Immigrants innovate at higher rate than U.S. citizens, study shows

Image: A line forms near the entrance of the Immigration
An immigration office in Miami in 2001. A new study says immigrant-owned firms in the tech industry had higher rates of innovation than firms owned by U.S. citizens. Copyright Rhona Wise AFP - Getty Images file
By Ben Kesslen and Jason Abbruzzese with NBC News Tech and Science News
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Despite the study's findings, immigrant entrepreneurs still face a slew of visa challenges that make it difficult for them to start and build companies.


When Sara Itucas was a young girl, she watched her family navigate the perilous and notoriously bureaucratic U.S. immigration system.

Itucas and her family came to the U.S. from the Philippines when she was 5, and from a young age she saw how convoluted the immigration process was.

"Watching my mom go through the immigration process was really stressful for our whole family," Itucas said. "It was so complicated, and we didn't speak English that well."

When Itucas grew up, she decided to do something to make the process easier. She and Todd Haines founded LegalPad, a startup meant to simplify the visa application process.

"I wanted to give other people that opportunity I had," Itucas told NBC News. "LegalPad aims to simplify the process and educate people so they are more empowered to help themselves."

Itucas is far from the only immigrant founder of a venture capital-backed startup in the U.S. A 2016 reportby the National Foundation for American Policy said that immigrants had founded more than half of America's startups valued at or over $1 billion.

More recently, a working paper from researchers at George Mason University released this month said that immigrant-owned firms in the tech industry had "uniformly higher rates of innovation" than firms run by U.S. citizens in 15 of the 16 measures they surveyed.

John S. Earle, a professor at the university's Schar School of Policy and Government and one of the authors of the paper, said he believed that the study was the first of its kind.

"There have been studies of immigration and self-employment, and there has been a little bit of research that looks at size of firms owned by immigrants," Earle said. "Ours is the first study that I'm aware of to look at the innovativeness of immigrant entrepreneurs."

Earle said that most research on immigrants in the workplace has focused on the impact immigrants have on American workers, and that such research has "generally failed" to find any negative effects. This new study builds on that previous research.

"It appears that immigrant entrepreneurs are not replacing Americans," Earle said. "Instead, they are creating something new."

Tech companies and executives have been vocal about immigration issues, particularly since Trump took office. In 2018, the Information Technology Industry Council, which labels itself the "global voice of the tech sector," called for immigration reform and an end to family separations at the border. The CEOs of many tech giants, including Tim Cook, Mark Zuckerberg and Elon Musk, called for an end to the separation policy, and many cited personal donations they had made to immigrant rights groups.

Ian Hathaway, the lead researcher at the Center for American Entrepreneurship and a fellow at the Brookings Institution, reacted to the new study with "zero surprise."

"I would be shocked if it was the other way," he told NBC News.

"There aren't a lot of things that economists agree on," Hathaway said, but one thing they do agree on is the "universal positive benefit" immigrants have on the economy and entrepreneurship.

"It's irrefutable any way you look at the data," he said.

Semyon Dukach, managing partner at One Way Ventures, a venture capital firm that only invests in immigrant-run startups, including LegalPad, told NBC News that the study found what people in the tech industry already knew.

"The study might be novel in its conclusions, but the overall ideas are really well-known," Dukach said.


Dukach is a refugee from the Soviet Union. Part of the reason One Way invests only in immigrant-owned firms is that "we want to live in a world where it's more widely recognized that immigrants create value." He added, "We think statistically it will make us more successful."

Om Malik, a partner at the Silicon Valley venture capital firm True Ventures and previously a prominent tech writer, said the study makes sense if you look at California's tech scene, which became a destination for people from around the world seeking a like-minded community.

"You start to look at those people and you see that the brightest and the smartest people from around the world were coming to Silicon Valley for one simple reason — to find kindred spirits," Malik said.

Malik said he saw Silicon Valley as a microcosm for the impact immigrants had throughout the U.S., bringing new and different ideas that spur innovation and creativity.

"The diversity of thinking, the diversity of approaches, the diversity of backgrounds allows for a more robust ecosystem to thrive and develop," Malik said. "Silicon Valley is a perfect example of that. It's like a microcosm of that, and here it happens at hyper-scale."


Despite the success of immigrant entrepreneurs, their journey to founding U.S. startups is not without difficulty.

"The U.S. is intentionally making it much harder for the best skilled people to come to our country and build great companies," Hathaway said. "That's a deliberate decision of our current administration and leadership structure in Congress."

Workers who want to come to or stay in the U.S. as entrepreneurs have a couple of visa options, none of which are perfect.

"There are a ton of legal challenges for immigrant entrepreneurs because there is no specific visa or green card option for entrepreneurs in this country," said Mary Grilli Jacobs, who leads the business immigration group at Alcorn Law in Mountain View, California.

Depending on their situation, immigrant entrepreneurs can apply for an E-2 visa, an EB-5, or an H-1B, all of which have their respective drawbacks.


"We are just trying to find the best fit in this landscape of imperfect options," Jacobs said.

While the system wasn't necessarily easier under President Barack Obama, Jacobs said that since Trump took office there is "this prevailing understanding that the review is getting tougher."

Ian Scott, managing partner of the business and immigration firm Scott Legal, P.C., in New York, agreed.

"H-1Bs have come under such scrutiny that even qualifying has become really difficult," Scott said.

In the past couple of years, notwithstanding the obvious successes of immigrant entrepreneurs, case adjudications are taking longer and becoming stricter, Scott said. For some visas, decisions can take more than a year, and for people trying to enter the fast-paced tech world, living in limbo can be difficult while trying to start and expand a business.


"One of the most automatic ways we know how to create economic growth is to get smart people together. That's what high-skilled immigration does," Hathaway said. "Countries are begging for high-skilled immigrants. We are fumbling the ball, and giving it away."

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