The Startup Arms Race: Can the US stay ahead?

March 23, 2010

Startups are the backbone of the US economy, and according to Eric Ries, the creator of Lean Startup Methodology and writer for the Huffington Post, startups have accounted for nearly all net job growth in our country for the past two decades.This being the case, it makes sense that developing countries are trying to catch up to the US in the startup race.

The cost of creating new companies is falling, and globalization has made access to markets, distribution, and information available to anyone with an internet connection. We are all aware that immigrants play a vital role to American job creation. In fact, according to Ries’ article in the Huffington Post, over 25% of the technology companies founded between 1995-2005 had a key immigrant founder, and those companies produced over $52 billion in sales, and employed 450,000 workers in 2005 alone. Along the same lines, 24% of all patents filed in the US in 2006 had a foreign resident as inventor or co-inventor.

What can the US do to hold its place at the forefront of entrepreneurial talent? The Startup Visa Act of 2010 could be the answer. Currently pending in the Senate, and co-sponsored by Senator John Kerry (D-MA) and Senator Richard Lugar of Indiana (R-IN), this Act would open up the US to immigrant entrepreneurs, granting them US work visas if they can secure at least $100,000 from a sponsoring angel investor or at least a $250,000 venture capital investment from a qualifying fund. After two years, if the immigrant entrepreneur can create at least five jobs (not including family members), attract an additional $1 million in angel investments or venture funding, or produce $1 million in revenue, the entrepreneur can become a legal US resident.

What do you think… Is a startup visa a smart way to attract entrepreneurial immigrants to the US?

For more information about the Startup Visa, please check out StartupVisa.com.

VP, Human Capital

<strong>Diana Martz</strong> is Vice President, Human Capital at<a href="http://www.ta.com/">TA Associates</a>. She was previously the Director of Talent at OpenView.