Immigrant entrepreneurs in USA

America has a long story of being built mostly by its immigrants from all around the globe. This started when the discoverer Christopher Columbus officially set foot on the new land in 1492. Immigrants eagerly came to America with a dream of changing their lives, hoping to discover something new and having a fresh start. Why is this land still so attractive to immigrants, why is it considered the land of opportunities?

The numbers do not lie. According to the American immigration Council  report on Immigrants in the United States published in 2021, 14 percent of the residents were born outside of the country in 2019, while half of them are naturalised U.S. citizens. As for the country of origin of the immigrants, the study says the following are the top ones: Mexico (24 per cent), India (6 percent), China (5 percent), the Philippines (4.5 per cent), and El Salvador (3 percent). What the article highlights and which may come as a surprise, is that the vast majority of immigrants claim to speak English well or very well. This should not be shocking to anyone, as the US has become known as “a melting pot” already in the 20th century, where most of the population consisted of different cultures that blended together as one.

How does immigration affect the development of the United States?

As more and more people come to the United States, its economy suffers an impact, a positive one. Economy is growing. And why?

Workers are always needed in an economy that thrives, but there are also many other aspects that need to be looked at while considering the contributions that immigrants make. First of all, an increase of immigration stimulates competitiveness, which leads to new discoveries, new companies being created, new revelations. Let’s take as an example of educated immigrants holding higher degrees. At the beginning, only a small percentage might face language challenges, which means that very technical positions may be a better fit for them. This creates competition to native-born Americans, as there is an increase of the labour force in their occupation. This causes a tendency to intend to gain more skills, to take up more training courses in order to be more attractive on the labour market. 

The situation is similar, among low-skilled immigrants who come to America and need to make the ends meet. They take manual jobs just to get by, often in the manufactory, construction or agriculture industry. Time goes by and they learn English, so with the ability to communicate they look for better paid jobs where they can use their skills. 

Another aspect to consider when speaking about immigration is the increase in consumer demand. Immigrants have a higher need of buying, as they come with one language, they acquire homes to live in, cars to commute, and multiple goods and services, which means that they help to expand domestic economic demand. As a result, more workforce is needed for shops, restaurants, to sell clothes, food and build houses. The more demand there is, the more supply is needed. 

How many start-ups are founded by immigrant entrepreneurs?

As described above, there are multiple types of immigrants. Some dream of simply having a safe and comfortable life for them and their families, in a country that promises freedom and tolerance.

There are also those who come willing to contribute to science and research, while others see America as a great land of opportunities and want to take the risk of starting businesses, to create new technologies, and to thrive in one of the most stable economies of the world. Let’s look at the numbers now. The article on Immigrant Entrepreneurs and U.S. billion – dollar companies by Stuart Anderson from National Foundation for American Policy (NFAP) states that the “immigrants have started more than half (319 of 582, or 55%) of America’s start-up companies valued at $1 billion or more (…)”. 

According to NFAP analysis “(…) nearly two-thirds (64%) of U.S. billion-dollar companies (called unicorns) were founded or cofounded by immigrants or the children of immigrants. Almost 80% of America’s unicorn companies (privately-held, billion-dollar companies) have an immigrant founder or an immigrant in a key leadership role, such as CEO or vice president of engineering. The research shows the importance of immigrants in cutting-edge companies and the U.S. economy at a time when U.S. immigration policies have pushed talent to other countries.”¹ 

What’s more, according to the NFAP research “cutting-edge startups are crucial to an economy because innovation is often expressed through entrepreneurship. The best ideas will never be applied or perfected without people willing to take a chance on those ideas, and billion dollar companies are among America’s most innovative businesses.”

The article in the New American Economy also notices the importance of the immigrants as entrepreneurs especially in relation to the country’s economy. The immigrant entrepreneurs are more likely to help. The article highlights the importance of the jobs created by foreign-born entrepreneurs, which was crucial during the recovery from the Great Recession. Between 2007 and 2011, immigrant entrepreneurs founded a large share of new businesses across the country and in several key states. The study shows that 1 in 10 people employed at a privately owned U.S. company worked at an immigrant-owned firm in 2010. What about the industries that are the most popular among them? The New American Economy studies indicate that in 2007-20011 these sectors were Construction (31.8 per cent), Transportation and Utilities (29.4), Retail Trade (29.1), Healthcare and Social Assistance & Educational Services (28.7), Professional Business Services, (25.4) and Leisure and hospitality (23.9).

What benefits do immigrants bring to the US?

