Cleveland attorney Richard  Herman sent me an outstanding analysis (posted below) of a Duke University study released on January 4, 2007, which is attached to this posting and "concludes that foreign-born entrepreneurs were founders of over 25% of the technology and engineering companies started from 1995 to 2005," and surfaces that "Only 14% of Ohio's tech companies were founded by immigrants, well below the national average." "The study further found that Indians have founded more engineering and technology companies in the U .S. in the past decade than immigrants from U.K, China, Taiwan and Japan combined.  26% of all immigrant-founded companies have Indian founders." "Similarly, the study found that Ohio was successful in attracting only 1% of the Indian tech entrepreneurs and only 5% of the UK tech entrepreneurs." Richard offers three excellent suggestions for addressing this problem, and you should read those and his entire Economic Development Advisory and the attached report below.

Economic Development Advisory The most shocking finding of Richard's analysis is that "Currently, the Ohio Third Frontier Internship Program offers subsidies to Ohio employers who agree to offer paid internships to Ohio college students" but "The program expressly excludes students attending Ohio universities and colleges who are not U.S. Citizens.  This exclusion affects not only international students but also U.S. Permanent Residents who are attending Ohio's institutions of higher education." This is absurd, and I agree completely with Richard's assessment: "While it is not likely that such an exclusion would survive a constitutional challenge, it is certain that such a policy sends a strong message that Ohio does not fully appreciate and support international talent attending Ohio colleges."

In thinking about this analysis, I'll add that for all the economic development analyses, proposals and investments being made in our region, this is the only analysis I've seen that even mentions the importance of immigrants. It would be interesting to take a look at the companies funded by Jump Start and other local ED funds and initiatives to see how many dollars are going to immigrant-founded enterprises... and how many foreign born residents sit on local non-profit and for-profit boards and planning committees. We tend to have an inbred power structure... it is time to determine exactly how inbred. Thanks to Richard Herman for being the lone voice on this issue in NEO!

Economic Development Advisory - January 4, 2007

TO COMPETE IN A KNOWLEDGE-BASED ECONOMY, OHIO NEEDS TO SIGNIFICANTLY IMPROVE ITS ABILITY TO ATTRACT AND RETAIN IMMIGRANT TALENT

"America's New Immigrant Entrepreneurs," a study released today by a team of researchers at Duke University concludes that foreign-born entrepreneurs were founders of over 25% of the technology and engineering companies started from 1995 to 2005.

Please see attached study, and BusinessWeek link below.

http://www.businessweek.com/smallbiz/content/jan2007/sb20070103_187304.h...

Nationwide, these immigrant-founded companies produced $52 billion in sales and employed 450,000 workers in 2005.

The study further found that Indians have founded more engineering and technology companies in the U .S. in the past decade than immigrants from U.K, China, Taiwan and Japan combined.  26% of all immigrant-founded companies have Indian founders.

Not surprisingly, Ohio did not fair well in the study.

Only 14% of Ohio's tech companies were founded by immigrants, well below the national average of over 25%.

Similarly, the study found that Ohio was successful in attracting only 1% of the Indian tech entrepreneurs and only 5% of the UK tech entrepreneurs.
 
The Venture Capital industry is taking notice of the connection between high tech innovation and immigrant talent.

In November, 2006, the Venture Capital Association released the report "American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness."

The report found that a full 20 percent of venture-backed public companies were founded by one or more immigrants, Within the high-tech sector, that percentage rises to a whopping 40 percent.

The aggregate market capitalization of these companies exceeds $500 billion. Additionally, nearly half of today's private venture-backed start-ups have immigrant founders, and the proportion of immigrant-founded venture-backed companies has been increasing.

Eighty-seven percent of companies founded by immigrants operate in sectors such as high-tech manufacturing, information technology and life sciences, the study said.

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So the big question, how does Ohio start to reverse this trend and begin to proactively attract and retain immigrant talent?

A good first-step would be to examine ways to better attract and retain international students to Ohio colleges and universities. 

It is important to note that students are a leading indicator of global talent flows.

