nearly half (47 percent) of the founders of private (privately held, venture –backed) companies were immigrants.
  • While immigrant founders in venture-backed public companies come from across the globe, the leading countries of origin are India, Israel, and Taiwan.

November 16th, 2006 Posted by | Entrepreneurship, Immigration | one comment

1 Comment »

  1. Shantanu, thanks for sharing the report and thanks for your kind hat tip!

    Trends are important to understand but I think to sustain them – and knowing from a policy perspective what might help sustain desirable trends – it would be important to know the ‘why’ driving those trends. In those terms this report sheds little light.

    Another intriguing point – while Sun Microsystems (Vinod Khosla) and Intel (Andy Grove) are understandable for inclusion, I was a bit confused by the counting of Google in this list. Is Sergey Brin the ‘immigrant’ in this equation? He, who came to the USA, as a child of 5 or 6? When does the ‘immigrant’ label stop applying? When can a country legitimately claim an entrepreneur as their own? If birth is the criterion, should Russia not claim Sergey Brin or Hungary claim Andy Grove? Is it important to take into account how the ‘immigrant’ sees him/her self? Or is it for society to decide?

    I think both the ‘why’ and the ‘why not’ are important to understand in this increasingly globalising world. Thanks.

    Comment by Shefaly Yogendra | November 17, 2006

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