Needless to say, more jobs, growth in workforce, more opportunities also for the rest of the population are generated thanks to immigrants. The numerous start-ups they found not only add to America, but to the global economy as a whole. Immigrant entrepreneurs spur overall economic growth. Many newcomers do not limit themselves to the US market, they want to go big and expand to foreign markets. Immigrants start new companies, small businesses and those companies are often passed on to their families making more revenue. On the other hand, the money that is earned is also spent. According to the research on immigrant entrepreneurs, prepared by the American Immigration Council, shows that as consumers they add over a trillion dollars to the U.S. economy. The numbers shown in the article say about $1.3 trillion in collective spending power (after-tax income) in 2019. While 3.2 million immigrant entrepreneurs consisting of 22 per cent of all self-employed U.S. residents in 2019 generated $86.3 billion in business income. That means they also add to huge numbers paid in taxes. The fact sheet on Immigrants in the United States reports billions of dollars in taxes. To give an example from 2019, immigrant-led households across the United States contributed a total of $330.7 billion in federal taxes and $161.7 billion in combined state and local taxes in 2019. 

Other benefits brought to the US by immigrants are knowledge and scientific explorations. More and more immigrants who are highly educated choose the US to do their research as there are appropriate facilities and knowledge that helps them make ground-breaking discoveries. The article from National Foundation for American Policy (NFAP) on Immigrants and Nobel prizes: 1901 – 2021 says: “(…)immigrants have been awarded 38%, or 40 of 104, of the Nobel Prizes won by Americans in chemistry, medicine and physics since 2000, according to an analysis by the National Foundation for American Policy (NFAP).1 In 2021, three of the four U.S. recipients of Nobel Prizes in medicine, chemistry and physics were immigrants to the United States. Between 1901 and 2021, immigrants have been awarded 35%, or 109 of 311, of the Nobel Prizes won by Americans in chemistry, medicine and physics.”

Myths about immigrants in the US?

There are many myths about immigrants. It is human nature for some to be afraid of the unknown. That is why people create myths and generalisations to organise their world so that they can feel more comfortable in it. However, the myths can be very untrue and unrealistic. The most common myth is that many immigrants come to the US to take positions meant for Americans, and that some others do not want to work. In fact, the majority of them come to the US and need to take care of themselves to make ends meet, pay the bills and support their families. As mentioned before, the studies prepared by a fact sheet on Immigrants in the United States report billions of dollars in taxes. In other words, the taxes they pay cover the costs of healthcare and public education. And also, they are more likely to create their own businesses. The study on Immigrant Entrepreneurs and U.S. billion – dollar companies, NFAP by Stuart Anderson claims more than half (55%) of America’s start-up companies valued at $1 billion or more have at least one immigrant founder. The rates of entrepreneurship are high amongst them. The article also identifies that the average of 859 employees per company (the majority of the jobs are in the United States) were created by immigrant-founded U.S. billion-dollar companies. That proved that immigrants do not take jobs from Americans, as some people claim. It is actually the opposite, businesses are often created by them which means immigrants create more opportunities for everyone. What is more, by spending the money on local products, simply by consuming their salaries, they help to create a demand and as a result they help to create new positions. That actually declines the unemployment rate for all Americans.

Are immigrants good entrepreneurs?

The answer is simple- yes, yes and yes. That has been proved in numerous studies on immigrant business owners already. They bring a lot to the table when they come with their experiences and fresh view on the economy, so they can more easily find a niche on what is missing on the market and create businesses. To succeed, they need to find an appealing offer to the customers to start a company. As they come from different countries, they do see a need to internationalise fast and they do it successfully. Immigrants tend to connect markets easier. They have more tolerance for risk as they have already taken one to come to a new country to improve their lives. Business creation is just another step for them. They are more likely to start businesses having not a lot to lose. Also, new immigrant entrepreneurs have greater motivation in many cases, they want to follow an American dream. Immigrating to a brand new country and starting from scratch can be the best trigger to make money and contribute as the majority do not come from wealthy families. What is more, they do not take things for granted as opposed to citizens. They do not know the new market, so they are more open to learning about it, make use of this knowledge and start a new business.

There are many accomplishments of immigrant entrepreneurs and some inspiring stories that prove they are good entrepreneurs, and they are not just small business owners. Stuart Anderson describes the story of Guillermo Rauch in his article on Immigrant Entrepreneurs and U.S. billion – dollar companies (NFAP). Guillermo is a foreign-born business owner from Argentina who achieved great success with his development platform Vercel. It has 400 employees and a valuation of $2.5 billion. Things were not that easy for him in the beginning as an immigrant coming from Argentina when he had to build his network in Silicon Valley. “Originally from Buenos Aires, Guillermo learned English by reading software manuals. When he was eleven, he taught himself web development so he could take on remote Javascript projects as a contractor. That work eventually brought him to San Francisco, and he found the city was a perfect environment for his early entrepreneurial drive” as per Tyson Clark. Tyson also writes that Guillermo made a lot of connections with immigrant entrepreneurs who showed him it was possible.

Conclusion

Clearly, immigrants revitalise the USA. They need America as much as America needs them as  business owners. They stimulate economic growth and create the demand for more jobs. Thanks to that, all can benefit from it. After all, isn’t an American population made of descendants of immigrants? Isn’t this why America grew so strong being built on immigrant communities?

Sources:

¹ “Oh, Canada! How Outdated U.S. Immigration Policies Push Top Talent to Other Countries,” Hearing before the House Subcommittee on Immigration and Citizenship, July 13, 2021.