Immigrants fueling IPOs

0 Comments | Oakland Tribune, Nov 15, 2006 | by Barbara Grady

Sergey Brin of Google Inc., Jerry Yang of Yahoo Inc., Andy Grove of Intel Corp., David Lam of Lam Research Corp., Pradeep Sindhu of Juniper Networks Inc. and the list goes on and on.

Immigrants are often the founders behind some of the biggest U.S. companies, particularly technology and biotech companies. In fact, immigrants started one-fourth of the companies that went public in the last 15 years and were venture capital backed, according to a study to be released today by the National Venture Capital Association. In technology alone, immigrants founded a startling 40 percent of companies that went on to become public in those years and were venture backed.

The association plans to use this study -- by forwarding a copy to every member of Congress this morning -- to influence the debate on a comprehensive immigration reform bill introduced last spring and which Congress may take up again in the waning months of the 109th Congress. Specifically, the group wants Congress to expand its quota of H-1B visas, which are granted to skilled workers who have a job offer in the United States.

"To give you a sense of what that means in adding value to the American economy, the market capitalization of these companies (started by immigrants since 1991) exceeds $500 billion," and they employ about 220,000 people in the United States, said study author Stuart Anderson, executive director of the National Foundation for American Policy, which conducted the research for the venture capital group.from Business 1

What the venture capital association hopes to influence is the lame duck Congress decision regarding the Securing Knowledge, Innovation and Leadership Act, which would relax restrictions on H- 1B visas and was one of the legislative proposals for immigration reform. Congress has capped the number of H-1B visas granted each year to 65,000 since 1990, although a few years ago Congress amended the restriction to allow 20,000 more for students who received their graduate degrees from U.S. universities.

Even so, in the past three years, the quota for H-1B visas has been used up before the start of the fiscal years to which they are allocated, according to the study.

"We always had important anecdotal evidence of the importance of H-1B visas," said Mark Heesen, president of the venture capital association. "But given the increased rancor about immigration this year surrounding the (issue of) illegal immigration, we decided we need hard data for the case we are making. The data speaks for itself."

The study, "American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness," based on research conducted by the National Foundation for America Policy, can be found at http://www.NVCA.org/pdf/AmericanMade--study.pdf.

Many Silicon Valley business groups have tried to lobby Congress about relaxing the limits on H-1B visa numbers. They have called it a competitive issue as they try to lure top engineers and scientists before overseas competitors do.

Said Hilal, founder of Applied Medical Resources Corp. in Rancho Santa Margarita, said during a conference call that "we are having difficulty convincing some of the brightest minds from overseas to join us. As much talent as we find locally, there is a global competition for brains." Hilal came to the United States from Lebanon as a teenager. He said the red tape of applying for U.S. visas is starting to turn people toward going to companies and universities in other countries instead.

The study said that the number of international students enrolled in U.S. graduate programs fell 21 percent since peaking in 2001.

Jerry Yang came to this country as a youth and then studied at Stanford University before co-founding the Internet portal Yahoo! in Sunnyvale. Yang said in a statement after being briefed on the study, "Yahoo would not be an American company today if the United States had not welcomed my family and me almost thirty years ago. We must do all that we can to ensure that the door is open for the next generation of top entrepreneurs, engineers and scientists from around the world to come to the U.S. and thrive."

But hope is not gone already. The study also found that a greater percentage of publicly held companies might be immigrant founded in the near future. That is because 47 percent of still private technology startups funded by VCs were founded by immigrants.

The foundation used a database of publicly traded companies maintained by Thomson Financial to conduct its study.