Hardik Desai conceived a startup while he was studying for an MBA at the Fisher College of Business at Ohio State University (OSU) in 2008. Based on research that the university was conducting, Desai came up with a new way to diagnose a group of diseases including painful bladder syndrome and irritable bowel syndrome. He and his team wrote a business plan for a company they named IR Diagnostyx. The plan won third place in a 2009 business school competition at OSU’s Center for Entrepreneurship. The panel of VCs and entrepreneurs provided Hardik strong encouragement to start this company.
But the U.S. government wouldn’t provide Hardik with a visa to start the company. Hardik had no difficulty in getting an H1-B visa that allowed him to work, but immigration rules did not allow him to work for a company that he started. So, he abandoned his entrepreneurial dreams.
Vivek Wadhwa is Vice President of Innovation and Research at Singularity University and Arthur & Toni Rembe Rock Center for Corporate Governance at Stanford University. His other academic appointments include Harvard, Duke and Emory Universities as well as the University of California Berkeley.
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I tell Desai’s and others’ stories in my book “The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent.” In the book, and on my team’s Web site, www.immigrantexodus.com, we have documented dozens of stories of entrepreneurs like Hardik who could be boosting U.S. innovation and creating the jobs our country desperately needs.
Indeed, a research project I recently completed at Duke University with UC-Berkeley School of Information Dean AnnaLee Saxenian and Stanford Law School Professor F. Daniel Siciliano shows a depressing trend: The tide of immigrant entrepreneurship, which was sweeping the U.S. and fueling its tech boom, has peaked and may be receding.
Previous research projects I led had documented that, from 1995 to 2005, 25.3 percent of all technology and engineering startups nationwide and 52.4 percent of those in Silicon Valley were founded by immigrants. More than a decade earlier, from 1980 to 1998, Saxenian had documented that the key immigrant-founding groups, Indian and Chinese, had founded 24 percent of the Valley’s startups. This means there was a very positive trend of growing immigrant entrepreneurship.
Our earlier research had documented that, on average, immigrant founders started their companies 13 years after entering the U.S., and they typically came here to study or work. In the late 90s and early 2000s there was an influx of skilled workers in response to the Y2K crisis and a booming tech economy. The U.S. boosted the number of H-1B visas issued from 65,000 to about 200,000 for several years. Given this, the United States should have a greater increase in immigrant entrepreneurship. But this hasn’t happened.
In a paper titled “America’s New Immigrant Entrepreneurs: Then and Now”, which the Kauffman Foundation released Tuesday, we report that the proportion of immigrant-founded companies nationwide has dropped from 25.3 to 24.3 percent. In Silicon Valley, this is down from 52.4 percent to 43.9 percent. The proportion of companies founded by Indians has increased from 26 percent of the immigrant founding pool in 2005 to 33.2 percent and Chinese from 6.9 percent to 8.1 percent. Missing are the Taiwanese—their proportion dropped from 5.8 percent to 1.1 percent. This is probably because, as Taiwan became a developed nation and improved its universities, fewer Taiwanese have been coming to the U.S. to study and work.