Friday, January 05, 2007

Immigrants Rule Tech Startups

SAN FRANCISCO — Foreign-born entrepreneurs were behind 1 in 4 technology start-ups in the United States over the last decade, according to a study to be published today.

A team of researchers at Duke University estimated 25.3% of technology and engineering companies started between 1995 and 2005 had founders, chief executives, presidents or chief technology officers who were born outside the U.S. That's striking, given that just 11.7% of the U.S. population is foreign-born, according to U.S. census data.

Immigrant entrepreneurs' companies employed 450,000 workers and generated $52 billion in sales in 2005, the survey says.

Their contributions to corporate coffers, employment and U.S. competitiveness in the global technology sector offer a counterpoint to the recent political debate over immigration and the economy, which largely centers on unskilled, illegal workers in low-wage jobs.

"It's one thing if your gardener gets deported," said the project's lead researcher, Vivek Wadhwa. "But if these entrepreneurs leave, we're really denting our intellectual property creation."

Wadhwa, a Delhi, India-born founder of two tech start-ups in North Carolina's Research Triangle, is Duke's executive in residence. "America's advantage is we can get the best and brightest from around the world," he said. "Let's make the most of it."

The study comes nearly eight years after an influential report from UC Berkeley on the effect of foreign-born entrepreneurs.

AnnaLee Saxenian, now dean of the School of Information at UC Berkeley, estimated that immigrants founded about 25% of Silicon Valley tech companies in 1999. The Duke study found the percentage had more than doubled to 52% in 2005.

California led the nation, with foreign-born entrepreneurs founding 39% of start-ups, compared with 25% of the state's population.

In New Jersey, 38% of tech start-ups were founded by immigrants, followed by Michigan (33%), Georgia (30%), Virginia (29%) and Massachusetts (29%).

Saxenian, also coauthor of the new study, said the research cast new light on the immigration debate, debunking the notion that immigrants who come to the U.S. take jobs from Americans.

"The advantage of entrepreneurs is that they're generally creating new opportunities and new wealth that didn't even exist before them," Saxenian said. "Just by leaving your home country, you're taking a risk, and that means you're willing to take risks in business."

Researchers polled executives at 2,054 tech start-ups, each with more than $1 million in revenue and at least 20 employees. They extrapolated the data to more than 28,000 engineering and technology start-ups founded nationwide between 1995 and 2005.

Immigrants were most likely to start companies in the semiconductor, communications and software niches. They were least likely to enter the defense sector.

One of the study's biggest surprises was the extent to which Indians led the entrepreneurial pack. Of an estimated 7,300 U.S. tech start-ups launched by immigrants, 26% have Indian founders, CEOs, presidents or head researchers, the study found.

Indian immigrants founded more tech start-ups from 1995 to 2005 than people from the four next biggest sources — Britain, China, Taiwan and Japan — combined.

Indians even emerged as the dominant entrepreneurs in Silicon Valley. In Saxenian's 1999 study, Chinese immigrants dominated.

Rosen Sharma, 34, leads Solidcore Systems Inc., a company that employs 150 people in offices in the U.S., Britain, Canada and India. He came to America from India in 1993 and has since founded six companies.

"People who come from India are laser-focused on technology. They come here and they learn to tell a story and paint a vision," said Sharma, who has a green card and is raising his daughters as U.S. citizens. "Once you have those two things, you're off to the races."

In 1998, foreign-born inventors living in the United States without citizenship accounted for 7.3% of patent filings to the Patent Cooperation Treaty of the Geneva-based World Intellectual Property Organization, which coordinates filing of patents that can be enforced worldwide. By 2006, the percentage had surged to 24.2%.

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