Immigrant Founders -- The Rest of the Story

<Eighty-two percent, or 41 out of 50, of the country’s top 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.

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; however, 19 of those 23 companies also had one or more American born founders.

Only 9 of the Top 50 companies did not have an American born founder. Most of the Top 50 companies are located in California, which has 34.9% population of foreign-born employed in the labor force, so the 32% foreign-born founders (found in the table below) basically represents the population.

* Avg. Year Founded is decimal

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 by ranking, but the foreign born cofounded companies seriously under-perform in the” Number of Employees” category. 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.

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).

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.

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

Appendix: Data