As an immigrant entrepreneur, I believe international founders have already proven their worth to the U.S. economy. According to a recent study by the National Foundation for American Policy (NFAP), nearly 80% of America’s unicorn, billion-dollar companies have foreign-born cofounders, CEOs or VPs.
But immigrant entrepreneurs have even more to offer when the market is tight. As fears of recession grow, venture capitalists (VCs) are adjusting strategies and pushing their limits. More funds than ever claim they are looking to foreign-born founders as sound investments. What’s their reasoning?
- Foreign-born individuals are resilient.
Immigrants have the courage to leave their friends, family and everything they know behind to start a new life from scratch. Starting over in an unfamiliar place takes determination, resourcefulness and ingenuity. If you want to succeed, you’ll need to flex your skills.
This principle holds true for immigrant tech startup founders, too. Many of them either experienced economic hardship themselves or grew up with parents who did—and who taught them to approach their situation practically. That’s why immigrants tend to adapt faster and more readily to changing circumstances.
After two recent economic crises—The Great Recession of 2007-2009 and the Covid-19 pandemic—employment for foreign-born people bounced back faster than it did for their peers born stateside. Interestingly, according to the Bureau of Labor Statistics, the employment for immigrants continued rising at a higher speed than it did among Americans. Some policies towards immigrants in the past led to fluctuations in the share of foreign-born people employed in business and financial operations; however, the number of immigrant investors has increased 1.5 times over the past 19 years.
- Immigrant-founded startups drive the U.S. economy.
International entrepreneurs come from different cultures and have been exposed to different values, so they often can think outside the box. This helps them identify new opportunities that might not be evident to a more conventional observer. It’s also one reason why immigrant-founded startups appear so often in the economy’s fastest-growing sectors.
At least 25 AI-focused U.S. billion-dollar companies have immigrant founders, according to the NAFP. These solutions range from software for U.S. national defense to tools combating financial crime. Innovative immigrant-founded companies make up an impressive selection of those in areas crucial to the U.S. economy, including cybersecurity, defense, supply chain, finance and healthcare.
- Immigrants create new opportunities.
The Great Resignation, too, shall pass, and the U.S. economy will eventually need to create more jobs. By launching businesses, international founders also create these new opportunities for others. According to a 2020 report by the National Bureau of Economic Research (NBER), immigrant-founded firms have created 42% more jobs than native-founded firms. The number of jobs in immigrant-founded U.S. billion-dollar companies rounds out to an average of 859 employees per company, according to NFAP.
For U.S. businesses, hiring highly-skilled immigrants can bring in international knowledge, unique perspectives and improved diversity in the workplace. American companies could get more competitive advantages in the global arena as a result. But it’s important to help foreign professionals adapt to the company culture.
For example, unwritten organizational rules and policies may be difficult to understand, and immigrants may feel vulnerable and unwilling to ask for help or communicate their challenges. One way you can approach these issues is by integrating diversity management practices, such as cultural competency training for supervisors. Another way to help new foreign-born workers adapt is by building teams that include people of different backgrounds.
Being an immigrant myself, I understand why international founders are drawn to the U.S. in such great numbers. It’s not just about the market; it’s also about equal opportunities and fair and transparent business practices.
As an entrepreneur, you need to “dance with uncertainty” every day. This is something many immigrants have learned on their journeys, and it’s something we should learn to embrace as investors.
By Katya Kohen, VC, Partner & Board Member at Amadeo Global, a New York-based investment firm focusing on public and private companies.
First published on Forbes