Foreign graduates deterred from joining US technology start-ups

PhD leavers from overseas seek new companies, but can’t accept visa risks

August 6, 2019
Hoping to apply to a US university as a foreign student.

Foreigners who graduate from universities with a science doctorate are far less likely than their American citizen counterparts to work at a start-up company, costing the country critical expertise in sectors important to economic growth, a nationwide study has found.

The foreigners are more interested than Americans in joining start-ups, but real and perceived problems in securing visas lead many of them to withdraw from consideration after receiving a job offer from a start-up, the study found.

The findings, published in the Proceedings of the National Academy of Sciences, were based on survey data and job application rates involving 2,324 foreign and US doctoral recipients compiled by researchers at Cornell University and the University of California, San Diego.

The barriers facing foreigners keen to join start-up technology companies suggested significant harm to both the individuals and the broader US economy, said one of the authors, Michael Roach, an assistant professor of entrepreneurship at Cornell.

“This study shows that the start-ups are really losing out with respect to the immigration policies,” he said.

Restrictions, quotas, costs and timelines are well-known obstacles to highly educated foreigners settling in the US, despite support in both major political parties for welcoming them.

But Dr Roach said his study, conducted with John Skrentny, a professor of sociology at San Diego, was the first to quantify the situation affecting new companies, which often fail but nevertheless have significant job-producing potential.

The scholars found that among graduates with a doctorate in science or technology fields whose first job was corporate research and development, 15.8 per cent of US nationals worked in a start-up, compared with 6.8 per cent of foreigners.

The data showed that the foreigners were just as likely as US nationals to seek and receive offers from start-up companies. But after getting an offer, the foreigners were 56 per cent less likely to take the job.

Major reasons for the difference, Dr Roach said, include the uncertainties and finances surrounding a start-up company, as compared with more established technology companies.

US law does allow university graduates in the sciences to stay 36 months beyond the end of their student visa, during which time many apply for work visas and permanent residency. But the process is complicated, involves thousands of dollars in fees, and must be restarted if the applicant changes jobs – all factors that discourage a choice of low-budget, high-risk start-up ventures, Dr Roach said.

Yet start-up companies have long been recognised as vital creators of new jobs, especially in science and technology fields. Experience in them is beneficial both for the worker and for his or her ability to create more start-up companies in the future, Dr Roach said.

Visa-related obstacles were “cutting off an important work experience and learning experience for these immigrants”, he said.

Lawmakers from both parties, and the Trump administration, have advocated measures that would grant a green card or other immigration advantages to highly skilled workers. But virtually any changes to immigration law, as well as the current set of visa extensions for university graduates, remain highly controversial in the nation’s present political environment.

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