Indians founded most tech startups in US

High-tech startups founded by immigrants from India have grown phenomenally in US amidst a decline in immigrant entrepreneurs considered a critical source of fuel for the US economy, according to a new study.

The proportion of immigrant-founded companies in the US has slipped from 25.3 per cent to 24.3 per cent since 2005, according "America's New Immigrant Entrepreneurs: Then and Now", a Kauffman Foundation survey published Tuesday.

The drop is even more pronounced in Silicon Valley, where the percentage of immigrant-founded startups declined from 52.4 per cent to 43.9 per cent.

The exceptions to this downward trend were immigrants from India, the study noted. Although founders in the study hailed from more than 60 countries, 33.2 per cent of them were Indian, up from about 7 per cent in 2005.

Indians, in fact, founded more of the engineering and technology firms than immigrants born in the next nine immigrant-founder countries combined.

After India, immigrant founders represented China (8.1 per cent), the United Kingdom (6.3 per cent), Canada (4.2 per cent), Germany (3.9 per cent), Israel (3.5 per cent), Russia (2.4 per cent), Korea (2.2 per cent), Australia (2.0 per cent) and the Netherlands (2.0 per cent).

While immigrant entrepreneurship has stagnated, the rates of Indian and Chinese startups have increased, the survey found.

In 2005, Indians and Chinese entrepreneurs accounted for 26.0 per cent and 6.9 per cent of immigrant-founded companies, respectively.

Immigrant-founded firms were most likely to be located in traditional immigration gateway states: California (31 per cent), Massachusetts (9 per cent), Texas (6 per cent), Florida (6 per cent), New York (5 per cent) and New Jersey (5 per cent).

Indian founders tended to establish businesses in California, New Jersey and Massachusetts, and Chinese founders showed a propensity to start companies in California and Maryland.

"For several years, anecdotal evidence has suggested that an unwelcoming immigration system and environment in the US has created a 'reverse brain drain.' This report confirms it with data," said Dane Stangler, director of Research and Policy at the Kauffman Foundation.

"To maintain a dynamic economy, the US needs to embrace immigrant entrepreneurs."

"The US risks losing a key growth engine just when the economy needs job creators more than ever," said one of the study's authors, Vivek Wadhwa, director of research at the Centre for Entrepreneurship and Research Commercialisation at the Pratt School of Engineering, Duke University.