Author Interviews
1:15 am
Fri October 5, 2012

Preventing Silicon Valley's 'Immigrant Exodus'

Originally published on Fri October 5, 2012 2:02 pm

A new study from the Kauffman Foundation shows that the number of immigrant entrepreneurs in the United States has fallen slightly. But according to Vivek Wadhwa, an author of the study, the drop is especially steep in Silicon Valley, long a magnet for the brightest and most ambitious minds from around the world.

From 1995 to 2005, immigrants founded 52 percent of the startups in Silicon Valley. The updated research shows that since 2005, that dropped to 44 percent. Wadhwa joins NPR's Renee Montagne to discuss his findings.


Interview Highlights

On the reason for the drop in immigrant entrepreneurs in the past seven years

"Well, the No. 1 reason is because we won't give the foreign people who are already here visas to start companies. My research has also documented that there were 1 million skilled immigrants waiting for green cards, for permanent resident visas. And we had predicted if we don't fix the immigration system, they'd start leaving. Now this is in 2007, when we had published that research. Well guess what? They're leaving."

On the case of Anand and Shikha Chhatpar, an Indian entrepreneurial couple who are part of the immigrant exodus

"Well, Anand and Shikha Chhatpar, they started a company called Fame Express that was building really cool Facebook apps. They signed up a million users in almost no time, building lots of revenue. Annan and Shikha paid a quarter of a million dollars in taxes while they were here. They had to go back to India to get their visa adjusted to start the process of permanent residency, and the U.S. government wouldn't let them back, despite the fact that they were hiring Americans, they were doing well, they were here legally. Annan had filed eight patents, so the guy was exceptional. No one was disagreeing that he's a worthy candidate. But even the head of the immigration department couldn't fix this. So now they're living in India, paying Indian taxes, employing Indian workers. It's a big loss for America. This is the stupidity of our immigration system.

"It happens far more than you would imagine. You have to live in Silicon Valley and hear the horror stories. You go and hang out at the cafes, and you meet entrepreneur after entrepreneur who's struggling, basically — who's had a visa problem who wants to start a company, but they can't start companies. It's really heartbreaking to go to Silicon Valley and see what could be and what isn't."

On his proposition for a new immigration program that would allow foreigners to get visas without a large investment

"If we had a startup visa which allowed any foreigner to start a company here, if after three or four years the company is employing less than five Americans, that person is ineligible for a green card. That would lead to tens of thousands of new startups, possibly hundreds of thousands of startups, which would generate hundreds of thousands, maybe millions of jobs — all for a cost of zero.

"The graduates of Stanford [University] and Duke University, they don't have a million dollars lying around. Typically when you do a technology startup, you have $20,000 or $30,000, and you build an Instagram, you build a Facebook. You build companies like this with very low seed capital. There's no way they can come up with a million dollars upfront.

"That whole process of getting that EB-5 visa, as it's called, is so cumbersome that it could take a year or longer, and you don't know if you're going to get it. By that time your idea is stale. In the technology world, you have to execute fast or you're out of business."

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

RENEE MONTAGNE, HOST:

And a new study out this week finds that the number of immigrant entrepreneurs in the country has fallen slightly. Though in Silicon Valley, long a magnet for the brightest and most ambitious minds from around the world, the drop in entrepreneurs is especially steep.

Vivek Wadhwa is one author of that study, from the Kauffman Foundation. He also has a new book on the subject called "The Immigrant Exodus." He joined us to talk more about his findings.

VIVEK WADHWA: What we had documented previously was from 1995 to 2005, 52 percent of the startups in Silicon Valley were founded by immigrants. When we updated the research to look at what happened after 2005, we were shocked that it dropped to 44 percent.

That's a very significant drop in about six or seven years.

MONTAGNE: Why is this happening?

WADHWA: Well, the number one reason is because we won't give the foreign people who are already here visas to start companies. My research has also documented that there were one million skilled immigrants waiting for green cards, for permanent resident visas. And we had predicted that if we don't fix the immigration system, they would start leaving. Now this is in 2007, when we had published that research. Well, guess what? They're leaving.

MONTAGNE: You give an example in your book of one couple from India. Tell us what happened to them.

WADHWA: Well, Anand and Shikha Chhatpar, they started a company called Fame Express that was building really cool Facebook apps. You know, they signed up a million users in almost no time, building lots of revenue. Annan and Shikha paid a quarter of a million dollars in taxes while they were here. They had to go back to India to get their visas adjusted to start the process of permanent residence, and the U.S. government wouldn't let them back; despite the fact they were hiring Americans, they were doing well, they were here legally. Annan had filed eight patents, so the guy was exceptional. And no one was disagreeing that he's a worthy candidate. But even the head of the immigration department couldn't fix this. So now they're living in India, paying Indian taxes, employing Indian workers. It's a big loss for America. This is the stupidity of our immigration system.

MONTAGNE: How typical is the experience of Anand and Shikha Chhatpar?

WADHWA: It happens far more than you would imagine. You have to live in Silicon Valley and hear the horror stories. You go and hang out at the cafes, and you meet entrepreneur after entrepreneur who's struggling, basically - who's had a visa problem, who wants to start a company, they can't start companies. It's really heartbreaking to go to Silicon Valley and see what could be and what isn't.

MONTAGNE: Now we've been talking about Silicon Valley, but your book is speaking about the whole country and there are other states besides California that do attract this immigrant talent. Of all the things that you would like to see happen, give us one that you think is - would potentially have the greatest impact?

WADHWA: If we had a startup visa which allowed any foreigner to start a company here, if after - let's say - three or four years the company is employing less than five Americans, that person is ineligible for a green card. That would lead to tens of thousands of new startups, possibly hundreds of thousands of startups, which would generate, you know, hundreds of thousands, maybe millions of jobs - for a cost of zero.

MONTAGNE: Are you talking about an entirely new program or tweaking or expanding a program that already exists? Because we do know that people from outside America can get visas if they bring in a certain amount of money - quite a bit of money, actually.

WADHWA: Renee, the graduates of Stanford and Duke University, they don't have a million dollars lying around. Typically when you do a technology startup, you have $20,000 or $30,000, and you build an Instagram, you build a Facebook. You know, you build companies like this with very low seed capital. There's no way they can come up with a million dollars upfront.

MONTAGNE: And the million dollars is what people have to bring in?

WADHWA: Yes. Exactly. And that - even then - that whole process of getting that EB-5 visa, as it's called, is so cumbersome that it could take a year or longer, and you don't know if you're going to get it. By that time your idea is stale. In the technology world, you have to execute fast or you're out of business.

MONTAGNE: Vivek Wadhwa is author of "The Immigrant Exodus: Why America Is Losing The Global Race To Capture Entrepreneurial Talent."

Thank you very much for joining us.

WADHWA: Thank you. Transcript provided by NPR, Copyright National Public Radio.