More similarities - India and Israel

A new study had found that more than a quarter of the engineering and technology companies launched in the U.S. from 1995-2005 had at least one foreign-born founder and Indians founded more immigrant-founded firms - 26 percent - than newcomers from China, Taiwan, the U.K. and Japan combined.

Immigrants were the founders or key executives of 52 percent of tech and engineering companies started in Silicon Valley in the decade, and nationwide immigrant-founded firms produced $52 billion in sales and employed 450,000 workers in 2005.

Not only are immigrants prominent among start-ups in Silicon Valley, but they have also become venture capital magnets in other areas of the country.

In California, New Jersey and Michigan, immigrants founded or led 39 percent, 37.6 percent and 32.8 percent, respectively, of the technology and engineering start-ups in the 10-year period.

In New Jersey, 47 percent of the foreign-born founders or key executives born in India, with Israel and Korea tied in second place as the places of origin with 7 percent each.

The report, "America's New Immigrant Entrepreneurs," released Jan. 4, was done by a team of student researchers in the masters of engineering program of the Pratt School of Engineering at Duke University.

Vivek Wadhwa, co-leader of the study, told India-West that one "unexpected" finding in the study was the "dominance of the immigrant group by Indians across the country."

"This is probably the most in-depth and rigorous study of the contribution of skilled immigrants to date," he added.

Executive-in-residence at the Pratt school and founder of Relativity Technologies, Wadhwa added, "The fact that 52 percent of Silicon Valley start-ups are founded by immigrants was astounding. The fact that Indians have overtaken the Chinese in (Silicon valley) in founding companies was a surprise."

However, in what Wadhwa termed a "worrisome" finding, which was updated for reporters Jan. 2, the study found that the percentage of international patent applications filed by immigrants non-citizens increased from 7.8 percent in 1998 to 24.2 percent in 2006.

"These non-immigrant citizens are typically foreign graduate students completing their Ph.D.'s, Green Card holders awaiting citizenship and employees of multinationals on temporary visas," Wadhwa pointed out in an e-mail Jan. 2.

(The researchers analyzed the World Intellectual Property Organization Patent Cooperation Treaty database for international patent applications filed in the U.S.)

In an e-mail to India-West last week, Wadhwa, who writes a column for Business Week, amplified his concern.

"If these people are really valuable and will help the U.S. compete globally - and I believe this is the case - we want them to be citizens and grow deep roots. These are the people we want in the U.S.; we don't want them here temporarily."

Co-leaders of the study were Ben Rissing, research scholar and project manager at Pratt; and sociology professor Gary Gereffi. Another key member of the team was AnnaLee Saxenian, dean and professor of the School of Information at U.C.-Berkeley.

Saxenian's pioneering study of immigrant entrepreneurs in Silicon Valley in 1999, "Silicon Valley's New Immigrant Entrepreneurs," found that Chinese and Indian engineers founded or held key management posts at about 29 percent of the technology companies started in the late 1990s.

Unlike Saxenian's report, the Duke researchers didn't include professional services companies, where Indians are a major force.

"We wanted to focus more on technology and traditional engineering," Wadhwa said.

"Our exclusion of (professional services) firms was because we wanted to get a more balanced perspective. I didn't want to show any favor to Indians - yet the results speak for themselves."

The report also limited senior executives to co-founders, CEOs, presidents, chief technology officers - basically the top echelon of the management team.

"Saxenian's study counted any senior executive," the Relativity Technologies founder pointed out. "Not to say that marketing and finance people aren't important, I wanted to focus on KEY (Wadhwa's emphasis) founders, so we wouldn't be criticized for having too broad a criteria. A VP of technology would be counted if this was the Number Two exec in the company and was a major contributor."

Other findings in the report:

• Leading states for Indian immigrant-founded engineering and technology companies from 1995-2005 were: California, 26 percent; New Jersey, 14 percent; Virginia, 7 percent; Michigan, 7 percent; Other states, 7 percent; Florida, 5 percent; and Texas, 5 percent.

• Industry fields where Indian immigrants founded companies were: software, 46 percent; innovation/manufacturing-related, 44 percent; computers/communications, 5 percent; semiconductors, 2 percent; bioscience, 2 percent; environmental, 1 percent; and defense/aerospace, 0 percent).

• States with an above-average rate of immigrant-founded companies included Georgia (30 percent), Virginia (29 percent) and Massachusetts (29 percent). Some states with below-average numbers of foreign-born founders were Washington (11 percent), Ohio (14 percent), North Carolina (14 percent) and Texas (18 percent).

• Almost 80 percent of immigrant-founded firms in the U.S. were in two sectors - software and innovation/manufacturing-related services.

• Immigrants were least likely to start companies in the defense/aerospace and environmental industries. They were most represented in semiconductor, computer, communications and software.

"The low immigrant participation in the founding of defense/aerospace companies is likely due to the present relative environment for government contracts, which often limits work to individuals with U.S. citizenship and security clearances," the study said.

• Of immigrant-founded companies in Florida, Indians led with 18 percent, followed by Cuba (10 percent), Columbia (8 percent), Venezuela (8 percent) and Mexico (8 percent).

• In Massachusetts, those born in Israel led foreign-born founders/key executives at 17 percent each, followed by India, Germany and the U.K. at 10 percent each.

• In New York, foreign-born founders from India, Israel and Japan tied at 14 percent each. Russia, the U.K. and China tied at 7 percent.

• In Texas, Indians were the most represented among foreign-born founders/key executives at 25 percent. China was second at 14 percent, followed by Mexico at 7 percent.

"This study shows that skilled immigrants provide some of our greatest advantages," Wadhwa told India-West. "They contribute to the economy, create jobs and lead innovation."

"We need to figure what to do with the millions of unskilled workers who have entered the country illegally. But let's not forget the engineers and scientists that come through the front door. We need the world's best and brightest to lay deep roots in America, not come here as temporary workers," he concluded.

The Duke study comes fresh on the heels of a report issued about a month ago by the Arlington, Va.-based National Venture Capital Association.

That report found that immigrants in the U.S. from 1990-2005 founded 25 percent of all public venture-backed firms and 40 percent of high-technology start-ups. Of 144 immigrant-founded public companies in the report, 32 companies were founded or co-founded by Indians.