Silicon Valley's H1B's and Immigrant Entrepreneurs

Monday, September 22, 2008

SpaceX is the third company founded by Mr. Musk. Prior to SpaceX, he co-founded PayPal, the world's leading electronic payment system, and served as the company's chairman and CEO. PayPal has over twenty million customers in 38 countries, processes several billion dollars per year and went public on the NASDAQ under PYPL in early 2002. Mr. Musk was the largest shareholder of PayPal until the company was acquired by eBay for $1.5 billion in October 2002.

Before PayPal, Mr. Musk co-founded Zip2 Corporation in 1995, a leading provider of enterprise software and services to the media industry, with investments from The New York Times Company, Knight-Ridder, MDV, Softbank and the Hearst Corporation. He served as Chairman, CEO and Chief Technology Officer and in March 1999 sold Zip2 to Compaq for $307 million in an all cash transaction.

Mr. Musk's early experience extends across a spectrum of advanced technology industries, from high energy density ultra-capacitors at Pinnacle Research to software development at Rocket Science and Microsoft. He has a physics degree from the University of Pennsylvania, a business degree from Wharton and originally came out to California to pursue graduate studies in high energy density capacitor physics & materials science at Stanford.

NOTES, QUOTES, AND RESEARCH INFORMATIONS

I think back to my days when I joined IBM. I could speak English reasonably well and so was very well accepted by and large. But I never thought of myself as the guy who was going to rise up the chain and finally end up being president of the IBM Corporation. I didn’t look like somebody who could be president of IBM and I never even thought that’s what I wanted to do. I just at some point left and said, “Fine, I’ll start my own company and that’s the way I’ll do it.” I think there are a lot of Indians who feel that way." Umang Gupta, President, Pan IIT

Note to Washington: About half of VC-backed company founders are immigrants by Mark Heesen

For those who live and work in Silicon Valley, the positive impact of foreign nationals on the region is obvious. The area has long been a magnet for the best and brightest students, entrepreneurs and professionals from all over the world to thrive. Just look at some of the companies that were founded by these individuals and you start to get a sense as to their value • to our lives and to our economy.

The venture capital community has long understood the importance of making sure the cream of crop continues to come to the US to build businesses. In the past, based on anecdotes, we had estimated that at least half of our member’s portfolio companies had at least one immigrant founder. But no one ever made a serious attempt to quantify it until now.

Today the National Venture Capital Association (NVCA) is releasing a study that reveals some astounding numbers regarding the national prevalence and the contributions of immigrant entrepreneurs to our economic health • and highlights again the urgent need to fix our immigration policies before the US loses its global innovation leadership.

NVCA has been involved for years in the effort to reform H1-B visa and green card policies. But given the increased rancor of the immigration debate this year, the focus on illegal immigration, and the strong sense within the venture community that these issues impact US competitiveness we decided we needed hard data to really make the case. The study speaks for itself in terms of the dramatic impact immigrant entrepreneurs have had on the US economy.

In terms of positive impact, the numbers are impressive:

â€¢ Companies founded by immigrants and initially backed by venture capital account for more than $500 billion of total U.S. market capitalization.

â€¢ Over the past 15 years, in fact, immigrants have started 25 percent of all the venture-backed companies that have gone public.

â€¢ Immigrant-founded, venture-backed public companies today employ an estimated 220,000 people in the United States and over 400,000 people globally

Quality may be more important than quantity, however, as these companies • concentrated largely in cutting edge sectors • tend to generate white collar jobs that pay high salaries, which in turn help to create wealth and raise living standards.

We also looked to test the premise that half of the current venture-backed companies had at least one immigrant founder. We surveyed these companies and garnered more than 340 responses from around the country. It appears our intuition was in the ballpark. Of those responding to the survey, nearly half (47 percent) of the founders of private companies were immigrants, and almost two-thirds (66 percent) of the immigrant have already started or intend to start more companies in the United States.

While the successes have been great for our industry and the US economy, they also suggest an alarming reality: The US is essentially stunting its own growth by not reforming its immigration system with the proper urgency.

Responses to the NVCA survey bear this out:

â€¢ More than 2/3 of immigrant entrepreneurs agreed with the notion that U.S. immigration policy has made it more difficult than in the past to start a business in America.

â€¢ Sixty-six percent of respondents who use H-1B visas indicated that “current U.S. immigration laws affecting skilled professionals harm American competitiveness.”

â€¢ Among companies who use H-1B visas, nearly 40 percent said the lack of H-1B visas •has “negatively impacted [their] company when competing against other firms globally.”

â€¢ One-third of the respondents indicated that the lack of H-1B visas had influenced their firm’s decision to place more personnel in facilities abroad.

Fortunately, it’s not too late. According to the research, 95 percent of the immigrant founders in private companies would still start their companies in the United States if given the choice today. By raising the H-1B cap, among other measures, we can ensure that America continues to draw the world’s best and brightest minds • and thus share in the wealth that they create as crucial participants in the US innovation economy.

Monday, September 22, 2008

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NOTES, QUOTES, AND RESEARCH INFORMATIONS

Note to Washington: About half of VC-backed company founders are immigrants by Mark Heesen

America's Unrecognized Assets