Immigrant entrepreneurs are the backbone of America

NEW YORK – Ronald Reagan once said, ‘You can go to France to live but you cannot become a Frenchman. You can go to live in Germany or Japan but you cannot become a German or a Japanese. But the one place in the world where anyone from any corner of the world can come (is) America. Come to live and become an American.’

Under the Trump administration, though, legal immigration is tottering; choked, dismantled slowly. Immigrants on visa feel hounded, uncertain of their future. Permanent residency seems far-fetched. To be a naturalized American citizen, granted voting power, a mirage.

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If 2018 brought plenty of misery and trepidation for tens of thousands of legal immigrants, and the future looks even worse, it’s good to remember that America has prospered to a large extent because of immigrant entrepreneurs. These entrepreneurs, who came as students, on H-1B visa, through family-based immigration, even as refugees, have created millions of jobs in every nook and corner of the country.

One need to only peruse a study put out this year by the Arlington, Virginia-based National Foundation for American Policy (NFAP), a non-profit, non-partisan organization dedicated to public policy research on trade, immigration, education, and other issues of national importance, to get a sense of the immense contribution of legal immigrants, who have enrichened the lives of countless Americans.

According to the study, immigrants have started more than half (50 of 91, or 55%) of America’s startup companies, co-called ‘Unicorns’, valued at $1 billion or more and are key members of management or product development teams in more than 80% of these companies.

At least 9 highly successful immigrant-founded billion-dollar companies were recently acquired or went public in an initial public offering and, therefore, were not included in the study, an indication the findings underestimate the contributions of immigrant entrepreneurs. Moreover, several of the immigrant entrepreneurs featured in the research have started more than one company and jobs from those companies were not included in the study.

The collective value of the 50 immigrant-founded companies is $248 billon, which is more than the value of all the companies listed on the stock market of many countries, including Argentina, Columbia, Peru, Portugal and Ireland.

Immigrant entrepreneurs in billion-dollar startups come from diverse backgrounds. The leading countries of origin for the immigrant founders of billion-dollar companies are Canada and Israel with 9 immigrants each, India (8), the United Kingdom (7), China (6), Germany (4), France (3), Ireland (3), Russia (3), Australia (2), Ukraine (2) and 14 other countries with one entrepreneur – Armenia, Azerbaijan, Bulgaria, Denmark, Iraq, Italy, Lebanon, the Netherlands, New Zealand, Norway, South Africa, Sweden, Uzbekistan and Vietnam.

California is the headquarters of 33 of the 50 immigrant-founded companies, followed by New York (8), and Massachusetts (5).

A 2006 study conducted with the National Venture Capital Association (NVCA) identified an immigrant founder in 25% of venture-backed companies that became publicly traded between 1990 and 2005, while a 2013 NVCA study found immigrants started 33% of U.S. venture-backed companies that became publicly traded between 2006 and 2012. A March 2016 NFAP study found immigrants started 51% or 44 of 87 of America’s startup companies valued at $1 billion or more and were key members of management or product development teams in 71% or 62 of 87 of these companies.

Strikingly, a lot of the entrepreneurs came as international students. The Trump administration is faced with a recent lawsuit filed by several universities who have challenged new rules that would adversely impact hundreds of thousands of international students, force them to leave the country on charges of overstaying their visa, and worse, bar them from entering, for no fault of theirs because of visa transition problems.

Cloudflare’s Michelle Zatlyn has said obtaining Optional Practical Training was crucial to the company’s founding. Today, Cloudflare has 715 employees. Indian-origin entrepreneurs like Ash Ashutosh, Arvind Jain, Dhiraj Rajaram, Soham Mazumdar, Bipul Sinha, and Ragy Thomas came on an F-1 visa.

Jyoti Bansal, the founder of AppDynamics, with over 1,400 employees – which was acquired by Cisco for $3.7 billion in January 2017 – came to the US from India in 2000 on an H-1B visa.

“I waited 7 years for my employment-based green card and I wanted to leave my job and start a new company but couldn’t,” he is quote in the NFAP report. “What is most frustrating about the green card process is you have no control over a major part of your life. I have friends who became frustrated with the uncertainty and after years of waiting they finally left the United States.”

After he left his employer, Jyoti started AppDynamics.

“America has everything we need to create great companies here. We have great openness. We have a good legal structure and access to capital. But in technology it’s all about talent. We need an immigration system that allows people to keep coming here,” he said.

Dheeraj Pandey and Mohit Aron were international students who came to America and, along with fellow Indian immigrant Ajeet Singh, founded Nutanix, which provides solutions for enterprise data center infrastructure. Nutanix has over 2,000 employees and had an initial public offering in 2016 valued at $2 billion.

