Eberhard Anheuser came to America as a soap and candle maker in 1842. When he died, his company had pioneered the pasteurization of beer. Marcus Goldman came to the United States in 1848 to work as a peddler on the streets of New York. Thirty years later, the company he founded was turning over $30 million of commercial paper a year. These two immigrants arrived on these shores with a few sparse belongings and went on to found two of America's iconic companies -- Anheuser Busch and Goldman Sachs. Immigrant entrepreneurs helped build America, yet current immigration laws are hostile to them, and the bills currently being debated in Congress do little to alleviate that situation.
The list of companies founded by immigrants is long and storied, and includes modern tech giants as well as established icons. It includes Warner Brothers, Anheuser Busch, Goya Foods, Goldman Sachs, Paramount Pictures, Sbarro, Forever 21, Google, Intel, Sun Microsystems, Yahoo!, Yurie Systems, Kraft, Pfizer, eBay, Nordstrom, and AT&T. It's not just large businesses. In New York City alone, 70,000 immigrants own small businesses, including 90 percent of the city's laundry and taxi services. Studies find that immigrants are twice as likely as native born Americans to found new businesses. It is not a stretch to say that immigrants are essential to America's entrepreneurial culture.
Yet our immigration system makes no allowance for entrepreneurs. The desire to start a business and provide jobs and wealth is not regarded as a valid reason to gain entry to the United States. All those recent immigrant entrepreneurs came here initially via employer or family sponsorship. There is an E2 Visa that allows investors the chance to come here if they own 51 percent of a business and make a personal investment of $100,000 a year, and other higher-profile visas that can be used by the very rich or established stars. Ambitious and hardoworking yet penniless immigrants like Eberhard Anheuser or Marcus Goldman stand no chance under the modern system, which seems designed to exclude precisely the people America needs most -- innovators, risk-takers, and visionaries.
As my former colleague David Bier finds in a new study from the Competitive Enterprise Institute, "America Still Needs a True Entrepreneurship Visa," neither of the immigration bills currently being discussed in Congress comes close to fixing this problem. If anything, they make the current situation worse. The Senate bill, the Border Security, Economic Opportunity, and Immigration Modernization Act (S. 744), is a case in point.
To begin with, S. 744's Invest Visa (or X Visa) only applies to people who have already started a business in America and operated it for two years. Realistically, this can only be done by immigrants who already have jobs here, probably on an H-1B visa. The X Visa would require applicants to prove their intent to return to their home country -- a baffling requirement for entrepreneurs. As a temporary visa, it also requires regular renewal through our byzantine bureaucracy, unlike the entrepreneur visas in other countries like Canada. By contrast, the H-1B visa does not require applicants to show intent to return to their home countries and allows the possibility of permanent residency.
The vast majority of entrepreneurs in America would not qualify for the X Visa. The visa requires initial annual revenue of $200,000. The average annual revenue for a startup business is $60,000. Even for established small businesses, average revenue is $182,000 a year. It also requires a $250,000 investment for renewal, which is achieved by only 5 percent of current immigrant-owned businesses. Moreover, the visa requires that the investment comes from government-approved financing sources. Sergey Brin started Google on his credit card. The House bill (H.R. 2131) is even more stringent in these requirements.
Sadly but unsurprisingly, our international competitors use America's hostility to immigrant entrepreneurs to their advantage. Canada's immigration minister Jason Kenney said in May this year, "It's really difficult for talented immigrants to stay in the U.S. permanently... If you're a young startup entrepreneur having trouble renewing your visa, come here! We offer immediate permanent residency."
America needs a genuine entrepreneurship visa, one that offers a clear path to permanent residency to any foreign-born, venture-backed founder of a new business in the U.S., without further restrictions. If we do not do this, we will see the next Anheuser Busch in Vancouver and the next Goldman Sachs in Montreal.