Indians founded most high-tech startups in US

By Arun Kumar (IANS) | Published on Wed, Oct 3 2012 10:09 IST | 3 Views | Add comment
Washington, Oct 3

High-tech startups founded by immigrants from India have grown phenomenally in US amidst a decline in immigrant entrepreneurs considered a critical source of fuel for the US economy, according to a new study.

The proportion of immigrant-founded companies in the US has slipped from 25.3 percent to 24.3 percent since 2005, according "America's New Immigrant Entrepreneurs: Then and Now", a Kauffman Foundation survey published Tuesday.

The drop is even more pronounced in Silicon Valley, where the percentage of immigrant-founded startups declined from 52.4 percent to 43.9 percent.

The exceptions to this downward trend were immigrants from India, the study noted. Although founders in the study hailed from more than 60 countries, 33.2 percent of them were Indian, up from about 7 percent in 2005.

Indians, in fact, founded more of the engineering and technology firms than immigrants born in the next nine immigrant-founder countries combined.

After India, immigrant founders represented China (8.1 percent), the United Kingdom (6.3 percent), Canada (4.2 percent), Germany (3.9 percent), Israel (3.5 percent), Russia (2.4 percent), Korea (2.2 percent), Australia (2.0 percent) and the Netherlands (2.0 percent).

While immigrant entrepreneurship has stagnated, the rates of Indian and Chinese startups have increased, the survey found.

In 2005, Indians and Chinese entrepreneurs accounted for 26.0 percent and 6.9 percent of immigrant-founded companies, respectively.

Immigrant-founded firms were most likely to be located in traditional immigration gateway states: California (31 percent), Massachusetts (9 percent), Texas (6 percent), Florida (6 percent), New York (5 percent) and New Jersey (5 percent).

Indian founders tended to establish businesses in California, New Jersey and Massachusetts, and Chinese founders showed a propensity to start companies in California and Maryland.

"For several years, anecdotal evidence has suggested that an unwelcoming immigration system and environment in the US has created a 'reverse brain drain.' This report confirms it with data," said Dane Stangler, director of Research and Policy at the Kauffman Foundation.

"To maintain a dynamic economy, the US needs to embrace immigrant entrepreneurs."

"The US risks losing a key growth engine just when the economy needs job creators more than ever," said one of the study's authors, Vivek Wadhwa, director of research at the Centre for Entrepreneurship and Research Commercialisation at the Pratt School of Engineering, Duke University.

(Arun Kumar can be contacted at arun.kumar@ians.in)

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