Immigrant Founders -- The Rest of the Story

Eighty percent, or 40 out of 50, of the country’s Top 50 Venture-Funded companies had one or more American born founders. No, I didn’t make up the statistic, I found the data and reversed the spin that the pro-immigration faction is trying to promote.

Updated:

Due to a data sorting error, I originally overstated the percentage of U.S. born cofounders in the Top 50 Venture Backed companies. This error has been corrected. See Footnote.

Other Findings:

Companies "Without a Foreign Born Founder" have employment levels 26% higher than the Top 50 average employment levels.

Companies "Without a American Born Founder" have employment levels 25% lower than the Top 50 average employment levels.

Companies with foreign born founders/cofounders (23 of 50) are almost twice as likely to apply for H-1B temporary guestworker visas.

Stuart Anderson’s organization, the National Foundation for American Policy (NFAP), may be doing more harm to his cause than good. Whenever someone throws out a percentage and does not provide a divisor, you can be assured that they are hiding something.

This paper’s topic:

"Immigrant Founders and Key Personnel In America’s Top Venture-Funded Companies,"

By: Stuart Anderson

The NFAP study states: "The research finds that 46 percent, or 23 out of 50, of the country’s top venture-funded companies had at least one immigrant founder. This illustrates the increasing importance and contributions of immigrants to the U.S. economy."

Mathematically, the NFAP statement makes no sense, how do you divide a variant number of founders by the number of companies? I was taught that you have to divide by "like" terms, cofounders and companies are not like terms. Curiously, the NFAP document has a Table with the names and birthplace of the foreign-born founders. However, after finding another source for the "Top 50" data, I find that the NFAP has removed the names of the U.S. born founders and eliminated the companies that did not have a foreign-born founder from the Table included in the NFAP Study.

After combining the two sources of data, I (also) found that 23 of the 50 companies selected did have one or more foreign-born founders/cofounders; however, 13 of those 23 companies also had one or more American born cofounders. Only 10 of the Top 50 companies did not have an American born cofounder.

Most of the Top 50 companies (36) are located in California, which has 34.9% population of foreign-born employed in the labor force, so the 31.9% foreign-born founders/cofounders (found in the table below) basically represents the population.

Top 50 Venture Backed Companies
Total Employees	10,314
Avg. Employees	206.28
	Number	Percent
Total Founders	119	100%
Foreign Born Founders	39	32.8%
American Born Founders	80	67.2%
With a Foreign Born Founder
Number of Companies	23	46.0%
Number of Employees	3,289	31.9%
Avg. Employees	143.0
*H-1B Work Visa Applications (LCA)	362	11.0%
Avg. Ranking (1 to 50)	23.09
**Avg. Year Founded	2004.9
Without a Foreign Born Founder
Number of Companies	27	54.0%
Number of Employees	7,025	68.1%
Avg. Employees	260.2
***H-1B Work Visa Applications (LCA)	445	6.3%
Avg. Ranking (1 to 50)	27.56
**Avg. Year Founded	2003.5
Without an American Born Founder
Number of Companies	10	20.0%
Number of Employees	1,295	12.6%
Avg. Employees	129.5
*H-1B Work Visa Applications (LCA)	154	11.9%
Avg. Ranking (1 to 50)	25.70
**Avg. Year Founded	2005.2

* (H-1B) Number of Visa Applications -- Percent of Number of Employees
** Avg. Year Founded is decimal
***Appia Inc., (with an employee roster of 51), applied for 214 of the 445 H-1B Work Visa Applications in "Without a Foreign Born Founder".
 

If Appia Inc. 51 employees and 445 H-1B applications are removed from the sample, the percent of  H-1B applications would be 3.3% in the "Without a Foreign Born Founder" group of companies.

From the table above, I notice that the Top 50, Avg. Ranking for each group is similar, each segregated group is near the middle of the Top 50 Avg. Ranking. The two groups of companies with foreign born cofounders appear to have a slightly more viable ranking, but the foreign born founded/cofounded companies seriously under-perform in the" Number of Employees" category. Additionally, companies with foreign born founders and cofounders are almost twice as likely to apply for H-1B temporary guestworker visas.

