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Indians lead in immigrant entrepreneurship in the US

Kauffman Foundation survey says immigrant entrepreneurship is on decline in the US first time in decades but number of companies co-founded by Indian immigrants is on a roll

Bibhu Ranjan Mishra  |  Bangalore 

In a time when the US has started to see a drop in the number of immigrant-founded technology companies, Indians and Chinese immigrant entrepreneurs have not followed the trend.

According to a recent study by Kauffman Foundation based on a sample survey, about 33.2% of the co-founders of engineering and technology companies incorporated in the US during the last six years were Indians. This is an increase of about 7%age points from what a similar study that examined immigrant-founded companies between 1995 and 2005, found.

Other than Indians, the number of technology companies in the US which were co-founded by Chinese has also gone up to 8.1% compared to 6.9 in 2005, it says.

The study “America’s New Immigrant Entrepreneurs: Then and Now” is based on a survey among a random sample of 1,882 companies of the total 107,819 engineering and technology companies founded in the last six years in the US. Of those companies, 456 had at least one foreign-born founder.

It found that the proportion of immigrant-founded companies in the country has slipped to 24.3% now from 25.3% in 2005. The drop is even more pronounced in Silicon Valley, where the%age of immigrant-founded start-ups declined from 52.4% to 43.9%.

“The exceptions to this downward trend were immigrants from India... Indians, in fact, founded more of the engineering and technology firms than immigrants born in the next nine immigrant-founder countries combined,” it said.

After India, immigrant founders in the US represented China (8.1%), the United Kingdom (6.3%), Canada (4.2%), Germany (3.9%), Israel (3.5%), Russia (2.4%) and Korea (2.2%). Australian and Dutch immigrants accounted for 2% of the technology companies founded in the US during the last 6 years, each.

It said Indian founders tended to establish businesses in California, New Jersey and Massachusetts whereas Chinese immigrant entrepreneurs showed a propensity to start companies in California and Maryland. California was the most favoured place of the immigrant entrepreneurs to start business except for Germans who most often chose Ohio.

The implications of the findings, conducted by researchers at Duke University, The Berkeley School of Information and Stanford University has now been encapsulated in a book “The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent”. The book has been authored by Vivek Wadhwa, director of research at the Center for Entrepreneurship and Research Commercialization at the Pratt School of Engineering, Duke University.

“The US risks losing a key growth engine just when the economy needs job creators more than ever,” said Wadhwa. “The US can reverse these trends with changes in policies and opportunities, if it acts swiftly. It is imperative that we create a start-up visa for these entrepreneurs and expand the number of green cards for skilled foreigners to work in these start-ups. Many immigrants would gladly remain in the United States to start and grow companies that will lead to jobs,” he added.

Immigrant founders employed about 560,000 workers and generated an estimated $63 billion in sales from 2006 to 2012 underscoring the continuing importance of the high-skilled immigrants to the US economy.

“For several years, anecdotal evidence has suggested that an unwelcoming immigration system and environment in the US which have created a ‘reverse brain drain.’ This report confirms it with data,” said Dane Stangler, director of Research and Policy at the Kauffman Foundation.
“To maintain a dynamic economy, the U.S. needs to embrace immigrant entrepreneurs,” he added.

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First Published: Tue, October 02 2012. 18:14 IST