America’s REAL Energy Problem: Lack of Immigrant Entrepreneurs

By Shlomo  Maital    

 Indian entrepreneur in Silicon ValleyNaveel Selvadurai


  America is surprisingly well on its way to solving its energy problem, and may by 2020 be a major energy exporter, thanks to new discoveries of offshore oil and especially, new discoveries of gas taken out of the ground by fracking.

  But America may have a different energy problem: A lack of entrepreneurial energy, because its anti-immigration policies are keeping out foreigners who would otherwise come to America and start successful businesses.

   This is the finding of a new study by the Kauffman Foundation, done by three scholars who include the definitive historian of Silicon Valley, AnnaLee Saxenian.*   Here is what they conclude:

 ” …. for the first time in decades, the growth rate of immigrant-founded companies has stagnated, if not declined. In comparison with previous decades of increasing immigrant-led entrepreneurism, the last seven years has witnessed a flattening out of this trend. The proportion of immigrant-founded companies nationwide has dropped from 25.3 percent to 24.3 percent since 2005. While the margins of error of these numbers overlap, they nonetheless indicate that immigrant-founded companies’ dynamic period of expansion has come to an end.

We also performed a special analysis of Silicon Valley, which is widely known as the international hub for technological development and innovation. The findings indicate that 43.9 percent of Silicon Valley startups founded in the last seven years had at least one key founder who was an immigrant. This represents a notable drop in immigrant-founded companies since 2005, when 52.4 percent of Silicon Valley startups were immigrant-founded.”

 Can it be that the driving innovative energy and spirit of Silicon Valley is actually imported, from, for instance, India?  Half of all Silicon Valley startups are still immigrant-started!  And for America, of all immigrant startups (defined in the Kauffman study as engineering-technology firms),  fully a third are started by entrepreneurs from India, like Naveel Selvadurai (shown above), who was born in Chennai, India, in 1981, and founded the social networking website Foursquare.  (Next comes China, with 8 percent of all foreign launched startups). 

    It is well known that America’s paranoia regarding a) terrorists and b) immigrant workers has made getting a work visa very difficult.  The result may   deeply hurt America’s dynamic innovation and entrepreneurship,  much of which, we now learn, is actually imported.   In 1998 Saxenian found this: “in 1998, Chinese and Indian engineers were responsible for operating one-quarter of technology businesses in the Silicon Valley region, accounting for more than $16.8 billion in sales and 58,282 jobs.”  Those numbers are far bigger today.  Will its paranoia deprive America of a vital source of imported creative energy? 

  • ·         Then and Now: America’s New Immigrant Entrepreneurs,   by Vivek Wadhwa, AnnaLee Saxenian, F. Daniel Siciliano. Kauffman Foundation: Kansas City, MO, 2012.