The NFAP study trumpets that immigrants are crucial to employment growth. Conversely, the table above demonstrates that the "Without a Foreign Born Founder" group of companies employ 68% of the personnel while this group consists of only 54% of the Top 50 companies.

Key Positions Held By Foreign Born: The NFAP study also contains a table of key positions held by foreign-born employees, but here-again the NFAP does not include the universe of key positions. The NFAP uses the following statement to describe key positions:

Table 2: Immigrant Key Member of Management or Product Development Team in Top VC-Backed Companies

While it would be interesting to see if these companies have a preference for foreign-born employees, we would also have to take into consideration the percentage of employed foreign-born in each state’s labor force.

The following table examines the foreign born founder data in relation to location, and the prevalence of the population of foreign born employed within the specified states (from Census data).

	Founders		Foreign Born			Companies
Company Location	Foreign Born	U.S. Born	Aggregate	Percent	*Census Employed	Number
CA	31	56	31 of 87	35.6%	34.9%	36
CO	0	1	0 of 1	0.0%		1
GA	1	0	1 of 1	100.0%	12.1%	1
IL	0	2	0 of 2	0.0%		1
IN	0	3	0 of 3	0.0%		1
MA	0	2	0 of 2	0.0%		1
NC	0	1	0 of 1	0.0%		1
NJ	3	0	3 of 3	100.0%	25.6%	1
NY	3	6	3 of 9	33.3%	27.0%	3
TX	0	7	0 of 7	0.0%		2
UT	0	2	0 of 2	0.0%		1
WA	1	0	1 of 1	100.0%	14.3%	1
Total	39	80	39 of 119	32.8%	27.6%	50

*Census Employed is based upon the combined population of the five states of interest -- 2007 Census data An Unemployment rate of 5.2 percent would suggest that the foreign born Labor Force for this combined population would also be 32.8%

In closing, the majority of the Top 50 Venture-Funded companies are located in states with extremely high populations of foreign-born in the labor force -- the data shows nothing statistically remarkable about foreign-born founders. Moreover, the benefit of employment growth in foreign born cofounded companies is muted by a substantially higher application rate for temporary foreign workers and below average employment levels. In fact, companies Without a Foreign Born Founder" have employment levels 26% higher than the Top 50 average, while companies "Without a American Born Founder" have employment levels 25% lower than the Top 50 average employment levels.

Footnote:
I originally used a single data table to contain the cofounder data and manually sorted the single table to select the desired values for the Average and Sum spreadsheet functions. I must have inadvertently sorted the table an additional time, which in turn provided incorrect values for the Average and Sum calculations.

The corrected error:

Ninety-two percent, or 46 out of 50, of the country’s top venture-funded companies had one or more American born founders.

This error has been corrected, and learning from my mistake, I de-normalized the single data table into three separate data tables, which can be sorted without affecting the Average and Sum calculations.

I’ve updated the tables above this section to reflect the correct values for each table. I apologize for any inconvenience this may have caused, and I want to ensure to everyone that I have the utmost respect for providing true and correct data regarding this important debate.

Source Data:

National Foundation for American Policy (NFAP)
"Immigrant Founders and Key Personnel In America’s Top Venture-Funded Companies,"
http://www.nfap.com/pdf/NFAPPolicyBriefImmigrantFoundersandKeyPersonnelinAmericasTopVentureFundedCompanies.pdf

Wall Street Journal
Top 50 Venture-Funded Companies WSJ.com
(This source provided founder data omitted from tables presented by NFAP publication)
http://online.wsj.com/article/SB10001424052748704132204576190644237905576.html

Foreign Born Employed in the Labor Force:

Employed Civilian Foreign-Born Labor Force by State: 2007
Appendix Table A.

www.census.gov/prod/2008pubs/acs-09.pdf

H-1B LCA Application Data
http://www.h1bistro.com/

Appendix:

