Immigration boosts entrepreneurship

March 26, 2010

Despite his occasional bout of annoying repetitiveness (the world is flat : i got the point, no need for 600 pages), Thomas Friedman produces some inspirational columns, and this week’s on the Intel Science Talent Search is no exception in my humble opinion.

Friedman’s column triggered my thinking about the importance of immigration in building successful startups, and why we don’t witness more of this phenomenon here in France.

In the US, the statistics are well-documented. Google, Pfizer, Intel, Yahoo, DuPont, eBay and Procter & Gamble are all former start-ups founded by immigrants. Foreign-born residents made up just 12.5% of the US population in 2008. But nearly 40% of technology company founders and 52% of founders of companies in Silicon Valley are immigrants.

The grass-roots startup visa movement recognizes the importance of immigrants and attempts to reform immigration policy to value this fact.

In France, such statistics are more elusive. France’s fundamental value of égalité pre-empts measurement of workers by race or country of origin. However, I suspect that barring a few rare exceptions, French high-tech success stories rarely stem from founder teams of diverse national origins.

Building a successful business in France requires being an insider. Individuals who attended the right school or are well-connected are more likely to receive funding and access the right gatekeepers to enter markets. Banks are more likely to be receptive to an individual with the right pedigree. French VCs are generally more attracted to grande école graduates. Individuals from the right milieu are more likely to be aware of the numerous state subsidy programs and have the political wherewithal to take advantage of them. Without the right connections, however, an entrepreneur must exert heroic efforts to overcome the inertia of a risk-averse business culture.

Additionally, immigrating to France requires heroic efforts in and of itself. Unlike the arguably successful « points » program in the UK, France does not offer a fast-track immigration process based on business qualifications. The mere prospect of obtaining a French work permit for non-European citizens is daunting.

For those determined (and perhaps foolish ?) few that persevere and jump through all the hoops (present company not excluded), the financial rewards are subject to heavy tax burdens.

For these reasons, the best and brightest usually do not choose France as their first priority. They go to the US or the UK, environments leaning closing to the ideal of meritocracy, where they can succeed as outsiders and reap the financial rewards of their efforts.

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posted in venture capital by mark

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  • Terry J

    Interesting post. You’re absolutely right about how tough it is in France for entrepreneurs who are different.

    I wonder if the difficult environment for immigrant entrepreneurs in France is more of a recent phenomenon though (ie post WWII). I recently visited the museum of immigration in eastern Paris. Immigrants have had a big impact on French society and business, which is laid out nicely in the museum. For example, the wine industry, particularly in Bordeaux. Bordeaux as we know it today was largely shaped by the British and Irish (just check out some of the names of the chateaux – Cantenac-Brown, Brane Cantenac, Langoa Barton etc). Also the porcelain industry, on which Russian immigrants apparently had a large influence. You should check out the museum if you get the chance. I really learned a lot about how much immigrants helped lay the seeds for what became modern France.

    So perhaps the French need to go back to their roots a bit on this one!

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