VALLEY'S NEW LEADERS COMING FROM OVERSEAS: STUDY SHOWS IMMIGRANTS HELP CREATE MORE THAN HALF OF AREA'S START-UPS
BYLINE: John Boudreau, San Jose Mercury News, Calif.
Jan. 4--Sudhakar Muddu left everything familiar in his homeland of India in 1990 to attend Yale University on a post-graduate scholarship. He later worked for IBM and Silicon Graphics.
But he didn't leave family and home just to have his name in a company directory. He staked everything on the Silicon Valley Dream -- starting a tech company.
"Leaving family is such a hardship," said Muddu, now on his second start-up, Kazeon, a 3-year-old Mountain View maker of search technology for businesses. "So the dream is to make a mark, to prove something to your family and to the world."
Muddu's story is replayed over and over in the valley, where, according to a study being published today, more than half of local start-ups established in the past decade were founded by people born overseas.
The report, "America's New Immigrant Entrepreneurs," written by researchers from Duke University and the University of California-Berkeley, confirms what many in the valley already know: Skilled immigrants from India, Taiwan, China and other countries play key roles in the creation of wealth and jobs. Nationwide, 25 percent of tech and engineering start-ups have founders who are immigrants.
In many ways, Silicon Valley's risk-taking ethos is a perfect fit for immigrants who often chance everything to come to the United States.
"For those of us who have the guts to leave our country and our family, just settling for a job is not good enough," said Vivek Khuller, founder of Mountain View-based DiVitas Networks, whose technology allows professionals to sync their work phones, e-mail and other communications applications with their mobile phones. "It's in your blood to take risks."
"America has so many advantages," including a legal and financial system that encourages entrepreneurship, said Vivek Wadhwa, the study's primary author who is executive-in-residence at the Pratt School of Engineering at Duke. But, he added, "The secret ingredient is the immigrants who come here. These are people used to being in a land of a billion people and fighting corruption and all the obstacles of that society. You take those people and put them in fertile ground and they flourish."
The contributions of skilled immigrants to U.S. society is often lost in the debate about undocumented immigrants, Wadhwa said. So he decided to take another look at their influence in the nation's technology and engineering sectors.
The report, which builds on the 1999 research of AnnaLee Saxenian, dean of the School of Information at UC-Berkeley, echoes a recent study by the National Venture Capital Association. That report said 47 percent of venture-backed start-ups have immigrant founders.
The Duke study, in which 2,054 engineering and tech companies founded from 1995 through 2005 were surveyed, revealed that 52 percent of valley start-ups had at least one immigrant as a key founder. In Research Triangle Park in North Carolina, less than 19 percent of the start-ups had an immigrant founder.
Rafiq Dossani, senior research scholar at Stanford University who studies India's technology sector and its relationship to Silicon Valley, questioned some of the report's methodology, including the use of graduate students and research assistants to phone the companies, rather than meeting face to face with executives to ensure more accurate reporting. He also believes the study should have distinguished between immigrants who came to the United States as young children and those who came later in life, such as college students.
"I don't think it's academically rigorous. But it certainly has a value, which is to show that immigrants continue to make an impact through the bubble, through the burst and into the recovery," Dossani said.
Vish Mishra, senior venture partner with Clearstone Venture Partners in Menlo Park, said many of the companies his firm backs were founded by immigrants.
"The valley doesn't care what your color is, what your origins are, what your gender is," he said. "As long as you have talent and are prepared to work hard, people don't care who you are."
Vietnamese are the second-largest Asian group in the valley, but they do not show up in large numbers when it comes to founding engineering or tech companies, the Duke study revealed.
That does not surprise Yuric Hannart, a Vietnamese-American who founded Ontelix, a Santa Clara start-up that makes open-source software for small and medium-size businesses. Hannart, who changed his Vietnamese name when he became a U.S. citizen in 1980, said the first wave of Vietnamese were political refugees in the 1970s. They came with children to feed, not elite university degrees, like many Taiwanese, Chinese and Indians, he added.
"Many of their businesses were started by necessity rather than by choice," Hannart said. "They came here with nothing. Many could not speak English. They started restaurants and mom-and-pop stores."
Saxenian said immigrant entrepreneurs add to the valley's ecosystem of venture capital, world-class universities and abundant talent. As business opportunities and markets continue to open up in countries like India, China and Vietnam, skilled immigrant workers will enable valley companies to expand further overseas.
"They are connecting us to new markets we wouldn't have access to," she said.
Contact John Boudreau at jboudreau@mercurynews.com or (408) 278-3496.
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