Data

Rank	Name	Location	Industry	All Founders	Employees	Year Founded	Immigrant founders	H-1B LCA
1	Castlight Health Inc.	San Francisco	Health Care	Giovanni Colella, Todd Park	100	2008	Giovanni Colella (Italy)	4
2	Xirrus Inc.	Thousand Oaks, Calif.	Information Technology	Steven DeGennaro, Dirk Gates, Patrick Parker	170	2003		0
3	Xactly Corp.	San Jose, Calif.	Business and Financial Services	Christopher Cabrera, Satish Palvai	140	2005	Satish Palvai (India)	13
4	Recycle Rewards Inc.	New York	Business and Financial Services	Patrick FitzGerald, Ron Gonen	150	2004		5
5	ExteNet Systems Inc.	Lisle, Ill.	Information Technology	Ross Manire, Eric Lekacz	86	2002		2
6	Cyan Optics Inc.	Petaluma, Calif.	Information Technology	Michael Hatfield, Rick Johnston, Steve West, Eric Clelland	102	2006	Steve West (South Africa)	16
7	Aster Data Systems Inc.	San Carlos, Calif.	Information Technology	Tasso Argyros, Mayank Bawa, George Candea	102	2005	Tasso Argyros (Greece) Mayank Bawa (India)	55
8	Glam Media Inc.	Brisbane, Calif.	Consumer Services	Samir Arora, Rebecca Bogle Arora, Ernie Cicogna, Susan Kare, Dianna Mullins, Raj Narayan, Fernando Ruarte, Vic Zaud	300	2004	Samir Arora (India) Raj Narayan (India)	6
9	Carrier IQ Inc.	Mountain View, Calif.	Information Technology	Bruce Lacey, Steve Roskowski	75	2005		16
10	Imperva Inc.	Redwood Shores, Calif.	Information Technology	Mickey Boodaei, Shlomo Kramer, Amichai Shulman	350	2002	Mickey Boodaei (Israel) Shlomo Kramer (Israel) Amichai Shulman (Israel)	14
11	Vidyo Inc.	Hackensack, N.J.	Information Technology	Alex Eleftheriadis, Avery More, Ofer Shapiro	140	2005	Ofer Shapiro (Israel) Alex Eleftheriadis (Greece) Avery More (Israel)	22
12	Etsy Inc.	Brooklyn, N.Y.	Consumer Services	Robert Kalin, Chris Maguire, Haim Schoppik, Jared Tarbell	185	2005	Haim Schoppik (Switzerland)	1
13	RGB Networks Inc.	Sunnyvale, Calif.	Information Technology	Edward Krause, Peter Monta, Adam Tom	175	2003	Edward Krause (Canada)	37
14	IronKey Inc.	Sunnyvale, Calif.	Information Technology	David Jevans	100	2005		8
15	Appia Inc.	Durham, N.C.	Information Technology	Jud Bowman	51	2008		214
16	The Active Network Inc.	San Diego	Business and Financial Services	James Woodman	2,500	1998		58
17	Nimble Storage Inc.	San Jose, Calif.	Information Technology	Umesh Maheshwari, Varun Mehta	55	2008	Umesh Maheshwari (India) Varun Mehta (India)	7
18	PatientSafe Solutions Inc.	San Diego	Health Care	Kim Rubin, David Swenson	80	2002		0
19	Glaukos Corp.	Laguna Hills, Calif.	Health Care	Olav Bergheim, Richard Hill, Morteza Gharib	40	2001	Olav Bergheim (Norway) Morteza Gharib (Iran)	0
20	Fusion-io Inc.	Salt Lake City	Information Technology	David Flynn, Rick White	370	2006		4
21	Achaogen Inc.	South San Francisco, Calif.	Health Care	Nathaniel David, J. Kevin Judice, Floyd Romesberg, Peter Schultz	64	2004		3
22	NeuroPace Inc.	Mountain View, Calif.	Health Care	Robert Fischell, David Fischell	90	1997		4
23	Xoom Corp.	San Francisco	Business and Financial Services	Alan Braverman, Kevin Hartz	70	2001		19
24	Workday Inc.	Pleasanton, Calif.	Business and Financial Services	Aneel Bhusri, David Duffield	650	2005		21
