It’s widely established that foreign-born STEM students are great for the economy. Not only do they make up a disproportionate number of Ph.D. graduates in science and engineering, but they also go on to start a disproportionate number of startups, with over half of American startups valued at over $1 billion having been founded by immigrants, including WhatsApp’s Jan Koum, CloudFlare’s Michelle Zatlyn, WeWork’s Adam Neumann, and of course multiple entrepreneurs like Elon Musk and Peter Thiel.
Maintaining this hugely lucrative pipeline is therefore incredibly important to the economic health and vitality of the nation, yet recent research from Cornell University suggests it’s a leaky and dysfunctional pipeline. The paper highlights how despite many foreign-born Ph.D. graduates applying for jobs at tech startups, and indeed receive offers to work for them, a large number of them fail to actually take up those jobs due to visa issues.
Instead, those people were much more likely to work at larger tech companies who have the resources and expertise to help them navigate the Kafka like H-1B and permanent residency process. It’s a process that Estonian startup Jobbatical are familiar with, as they recently announced a pivot of their own.
The company began life as a jobs service, with the aim of helping “citizens of the world” find work either overseas or that could be performed remotely. During this time they developed detailed expertise in navigating the visa processes around the world, and so they have moved away from jobs and towards providing dedicated visa support for individuals and organizations alike.
“Complex immigration is a huge problem for companies, including startups. From country to country the problems vary. Several European countries have moved towards simplifying the immigration process for tech companies and/or startups. Estonia certainly is a strong example here,” Jobbatical founder Karoli Hindriks explains. “A person from a visa-free country can be granted the right to work at a startup as quickly as within 1-2 working days. For those who need a visa to enter Estonia, it takes about two weeks. At the same time, Estonia has so few embassies globally that often we have to fly people to another continent to get the visa in their passports.”
Welcome though such services are, given the important role startups play as the engine of economic growth and innovative output, it seems now is the time for governments to get their act together and reform a visa process that is currently denying startups access to the talent they need to grow.
Fintech startup Elemental Financial appreciate this all too well. Its very business revolves around breaking down barriers and reconnecting the world’s financial system by providing risk-managed banking services to emerging markets around the world. It’s a mission that requires access to the best talent however, both in their London headquarters and their regional bases around the world.
“Our business relies on building relationships so that we can rise above commodity status, so it’s vital that we can attract the best people, regardless of their nationality,” Kevin von Neuschatz, CEO Elemental Financial says. “We aim to reverse the ‘banking cull’ that left many key areas like Africa locked out of the banking system. Being able to recruit and onboard those talented individually as easily as possible is vital given the inevitable resource constraints startup life presents.”
The Cornell research underlines just how big of an obstacle navigating visa policies is for startups who want to attract foreign-born talent, even in areas where there is a clear demand for skills. The difficulties navigating this domain creates an inherently uneven playing field, with big companies at a distinct advantage.
“A key insight from this research is that rather than fostering entrepreneurial activity, U.S. visa policies may disadvantage young technology startups—and this applies to startups founded by immigrants and U.S. citizens alike,” the researchers explain. “But hiring is one of the key challenges for early-stage technology startups, and current U.S. visa policies make it even harder.”
The researchers designed the study to rule out a number of other factors that could account for the disparity. For instance, they took account of the potential for greater risk aversion among foreign graduates that might account for the lower acceptance rate of offers with startups, with the data actually showing that foreign graduates actually had a higher propensity for risk.
They also considered the financial implications of working for a startup, with lower salaries common across the startup world, but again, the foreign graduates consistently listed pay as less important when choosing their ideal job than their American peers.
Skills in demand
The study found that technical skills, especially in areas such as data science and machine learning, are in huge demand, and as such it is perhaps unsurprising that unemployment among Ph.D. graduates in STEM disciplines is remarkably low. It’s a market in which around half of those receiving doctorates are foreign born however, so it’s vital that companies can easily recruit from this talent pool.
This is especially so as more and more of the economic growth of the country is dependent upon innovation in science and technology. This was underlined by the recent 2019 edition of the Global Innovation Index, which again highlighted the importance of talent to the innovative output of a nation.
The Cornell team remind us that even when innovation appears to come from a big company, it actually has its origins in a startup.
“We often see great innovations coming from Google and Apple, but a lot of their innovation is actually from buying startups,” they say. “These startups have trouble accessing the foreign talent our best universities are graduating.”
Uneven playing field
The tremendous demand for STEM graduates is underlined by the finding that Ph.D.s with American citizenship were about twice as likely to work for a startup as their foreign-born peers, even though both the application and offer rates were similar for both groups.
The researchers believe their findings provide a clear indication that onerous visa processes play a significant role in the ultimate career choices of highly skilled graduates, and they urge policy makers to consider interventions to make navigating them easier, both for graduates and startups alike.
“The findings of this study suggest the need to consider immigration policies that make it easier for technology startups to hire highly skilled foreign workers with Ph.D.s from U.S. research universities,” they conclude. “We may want to consider ways to make it easier for high-growth startups to hire the workers they need.”