International students' success in the U.S. reflects these trends. Over 50% of all U.S. PhD's in Engineering are immigrants; 45% of all U.S. PhDs in Life Sciences, Physical Sciences, and Computer Sciences are immigrants;  over 40% of all U.S. Master Degreed Computer Scientists, Physical Scientists and Engineers are Immigrants; 25% of all Physicians in the U.S. are immigrants.

Another leading indicator of talent flow and innovation is patent filings, which often relate back to university-based research.  Nearly 50% of all patents filed in the U.S. are filed by immigrants or international entities.

A recent World Bank study attempted to quantify immigrants’ contributions to innovation and the generation of new ideas, as measured by the number of patents applied for or received in a given year.  According to the study, a 10 percent increase in the number of graduate students from abroad, as a share of total graduate students, increases the number of patents granted to U.S.-based universities, firms, and other institutions by about 6–7 percent.

Ohio has a great resource in its colleges and universities, many of which have world-class science and engineering research facilities. Ohio needs to better leverage this position to attract and retain international talent.

Imagine what Ohio's economy would look like today if it had attracted some of the following immigrant innovators (most of whom came to the U.S. to attend college, graduated, worked in the U.S., and then started their companies in the U.S.):

Andy Grove
Co-Founder, INTEL
Country of Birth: Hungary

Sergey Brin
President, Co-Founder, GOOGLE
Country of Birth: Russia

Vinod Khosla
Co-Founder, SUN MICROSYSTEMS
Country of Birth: India

Pierre Omidyar
Founder and Chairman, eBay
Country of Birth: France

Jerry Yang
Co-Founder, YAHOO!
Country of Birth: Taiwan

Suhas Patil
Founder,  CIRRUS LOGIC
Country of Birth: India

Subrah Iyar
Co-founder, Chief Executive, WEBEX COMMUNICATIONS
Country of Birth: India

Sanjiv Sidhu
Founder, Chairman, I2 TECHNOLOGIES
Country of Birth: India

Jen-Hsun Huang
Co-Founder, NVIDIA
Country of Birth: Taiwan

Ohio is already leader in attracting international students.   Ohio's 18,000 international students, which comprise the 7th larges international student population in the country, inject $425,000,000 per year into the Ohio economy through tuition and living expenses.

Ohio falls behind, however, in failing to find innovative ways to retain these international students upon graduation. Better retention would lead to a rippling effect and significantly improve the quality and quantity of high-tech start-ups.

Specifically, the State of Ohio should:

1.)  Enact programs to promote internships for international students within Ohio corporations and research organizations.

2.)  Inasmuch as Higher Education is already a major export for the state of Ohio, develop a joint marketing initiative so that all Ohio universities and colleges can collectively recruit international students from abroad

3.)  Develop regional networks to help welcome international students into the social, civic, business, and multicultural life of Ohio cities

While #2 and #3 are self-explanatory, a few words about internships for international students may be instructive.

Currently, the Ohio Third Frontier Internship Program offers subsidies to Ohio employers who agree to offer paid internships to Ohio college students.

The program expressly excludes students attending Ohio universities and colleges who
are not U.S. Citizens.  This exclusion affects not only international students but also U.S. Permanent Residents who are attending Ohio's institutions of higher education.

While it is not likely that such an exclusion would survive a constitutional challenge, it is certain that such a policy sends a strong message that Ohio does not fully appreciate and support international talent attending Ohio colleges.

Under Governor Strickland's administration, it is hoped that efforts would be made to eliminate the exclusion of non-U.S. citizens from participating in the Ohio Third Frontier Internship program. In light of the compelling data that shows that immigrant engineering and technology talent are turbo-chargers for economic growth in a knowledge-based economy, it is clear that a policy of inclusion and equality for international talent should be incorporated into the Third Frontier Internship Program.
 
Such an amendment would capitalize on Ohio's strengths in attracting top international students to Ohio's colleges and universities, and help create an environment that supports and retains internationals upon graduation.

Richard Herman
Richard T. Herman & Associates, LLC
A Multicultural Law Firm Serving Diverse Communities
815 Superior Avenue, Suite 1910
Cleveland, Ohio 44114
216-696-6170
216-696-0104 fax
www.asklawyer.net
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