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Immigrants and Entrepreneurship

 4 min read / 

Immigrants have founded some of the world’s largest and most successful companies, and they have often overcome significant challenges to do so.

If there is going to be more encouragement for people to start businesses globally, governments need to develop support tailored to the needs of immigrants. Why? Because immigrant entrepreneurs can help the world face the economic challenges of tomorrow.

Immigrants Are Natural Entrepreneurs

Going back decades, studies across the globe have shown that immigrants have a natural and fearless entrepreneurial streak. In fact, a study by Zirra found that nine out of ten of the UK’s top-ten unicorn businesses had at least one first- or second-generation immigrant on the founding team. No surprise then that anecdotal evidence suggests that being an immigrant gives people subtle advantages when it comes to starting a successful business.

First, a depth of cross-cultural experience which the native population do not have. Immigrants understand two or more cultures, and that gives them an edge when it comes to spotting opportunities and gaps in the market.

Secondly, many immigrants have faced big challenges to reach their new home country and have built a certain toughness and hunger for success. And finally, countries are far more cosmopolitan today than in previous decades; customers are more open to new products, experiences and services and this gives immigrants a chance to import new ideas.

Immigrants Face Challenges to Becoming Entrepreneurs

There is no doubt that immigrants are driven to found successful companies. One American study found that 51 per cent of billion-dollar startups in the US were founded by immigrants. In fact, 60 per cent of the most highly valued tech companies in the world, including Google, Amazon and Apple were founded by first- or second-generation immigrants.

But it is not easy for immigrant entrepreneurs to get started. They often face practical issues such as language barriers, a lack of access to finance, and of course, sadly, xenophobia, or even racism. And that is all before people have even factored in things which affect the chances of success for every startup founder, such as regulations, employment and tax issues.

But, perhaps, one of the biggest obstacles that immigrant entrepreneurs can face is a lack of networks; given that they are new to a country, they often do not have established relationships that they can draw on. This makes not only striking business deals more difficult but also recruiting talent, which is one of the biggest challenges in running a successful business.

As Tomas Chamorro-Premuzic has written in HBR:

“Thus talented people – the vital few – are the main driver of a company’s success, and companies will see much higher returns on their investment if they devote more resources to the few people who are making a big difference, as opposed to trying to make the “trivial many” more productive.”

Governments Can Help Immigrant Entrepreneurs Succeed

So, what can governments around the world do to encourage aspirational, entrepreneurial immigrants choose their country over others, and what can the US and the UK in particular learn? Here are three things that governments should consider.

First, networks are incredibly important and immigrants need more help than others to be able to ‘click’ into existing ones. Countries should consider setting up government-supported assistance bodies for immigrant entrepreneurs, providing them with hands-on support to meet other like-minded individuals, running language and skills training, and providing them with a forum to meet other immigrant entrepreneurs. For example, the UK already has a number of government-funded bodies to support entrepreneurs, such as StartUp Loans. It would not take too much for the government to add a smaller unit to these organisation which helps and facilitates immigrant entrepreneurs.

Secondly, governments need to do a lot more to provide immigrant entrepreneurs with access to funding. Often foreign-born entrepreneurs without a credit record in a country will find it very difficult to access traditional bank funding for a business. A dedicated pot of government funding, which immigrant entrepreneurs could apply to, would make a big impact.

Finally, this is a communication battle: governments and countries need to make clear on the world stage that they are incredibly welcoming to ambitious immigrant entrepreneurs. There are many countries who are doing just that and rapidly outpacing the UK and the US. For example, New Zealand recently launched a scheme called LookSee Wellington, which provides tech workers and entrepreneurs with a free trip to the city if they wanted to relocate. Overall, the world needs more ambitious immigrant entrepreneurs. Governments need to make sure that they are in front of their competition.

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