Monday, January 2, 2012

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.

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 Employees10,314
Avg. Employees206.28
Total Founders119100%
Foreign Born Founders 3932.8%
American Born Founders8067.2%
With a Foreign Born Founder
Number of Companies2346.0%
Number of Employees3,289 31.9%
Avg. Employees143.0
*H-1B Work Visa Applications (LCA)36211.0%
Avg. Ranking (1 to 50)23.09
**Avg. Year Founded2004.9
Without a Foreign Born Founder
Number of Companies2754.0%
Number of Employees7,025 68.1%
Avg. Employees260.2
***H-1B Work Visa Applications (LCA)445 6.3%
Avg. Ranking (1 to 50)27.56
**Avg. Year Founded2003.5
Without an American Born Founder
Number of Companies1020.0%
Number of Employees1,295 12.6%
Avg. Employees129.5
*H-1B Work Visa Applications (LCA)15411.9%
Avg. Ranking (1 to 50)25.70
**Avg. Year Founded2005.2
* (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).

FoundersForeign BornCompanies
Company LocationForeign Born U.S. Born AggregatePercent*Census EmployedNumber
CA315631 of 8735.6%34.9%36
CO010 of 10.0%1
GA101 of 1100.0%12.1%1
IL020 of 20.0%1
IN030 of 30.0%1
MA020 of 20.0%1
NC010 of 10.0%1
NJ303 of 3100.0%25.6%1
NY363 of 933.3%27.0%3
TX070 of 70.0%2
UT020 of 20.0%1
WA101 of 1100.0%14.3%1
Total398039 of 11932.8%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.

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,"

Wall Street Journal
Top 50 Venture-Funded Companies
(This source provided founder data omitted from tables presented by NFAP publication)

Foreign Born Employed in the Labor Force:

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

H-1B LCA Application Data



RankNameLocationIndustryAll FoundersEmployeesYear FoundedImmigrant foundersH-1B LCA
1Castlight Health Inc.San FranciscoHealth CareGiovanni Colella, Todd Park1002008Giovanni Colella (Italy)4
2Xirrus Inc.Thousand Oaks, Calif.Information TechnologySteven DeGennaro, Dirk Gates, Patrick Parker17020030
3Xactly Corp.San Jose, Calif.Business and Financial ServicesChristopher Cabrera, Satish Palvai1402005Satish Palvai (India)13
4Recycle Rewards Inc.New YorkBusiness and Financial ServicesPatrick FitzGerald, Ron Gonen15020045
5ExteNet Systems Inc.Lisle, Ill.Information TechnologyRoss Manire, Eric Lekacz8620022
6Cyan Optics Inc.Petaluma, Calif.Information TechnologyMichael Hatfield, Rick Johnston, Steve West, Eric Clelland1022006Steve West (South Africa)16
7Aster Data Systems Inc.San Carlos, Calif.Information TechnologyTasso Argyros, Mayank Bawa, George Candea1022005Tasso Argyros (Greece) Mayank Bawa (India)55
8Glam Media Inc.Brisbane, Calif.Consumer ServicesSamir Arora, Rebecca Bogle Arora, Ernie Cicogna, Susan Kare, Dianna Mullins, Raj Narayan, Fernando Ruarte, Vic Zaud3002004Samir Arora (India) Raj Narayan (India)6
9Carrier IQ Inc.Mountain View, Calif.Information TechnologyBruce Lacey, Steve Roskowski75200516
10Imperva Inc.Redwood Shores, Calif.Information TechnologyMickey Boodaei, Shlomo Kramer, Amichai Shulman3502002Mickey Boodaei (Israel) Shlomo Kramer (Israel) Amichai Shulman (Israel)14
11Vidyo Inc.Hackensack, N.J.Information TechnologyAlex Eleftheriadis, Avery More, Ofer Shapiro1402005Ofer Shapiro (Israel) Alex Eleftheriadis (Greece) Avery More (Israel)22
12Etsy Inc.Brooklyn, N.Y.Consumer ServicesRobert Kalin, Chris Maguire, Haim Schoppik, Jared Tarbell1852005Haim Schoppik (Switzerland)1
13RGB Networks Inc.Sunnyvale, Calif.Information TechnologyEdward Krause, Peter Monta, Adam Tom1752003Edward Krause (Canada)37
14IronKey Inc.Sunnyvale, Calif.Information TechnologyDavid Jevans10020058
15Appia Inc.Durham, N.C.Information TechnologyJud Bowman512008214
16The Active Network Inc.San DiegoBusiness and Financial ServicesJames Woodman2,500199858
17Nimble Storage Inc.San Jose, Calif.Information TechnologyUmesh Maheshwari, Varun Mehta552008Umesh Maheshwari (India) Varun Mehta (India)7
18PatientSafe Solutions Inc.San DiegoHealth CareKim Rubin, David Swenson8020020
19Glaukos Corp.Laguna Hills, Calif.Health CareOlav Bergheim, Richard Hill, Morteza Gharib402001Olav Bergheim (Norway) Morteza Gharib (Iran)0
20Fusion-io Inc.Salt Lake CityInformation TechnologyDavid Flynn, Rick White37020064
21Achaogen Inc.South San Francisco, Calif.Health CareNathaniel David, J. Kevin Judice, Floyd Romesberg, Peter Schultz6420043
22NeuroPace Inc.Mountain View, Calif.Health CareRobert Fischell, David Fischell9019974
23Xoom Corp.San FranciscoBusiness and Financial ServicesAlan Braverman, Kevin Hartz70200119
24Workday Inc.Pleasanton, Calif.Business and Financial ServicesAneel Bhusri, David Duffield650200521
25SpiderCloud Wireless Inc.Santa Clara, Calif.Information TechnologyPeter Wexler60200820
26Jive Software Inc.Palo Alto, Calif.Information TechnologyBill Lynch, Matt Tucker33620016
27Federated Media PublishingSan FranciscoConsumer ServicesJohn Batelle16520052
28Boku Inc.San FranciscoBusiness and Financial ServicesMark Britto, Ron Hirson, Erich Ringewald652009Mark Britto (Singapore) Ron Hirson (South Africa)7
29Zoosk Inc.San FranciscoConsumer ServicesShayan Zadeh, Alexander Mehr802007Shayan Zadeh (Iran) Alexander Mehr (Iran)8
30EndoGastric Solutions Inc.Redmond, Wash.Health CareStefan Kraemer1202003Stefan Kraemer (Germany)0
31Chegg Inc.Santa Clara, Calif.Consumer ServicesAayush Phumbhra, Osman Rashid1502007Aayush Phumbhra (India) Osman Rashid (U.K.)34
32Everyday Health Inc.New YorkConsumer ServicesMichael Keriakos, Benjamin Wolin4002002Michael Keriakos (Canada)26
33Xsigo Systems Inc.San Jose, Calif.Business and Financial ServicesR.K. Anand, Ashok Krishnamurthi, S.K. Vinod1102004R.K. Anand (India) Ashok Krishnamurthi (India) S.K. Vinod (India)36
34Soasta Inc.Mountain View, Calif.Information TechnologyKenneth Gardner, Tom Lounibos10020063
35Rally Software Development Corp.Boulder, Colo.Information TechnologyRyan Martens24120022
36Prosper Marketplace Inc.San FranciscoBusiness and Financial ServicesChristian Larsen, John Witchel38200511
37Pivot3 Inc.HoustonInformation TechnologyRyan Callison, Lee Caswell, Bill Galloway, Alan Skidmore7820033
38Suniva Inc.Norcross, Ga.Energy and UtilitiesAjeet Rohatgi1902007Ajeet Rohatgi (India)4
39Veracyte Inc.South San Francisco, Calif.Health CareBonnie Anderson4020080
40ExactTarget Inc.IndianapolisBusiness and Financial ServicesChris Baggott, Scott Dorsey, Peter McCormick850200014
41OncoMed Pharmaceuticals Inc.Redwood City, Calif.Health CareMichael Clarke, Max Wicha7620045
42ExaGrid Systems Inc.Westborough, Mass.Information TechnologyJames Pownell, Dave Therrien14520021
43SeeSaw Networks Inc.San FranciscoBusiness and Financial ServicesPeter Bowen, Jeff Dickey, Rocky Gunderson, Scott Hines, Monte Zweben2020060
44Silver Peak Systems Inc.Santa Clara, Calif.Information TechnologyDavid Hughes1502004David Hughes (New Zealand)21
45Zilliant Inc.Austin, TexasInformation TechnologyAlex Chien, Deborah Vollmer Dahlke, Peter Zandan120199925
46Yammer Inc.San FranciscoBusiness and Financial ServicesAdam Pisoni, David Sacks10020085
47Bivio Networks Inc.Pleasanton, Calif.Information TechnologyJunaid Islam, Jeff Payne, Homayoun Valizadeh602000Junaid Islam (Canada) Homayoun Valizadeh (Australia)6
48TxVia Inc.New YorkBusiness and Financial ServicesCarl Ansley, Colin Fleming, Aaron Tay1502006Aaron Tay (New Zealand) Colin Fleming (New Zealand)27 Inc.Del Mar, Calif.Information TechnologyFred Luddy30020032
50Aprius Inc.Sunnyvale, Calif.Information TechnologyMarc Epitaux, Peter Kirkpatrick, Jean-Marc Verdiell252007Marc Epitaux (Switzerland) Jean-Marc Verdiell (France)10

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