25	SpiderCloud Wireless Inc.	Santa Clara, Calif.	Information Technology	Peter Wexler	60	2008		20
26	Jive Software Inc.	Palo Alto, Calif.	Information Technology	Bill Lynch, Matt Tucker	336	2001		6
27	Federated Media Publishing	San Francisco	Consumer Services	John Batelle	165	2005		2
28	Boku Inc.	San Francisco	Business and Financial Services	Mark Britto, Ron Hirson, Erich Ringewald	65	2009	Mark Britto (Singapore) Ron Hirson (South Africa)	7
29	Zoosk Inc.	San Francisco	Consumer Services	Shayan Zadeh, Alexander Mehr	80	2007	Shayan Zadeh (Iran) Alexander Mehr (Iran)	8
30	EndoGastric Solutions Inc.	Redmond, Wash.	Health Care	Stefan Kraemer	120	2003	Stefan Kraemer (Germany)	0
31	Chegg Inc.	Santa Clara, Calif.	Consumer Services	Aayush Phumbhra, Osman Rashid	150	2007	Aayush Phumbhra (India) Osman Rashid (U.K.)	34
32	Everyday Health Inc.	New York	Consumer Services	Michael Keriakos, Benjamin Wolin	400	2002	Michael Keriakos (Canada)	26
33	Xsigo Systems Inc.	San Jose, Calif.	Business and Financial Services	R.K. Anand, Ashok Krishnamurthi, S.K. Vinod	110	2004	R.K. Anand (India) Ashok Krishnamurthi (India) S.K. Vinod (India)	36
34	Soasta Inc.	Mountain View, Calif.	Information Technology	Kenneth Gardner, Tom Lounibos	100	2006		3
35	Rally Software Development Corp.	Boulder, Colo.	Information Technology	Ryan Martens	241	2002		2
36	Prosper Marketplace Inc.	San Francisco	Business and Financial Services	Christian Larsen, John Witchel	38	2005		11
37	Pivot3 Inc.	Houston	Information Technology	Ryan Callison, Lee Caswell, Bill Galloway, Alan Skidmore	78	2003		3
38	Suniva Inc.	Norcross, Ga.	Energy and Utilities	Ajeet Rohatgi	190	2007	Ajeet Rohatgi (India)	4
39	Veracyte Inc.	South San Francisco, Calif.	Health Care	Bonnie Anderson	40	2008		0
40	ExactTarget Inc.	Indianapolis	Business and Financial Services	Chris Baggott, Scott Dorsey, Peter McCormick	850	2000		14
41	OncoMed Pharmaceuticals Inc.	Redwood City, Calif.	Health Care	Michael Clarke, Max Wicha	76	2004		5
42	ExaGrid Systems Inc.	Westborough, Mass.	Information Technology	James Pownell, Dave Therrien	145	2002		1
43	SeeSaw Networks Inc.	San Francisco	Business and Financial Services	Peter Bowen, Jeff Dickey, Rocky Gunderson, Scott Hines, Monte Zweben	20	2006		0
44	Silver Peak Systems Inc.	Santa Clara, Calif.	Information Technology	David Hughes	150	2004	David Hughes (New Zealand)	21
45	Zilliant Inc.	Austin, Texas	Information Technology	Alex Chien, Deborah Vollmer Dahlke, Peter Zandan	120	1999		25
46	Yammer Inc.	San Francisco	Business and Financial Services	Adam Pisoni, David Sacks	100	2008		5
47	Bivio Networks Inc.	Pleasanton, Calif.	Information Technology	Junaid Islam, Jeff Payne, Homayoun Valizadeh	60	2000	Junaid Islam (Canada) Homayoun Valizadeh (Australia)	6
48	TxVia Inc.	New York	Business and Financial Services	Carl Ansley, Colin Fleming, Aaron Tay	150	2006	Aaron Tay (New Zealand) Colin Fleming (New Zealand)	27
49	Service-now.com Inc.	Del Mar, Calif.	Information Technology	Fred Luddy	300	2003		2
50	Aprius Inc.	Sunnyvale, Calif.	Information Technology	Marc Epitaux, Peter Kirkpatrick, Jean-Marc Verdiell	25	2007	Marc Epitaux (Switzerland) Jean-Marc Verdiell (France)	10