NET RESULTS:WE ALL know that start-up companies mean jobs, but creating the start-up companies is the challenge, writes KARLIN LILLINGTON
So who creates start-up companies? Entrepreneurs, obviously, but where do the entrepreneurs come from?
In the technology sector, the answer might surprise you. Studies in the US have shown consistently that a significant proportion of technology companies are started by immigrants. In Silicon Valley, about half of all new technology companies have an immigrant founder.
In the US generally, more than 25 per cent of technology companies created between 1995 and 2005 have an immigrant founder or co-founder. Those companies produced more than $52 billion (€36 billion) in revenue in 2005 and have created almost half a million jobs.
Outside the technology sector, immigrant entrepreneurs are also important. According to a 2008 study for the US Small Business Administration, immigrants are almost 30 per cent more likely to start a new business, and the businesses started by certain nationalities generally outperform businesses started by US-born entrepreneurs.
Businesses started by Indian and Chinese entrepreneurs lead the way, with Taiwanese, Canadian, Filipino and Greek businesses also doing well.
A 2006 study by the US National Venture Capital Association noted that one out of every four public venture-backed companies founded since 1990 in the US had at least one immigrant founder, and represented a collective market capitalisation of $500 billion. Those companies include technology giants such as Sun Microsystems, Yahoo, eBay, Google and Intel.
Almost half of all the immigrant entrepreneurs, 46 per cent, arrived as students. More than half started their business within 12 years of their arrival in the US. They hold an average of 14.5 patents. Two-thirds say they will start further US-based companies. Most go on to acquired US citizenship.
We could sure use some of that dedication and commitment.
But the US, like Ireland, has no special immigrant visa that recognises entrepreneurs.
Investors who promise to arrive with deep pockets and create a minimum of 10 jobs are eligible for a special US visa, but not the people likely to create the companies in the first place. Nor is there a visa that recognises the student who is about to turn entrepreneur.
This situation, coupled with recent reports that underline the importance of immigrants to the economy, has prompted the formation of a US group lobbying for the creation of an entrepreneur visa.
The Start-up Founder Visa campaign proposes that a company founder or entrepreneur receiving a certain amount of private capital investment could qualify for such a visa. At least one investor would need to be a US citizen or US organisation.
It is proposed that, rather than create an entirely new visa, the existing EB-5 visa – the one currently open to investors – could be modified under new legislation.
The group’s website, Startupvisa.com, argues that if the visa situation is not amended, the US will face a brain drain, especially in smart-economy industries such as technology and engineering.
Surely this is an idea worth considering here. Historically, Ireland too has placed more importance on investors than entrepreneurs, offering passports in return for investment in Irish businesses.
We still need to attract foreign venture capital – now more than ever, perhaps – but we need to have start-up companies seeking that capital in the first place. Based on the US situation, we have no reason to expect that Irish-born entrepreneurs alone can create those companies.
One of our key competitor nations, Britain, has already recognised the need to attract foreign-born entrepreneurs and has recently launched its own entrepreneur visa. The visa uses the existing points system for immigrant applications, but includes special categories for awarding points, such as the applicant’s ability to access capital above £200,000 (€223,000).
Canada, Germany, Australia and New Zealand also have entrepreneur visas.
As the Government considers ways to drive innovation, creating a similar visa is an obvious choice.
Alongside a system for recognising high-potential entrepreneurs from abroad who wish to establish companies here, such a visa should have provisions that would enable entrepreneurial foreign-born students studying in Ireland to continue on and found companies here if they demonstrate the potential to do so. It is those students who are likely to become the “new Irish”.
Given that there are several existing models for such visas, setting up an Irish version shouldn’t be too difficult.
In particular, the Government could look closely at how the UK visa works, given that the UK would be our most immediate and direct competitor for foreign
brainpower. With its high-emigration past, few nations are as familiar with the tragedy of brain drain as Ireland. If we continue to view “indigenous” as meaning only “Irish-born”, our industry, competitiveness and economy are likely to suffer even more than they are now.
Rather than losing our best and brightest to foreign lands, we need to keep them and Irish jobs here by convincing the world’s best and brightest that there is no better place to innovate and found a new company than on Irish soil. And then we need to give them the visa to do so.
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