How Immigrants Influence Start-ups and the Economy

By Josh Hart | uncategorized 0

Would immigration reform help kick-start America's stalled entrepreneurial activity? It's a question posed by Dane Stangler, Kauffman Foundation's Vice President of Research & Policy in a recent blog post on Forbes. The bulk of research on immigrant entrepreneurs highlights the contribution they make to the U.S. economy, showing high business formation rates among immigrants, successful businesses that hire employees, and a higher incidence of exporting goods and services than non-immigrant small business owners.


Facts about Immigrant-Owned Small Businesses

Statistics abound: immigrants create new business at a higher rate than native-born citizens. And trends are showing a divide; an increase in entrepreneurship among immigrants and a decrease in native-born Americans entrepreneurship.

According to the Small Business Administration, roughly one out of ten immigrant workers own a business, and 620 of 100,000 immigrants starts a business each month. Newer statics from the Kauffman Index of Entrepreneurial Activity report 430 new ventures per 100,000 immigrants, as opposed to 250 native-born entrepreneurs.


Immigrants, according to Kauffman, make up about one-quarter of new entrepreneurs in this country despite filling less than one-fifth of the labor force.


Often people associate immigrant entrepreneurs with low-wage jobs in the restaurant and service sector; however, data is showing a higher number of immigrants in high-end technology, creating companies that employ 10 or more people.


Financing the Wave of Immigrant Entrepreneurs

Looking at how non-natives finance their business ventures, the SBA reports that immigrant-owned businesses typically launch with more start-up capital than native-owned businesses. The most common source of capital is from savings or family savings, followed by credit cards, bank loans, alternative loans, personal or family assets or home equity loans.  The Immigration Policy Center reports that immigrant-founded venture-backed companies create recognizable value in the U.S. economy. As of June 2013, publicly traded immigrant-founded companies have a total market capitalization of $900 billion.

Stangler underscores the importance of attracting more immigrant entrepreneurs--perhaps through reform--to help jolt the nation's lag in new business creation. Put simply, new profitable business equals economic vitality and job creation--all good things for the United States.


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Last edit: March 6, 2018


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