VC, Partner & Board Member at Amadeo Globala New York-based investment firm that focuses on public and private companies.
As an immigrant entrepreneur, I believe that international founders have already proven their worth to the US economy. According to an recent research by the National Foundation for American Policy (NFAP), nearly 80% of America’s unicorn, multibillion-dollar corporations have foreign-born co-founders, CEOs, or VPs.
But immigrant entrepreneurs have even more to offer when the market is tight. As fears of a recession mount, venture capitalists (VCs) are adapting their strategies and pushing their limits. More funds than ever claim to be looking for foreign-born founders as solid investments. What is their reasoning?
1. Foreign-born persons are resilient.
Immigrants have the courage to leave their friends, family and everything they know behind to start a new life. Starting over in an unfamiliar place requires determination, ingenuity and ingenuity. If you want to succeed, you have to adapt your skills.
This principle also applies to founders of immigrant tech startups. Many of them had economic hardships of their own or grew up with parents who did—and who taught them to approach their situation practically. Therefore, immigrants tend to adapt more quickly and easily to changing circumstances.
After two recent economic crises — the Great Recession of 2007-2009 and the Covid-19 pandemic — employment for foreign-born people recovered faster than for their peers born in the United States. Interestingly, according to the Labor Statistics Bureauemployment for immigrants continued to rise faster than among Americans. Some immigrant policies have historically led to fluctuations in the proportion of foreign-born people employed in the corporate and financial sectors; however, the number of immigrant investors has increased 1.5 times in the last 19 years.
2. Start-ups founded by immigrants are the driving force behind the US economy.
International entrepreneurs come from different cultures and are exposed to different values, which often allows them to think outside the box. This helps them identify new opportunities that may not be apparent to a more conventional observer. It’s also one of the reasons immigrant startups are so common in the fastest-growing sectors of the economy.
At least 25 AI-focused US billion-dollar companies have immigrant founders, according to the NAFP. These solutions range from US national defense software to financial crime fighting tools. Innovative immigrant-founded companies make up an impressive roster of companies in areas critical to the U.S. economy, including cybersecurity, defense, supply chain, finance, and healthcare.
3. Immigrants create new opportunities.
The Great Resignation will also pass and the US economy will eventually have to create more jobs. By starting companies, international founders create these new opportunities for others as well. According to an 2020 report According to the National Bureau of Economic Research (NBER), immigrant companies have created 42% more jobs than native companies. The number of jobs in billion-dollar US firms founded by immigrants averages 859 employees per company, according to NFAP.
For US companies, hiring highly skilled immigrants can bring international knowledge, unique perspectives and greater diversity in the workplace. As a result, American companies could gain more competitive advantages in the global arena. But it is important to help foreign professionals to adapt to the corporate culture.
For example, unwritten organizational rules and policies can be difficult to understand, and immigrants can feel vulnerable and unwilling to ask for help or communicate their problems. One way to address these issues is to integrate diversity management practices, such as cultural competency training for supervisors. Another way to help new foreign-born employees adapt is to build teams of people from different backgrounds.
Being an immigrant myself, I understand why international founders are drawn to the US in such large numbers. It’s not just about the market; it is also about equal opportunities and fair and transparent business.
As an entrepreneur you have to “dance with uncertainty” every day. This is something many immigrants have learned in their travels, and it is something that we as investors need to learn to embrace.
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