Some of the notable Indian American entrepreneurs in NFAP reports over the years include: Laks Srini, who founded Zenefits (valued at $4.5 billion with 1,465 employees); KR Sridhar, who founded Bloom Energy (valued at $2.9 billion with 1,200 employees); Apoorva Mehta, who founded Instacart (valued at $2 billion, with more than 300 employees); Dheeraj Pandey, Ajeet Singh, Mohit Aron, who founded Nutanix (valued at $2 billion with 864 employees); Dhiraj Rajaram, who founded Mu Sigma (valued at $1.5 billion with 3,500 employees); Jahangir Mohammed, who founded Jasper (valued at $1.4 billion); Ragy Thomas of Sprinklr (valued at $1.2 billion with 325 employees); Ash Ashutosh, who founded Actifio (valued at $1.1 billion with 350 employees); Jyoti Bansal who founded AppDynamics (valued at $1 billion with 900 employees); Samir Arora, Raj Narayan of Mode Media ( valued at $1 billion and has 240 employees); and Jay Chaudhry, who founded Zscaler (with as valuation of $1.6 billion and 600 employees).

Uber was the largest source of employment for an immigrant-founded billion-dollar company with 9,382 employees in the U.S. as of December 2017, as well as 3 million active drivers. SpaceX was second with 7,000 employees, followed by WeWork (6,000), Mu Sigma (3,500), Palantir Technologies (2,000), Unity Technologies (2,000), Houzz (1,800), Sprinklr (1,400), Warby Parker (1,400), Medallia (1,300), Zoom Video (1,300), Apttus (1,200), CrowdStrike (1,200), Rubrik (1,200), Anaplan (1,150), Stripe (1,100), Compass (1,000), Peloton (1,000) and Slack (1,000).

Job growth in successful companies can be substantial. Many of the immigrant-founded billion-dollar companies doubled or substantially increased the number of employees at the company over the past two years. WeWork went from 1,200 to 6,000 employees between 2016 and 2018, Stripe increased from 380 to 1,100 employees over the previous two years. Houzz went from 800 to 1,800 employees from 2016 to 2018, according to the report.

The research found 75 of the 91 companies, or 82%, had at least one immigrant helping the company grow and innovate by filling a key management or product development position. CEO, chief technology officer (CTO) and vice president of engineering are among the most common positions held by immigrants in these billion-dollar startup companies. However, executive branch policies have made it more difficult to gain approval to hire or retain high-skilled foreign nationals, including international students in science, technology, engineering and math (STEM) fields, it noted.

“New immigration restrictions would likely prevent many future cutting-edge companies from being established in the United States,” the study said. “The Trump administration has proposed rescinding an Obama administration rule that would have allowed entrepreneurs to be paroled into the country if they met certain criteria and has not proposed any measures to make it easier for immigrant entrepreneurs to establish themselves in the U.S. The administration has also enacted a series of measures – and proposed additional ones – that will make it more difficult for refugees and family-sponsored and employer-sponsored immigrants to come to America, the people who the research finds are sources of immigrant entrepreneurs.”

Earlier this year, Forbes reported that immigrant entrepreneurs create about a quarter of new businesses in the US, with the numbers varying widely by location, according to a National Bureau of Economic Research working paper.

Immigrants account for more than 40 percent of new businesses in California, New York and New Jersey and fewer than 5 percent in Idaho, North Dakota and some other places, according to Wellesley’s Sari Pekkala Kerr and Harvard Business School’s William R. Kerr, who analyzed U.S. Census Bureau data on firm ownership and the jobs those businesses generate.

The researchers, who used information from the 2007 and 2012 Survey of Business Owners and other data, also observed that new immigrant-owned firms in 2007 were more likely to survive to 2011 and to grow slightly faster than those with owners born in the United States, Forbes reported.

Some of the key findings of the report are perhaps ignored by the Trump administration who have targeted legal immigration numbers this year, and put into place several measures to curb and curtail work opportunities, including for H-4 visa holders with an employment authorization card.

The report said though immigrant-owned firms are somewhat smaller than ‘native-owned’ businesses in employee count, they have comparable sales per employee.

Based on the data they analyzed, Kerr and Kerr estimated new immigrant-owned firms generated 3 million to 4 million jobs, a figure that increases to 4 million to 5 million including second-generation immigrant family entrepreneurs.

“While these calculations are only approximate,” they wrote, “they give a sense to the ongoing contribution to the U.S. economy of immigrant entrepreneurship.”

Something the Trump Administration should consider when poring over legal immigration issues, in 2019. To ‘Make America Great Again’, America needs more immigrant entrepreneurs.

(Sujeet Rajan is the Executive Editor of Parikh Worldwide Media. Email him: sujeet@newsindiatimes.com Follow him on Twitter @SujeetRajan1)