Immigration

55% of America's Top Startups Were Founded by Immigrants. Why Won't Congress Let in More?

Without a tenable visa pathway, immigrant entrepreneurs will look to greener pastures—and the American economy will be worse for it.

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Immigrants are 80 percent more likely than native-born Americans to found a firm, according to a study released this May by researchers from the Massachusetts Institute of Technology. But more than that, a report released this week by the National Foundation for American Policy (NFAP) indicates that immigrants are disproportionately responsible for starting high-value companies.

According to the NFAP, a nonprofit that researches trade and immigration, immigrants have started 319 of 582, or 55 percent, of America's privately-held startups valued at $1 billion or more. Over two-thirds of the 582 companies "were founded or cofounded by immigrants or the children of immigrants," notes the NFAP. For comparison, approximately 14 percent of America's population is foreign-born.

Together, the immigrant-founded companies are valued at $1.2 trillion and employ 859 people on average. Elon Musk's SpaceX has the largest valuation at $125 billion, employing 12,000 workers; Gopuff, a food delivery service valued at $15 billion, has 15,000 employees; Stripe, a payment platform valued at $95 billion, employs 7,000; and Instacart, a grocery delivery service valued at $39 billion, has 3,000 workers.

These findings are notable, the NFAP points out, since "there is generally no reliable way under U.S. immigration law for foreign nationals to start a business and remain in the country after founding a company." A large share of the immigrant startup founders came to the country as refugees, on family-sponsored green cards, or through employment-based pathways for other companies.

"Our employment-based pathways for immigrant entrepreneurship are so poorly designed, migrant businesses are often associated with non–employment based pathways," points out Sam Peak, an immigration policy analyst at Americans for Prosperity. Peak notes that refugees "have the highest rates of entrepreneurship of any other immigrant group," and family-based migration, "especially among siblings, is also strongly tied to new business formation."

Lawmakers have introduced a number of measures this year meant to bring more entrepreneurial and highly educated immigrants to the United States, but many of these have been included in—and eventually stripped from—larger bills. The House-passed America COMPETES Act contained provisions that would've established nonimmigrant visa programs for "entrepreneurs with an ownership interest in a start-up entity" and "essential employees of a start-up entity," but they didn't make it into the narrower Senate competition bill. More recently, Rep. Zoe Lofgren (D–Calif.) introduced an amendment to the National Defense Authorization Act (NDAA) that would've streamlined green cards for immigrants with doctoral degrees in STEM fields. But it wasn't included in the House-passed NDAA. Prospects for meaningful immigration reform now look slim, especially with the midterms coming up.

Entrepreneurial immigrants, many of whom could contribute to the American economy in huge ways, largely don't have intuitive ways to come to the United States. Lawmakers have been proposing a startup visa since 2009 to no real avail, and though the Biden administration rebooted an International Entrepreneur Parole program, recipients are only allowed to stay in the U.S. for up to five years. (What's more, the immigration and business law firm Scott Legal P.C. reported that the program appeared to be stalled as of April this year.) "Other pathways for highly skilled immigrants," notes the Progressive Policy Institute, "including the O-1, EB-1, and EB-2 visas, rely on a strong record of prior accomplishments and are not a good fit for entrepreneurs whose potential accomplishments lie in the future."

"Although some entrepreneurs can earn permanent residency if the government determines that the business [is] in the national interest, most firms will not meet this particular requirement," says Peak. "By and large, founders of successful businesses are unable to use their enterprise to become permanent residents." Department of Labor regulations also bar "most entrepreneurs from being sponsored through their own business," adding yet another layer of bureaucracy.

Without a pathway to permanent residency or citizenship in the U.S., entrepreneurial people may simply look to migrate elsewhere. Immigrants have to clear much higher barriers than native-born Americans in order to make their entrepreneurial dreams a reality. Experience tells us that they will flourish if given the opportunity—but unless their visa prospects improve, they'll look to greener pastures, and the American economy will be worse for it.