I hosted a panel recently on the impact of the elections on startup formation and growth. Panelists included VCs Jamie McGurk from Coatue Management and Ronjon Nag from the R42 Group as well as Ben Schrag, a Senior Program Director from the National Science Foundation. I had prepped for a discussion around 3 major policies: tax policy, global trade policy, and funding for fundamental research. However, from our discussions emerged the one policy that all panelists agreed could have the most substantial impact on startup formation – immigration policy.
Panelists believed that immigration policy affects startup formation. Historically, many storied companies have been built by immigrants – from Google to Tesla, and from eBay to Yahoo.
Although this has been anecdotally discussed, I was delighted to find a quantitative discussion in a recently published study by one of my former Professors at MIT Sloan – Prof. Pierre Azoulay. Published in September 2020, this study suggests that immigrants create jobs more than they take jobs. The study also cites other sources and I quote “immigrants are disproportionately likely to account for U.S. patents and hold STEM degrees”, “Immigrants start firms at higher rates than native-born individuals in several countries, including the U.S.”
The specific findings in this paper suggest that:
1) there tend to be more immigrant-founded firms, per immigrant in the population for all sizes of firms
2) wages are slightly higher in immigrant founded firms.
3) And, a finding that is close to my heart: firms with an immigrant founder are 35% more likely to have a patent than firms with no immigrant founders.
4) firms founded by immigrants are more likely to have patents for all firm sizes and especially at larger sizes
Source: Azoulay, Pierre et al., Immigration and Entrepreneurship in the United States. September 2020.
This is meaningful data. I tend to stay away from such discussions in most cases. I am an immigrant myself, and so I find it difficult to make the case for…myself, absent data. I am quite delighted to be armed with this data to make the case today.
If the incoming administration is listening, we suggest they focus on immigration policy to promote economic growth and maintain technological lead.