By Jackie Luo, TCV Growth Partner - We have just celebrated Independence Day. In celebrating the holiday, I am feeling grateful for having immigrated to the United States, which gave me the opportunity to pursue many things in my career, including building a software company. Immigrants have played a pivotal role in the American economy. This was true in the early days of our nation’s history; it is also true today. Immigrants have brought their talent, creativity, tenacity, and cultural diversity to America, creating more jobs and building more wealth for the economy. If you look around: the Zoom meetings you depend on during the pandemic and beyond, the Tesla model 3 you are driving, the Nvidia chips powering everything from data centers to super computers for genetic editing, they are all created by companies founded by immigrants.
According to statistics released by the Kaufmann Foundation on Entrepreneurship:
Immigrants are almost twice as likely to start businesses than U.S.-born persons. The percentage of adults, both U.S.-born and immigrant, who became entrepreneurs in any given month during 2016, was 0.31%. During the same time period, the entrepreneurship rate for immigrants was .52%, about twice the rate of the U.S.-born (.26%).
Of all new entrepreneurs in 2016, 29.5% were immigrants. This representation is far above the immigrant community’s 13.2% of the U.S. population.
As of January 1, 2015, immigrants have founded 51 percent of the country’s startup companies worth $1 billion or more. About one-fourth of all technology and engineering companies started in the U.S. between 2006 and 2012 had at least one immigrant cofounder.
Why are immigrants more entrepreneurial? Some argue that immigrant entrepreneurs are naturally selected to be more risk taking. Choosing to immigrate to another country carry a lot of uncertainty and inherent adversity, and only those who favor risk taking tend to do so. Others argue that immigrant entrepreneurs have chosen the path because they face discrimination in employment and promotional opportunities in traditional corporate jobs. For sure, both are contributing factors.
But there is a third factor, which explains why some immigrant entrepreneurs have built fast-growing businesses that have disrupted traditional ways of life. A 2016 study published in Harvard Business Review highlighted how cross-cultural experience has contributed to the creation of new products and services. Cross-cultural experience not only helps bringing products and services from another country, but also “spurs creativity by combining diverse ideas, solutions, and problems in order to create something entirely new”, according to authors Peter Vandor and Nikolaus Franke. In other words, immigrant Entrepreneurs bring creativity and diversity to business ventures. These can foster disruptive changes, which propel many fast-growing businesses.
Eric Yuan, founder of Zoom Video Communications, attributed his idea for Zoom to his communication challenges living in China in the 1980s. When Eric Yuan was just a freshman in college, he used to take a ten-hour train ride to visit his girlfriend. He hated those rides and used to think of other ways of visiting her, maybe one that didn't involve traveling. "Those daydreams eventually became the basis for Zoom", Yuan says.
Fostering diversity and creativity is critical for new venture growth. Immigrant entrepreneurs bring a lot of that. Nationwide statistics speak the facts. Locally, in the most recent SCALEUP Maryland™ program, a four-month long program for entrepreneurs of post seed stage business to get support and advice, half of the companies had immigrant founders. All of these businesses are in the engineering and bio-science field, with innovative products that could have large scale impact. As an immigrant entrepreneur myself, I am cheering for these new businesses and will continue to support them in anyway I can.
SCALEUP Maryland™ program is produced and managed by TCV Growth Partners and hosted by bwtech@UMBC. If you are interested in attending the next program, please contact Doug Zeisel, Managing Partner