According to the Immigration Policy Center, in 2010, “more than 40 percent of the Fortune 500 companies were founded by immigrants (90 companies) or children of immigrants (114 companies).” Together, these employ over 3.6 million people.
But the continuing success seen in the past is not inevitable.
A new start-up for start-ups, UnShackled, wants to make sure immigrant entrepreneurs keep succeeding.
The Start-Up Visa was meant to help retain top talent in the United States, creating a temporary immigrant visa which converts to a permanent residency after two years if certain conditions are met. Originally introduced in March 2011, the Start-Up Visa has stalled. In November 2014, the founders of Unshackled Ventures, Manan Mehta and Nitin Pachisia, stepped in to fill the void.
“The funding and immigration scenario have become more challenging for early stage immigrant founders since 2007,” Pachisia said. “On the immigration front, for instance, it takes much longer to reach permanent residency. Similarly, the funding environment has shifted towards a seed round following the product, which means a lot has to be accomplished before you can secure a seed round.”
Typically, funding for a business idea must be found from friends, family and angel investors, but it’s often not enough.
The result is that fewer companies are founded by immigrants, said Pachisia. “These factors are forcing visa-holding entrepreneurs to stay in day jobs, and bury their ideas or build their companies in another country.”
“Unshackled is in a great position to help highly-skilled immigrant entrepreneurs who are already in the US with a work authorization to innovate on a full time basis and build a seed fundable product. Effectively, we are providing the same solution that the Start-Up Visa was expected to provide.”
A new model to support immigrant entrepreneurs
Simply put, UnShackled is a $4 million angel investment fund. But it is more than that.
VentureBeat outlined UnShackled’s unique approach:
“In addition to funding, Unshackled will sponsor these entrepreneurs’ visa applications, so they can leave their current employer — or graduate from college — without being deported… many entrepreneurs [are] unable to afford to leave their current jobs or situations to pursue their ideas because of immigration or financial limitations. Employer-sponsored visas (known as H1-B visas) are only valid as long as the person is working for the sponsoring company; leaving to start a company means losing the visa, unless the new employer can sponsor the visa. Leaving would also mean no more employer benefits, and so on.
So that’s where Unshackled comes in. Under the fund’s model, these entrepreneurs become employees of Unshackled, which then takes over sponsoring their visas. Unshackled also provides benefits and disburses the startup’s funding through payroll for them and their employees.”
In a VentureBeat interview, Mehta explained, “we’re funded as a fund but we operate as a tech startup.” TechCrunch went a step further, calling UnShackled a “startup studio, a hybrid between a [venture capital] fund and a coworking space and an accelerator.”
UnShackled takes a wide-ranging approach to providing support. Start-ups get:
- Legal support
- Network of actively involved investors and business accelerators
- Design consulting
- A working space
- Fundraising, access to investors
- Marketing, branding and PR consulting
- Corporate and investment banking services
- Mentors and advisors made up of founders, entrepreneurs, and investors who have built billion dollar companies
It’s an approach that Pachisia said is necessary “to regain the competitive edge the US had as the most entrepreneurial place on earth.”
In a way, immigrants are naturally entrepreneurial. They come with a fresh set of ideas and thoughts because they come from a different country and working environment. “This is a huge advantage that often enables them to think out of the norm, which is the fuel behind disruption,” said Pachisia. “Certain things that are taken for granted by someone growing in a particular system or culture, are not so certain for a person new to that system.”
The UnShackled team also found that immigrant entrepreneurs have a high degree of passion and drive. “It’s almost like they have a chip on their shoulder and a point to prove. After all, they are giving up the comfort of their home country, family and support system to pursue their dreams in the US.” Himself an immigrant entrepreneur, Pachisia added, “this makes us desperate to succeed.”
At the same time, many immigrant entrepreneurs lack deep networks, the kind people build through school and jobs. There might also be communication and management style gaps, but these are “coachable” skills.
Unshackled is designed to step in as a support system. It provides a network of investors and entrepreneurs as well as coaching on various skills including communication, story telling, and management styles.
It is early to talk about success stories. Pachisia pointed out that start-up success can take five to seven years.
As of April 2015, UnShackled had made four investments in teams working on technology-focused businesses. Names are not yet being disclosed, but according to Pachisia, “companies include a [software as a service] company that is reinventing eCommerce search, a team that is disrupting the executive search business, a mobile app to make shopping at fashion stores a much more efficient experience for women, and a mobile app for sales professionals to close deals anywhere, anytime.”
The teams represent a mix of visa-holding immigrants and US citizens or permanent residents, with diverse US and international education and work experience.
“All founders are extremely passionate about their missions,” said Pachisia.
For some immigrant entrepreneurs, UnShackled may be the funding and stabilizing bridge they need to bring their ideas to life in the United States.
Did you know?
- Across half the OECD in 2012, around 70 per cent of start-ups were born because of opportunity or taking over a family business, as opposed to necessity (OECD 2014).
- In the US, immigrants are nearly twice as likely to start a business as native-born (Kauffman Foundation).
- More than 40 per cent of Fortune 500 companies in 2010 were founded by immigrants (Partnership for a New American Economy).
- In 2011, 76 per cent of patents going to the top ten patent-producing US universities had at least one foreign-born inventor (Partnership for a New American Economy).
- In the US as of June 2013, immigrant-founded venture-backed companies had a total market capitalization of $900 billion. If these companies were a country, its stock exchange value would rank sixteenth, above Russia and South Africa (National Venture Capital Association).