Mass. program helps foreign entrepreneurs create jobs
By Lizzie Short | May 4, 2016, 19:57 EDT
BOSTON – Boston and its environs boast world-class universities and a bustling innovation economy. People from all over the world travel to the Hub to study, but after graduating, many highly skilled and well-educated foreigners learn that they can’t remain in the U.S. legally.
This amounts to a significant loss for Boston and the region, according to Jeffrey Bussgang, a Harvard Business School senior lecturer and venture investor who has spoken out on the issue. He has also come up with a local solution.
“In my role as an entrepreneur, venture capitalist, and business school professor, I have watched our dysfunctional immigration system turn away the best and brightest from creating jobs and wealth in America,” Bussgang said on the blog of the Alliance for Business Leadership last year. “You could not make up a dumber economic development policy if you tried.”
To retain more of the best students who attend local schools, Bussgang developed the Global Entrepreneur in Residence Program. It provides a bridge that lets citizens of other countries with graduate degrees pair off with two public universities and in return receive a special visa so they can remain in the U.S. as they launch their startups.
“We are blessed with an incredible talent base in this community,” Bussgang said in the blog post for the group, which advocates for growing the Massachusetts economy in sustainable ways.
“Unlike other states, we do not need to attract talent – it pours in from all over the world thanks to our world-class universities and hospitals – instead, we need to retain it,” he wrote. “This is the only way Massachusetts can aggressively compete in an increasingly cutthroat global innovation sector.”
Retaining entrepreneurial talent, no matter where it may come from, may prove critical to the region, as it will both help keep Massachusetts on the razor’s edge of innovation, but also may fuel job growth. A study from the Kauffman Foundation in Kansas City, Missouri, showed that startups are responsible for creating nearly all new U.S. jobs. Similarly, a white paper from the National Bureau for Economic Research in Cambridge demonstrated that newly formed companies, rather than already established small businesses, drive job creation.
Bussgang’s program, set up through the Massachusetts Technology Collaborative in Westborough, pairs selected foreign entrepreneurs who have graduate degrees in science, engineering, mathematics and related subjects with either the University of Massachusetts Boston or UMass Lowell as mentors or teachers for roughly 10 hours a week. This gives these budding businesspeople access to an H-1B visa, and because universities are exempt from visa caps, pretty much anyone with the requisite skills and who is running a startup the chance to stay in the U.S.
“By being tied to a university you are, in effect, given a free pass,” Bussgang explained in an interview on WBUR-FM. When the entrepreneurs aren’t busy working for the school, they’ll be free to build their startup businesses.
“These entrepreneurs, they’re going to start these companies no matter what,” Bussgang said in the interview. “They’re just going to do them outside of the U.S. or outside of the state, if we don’t put something in place like this to attract them and retain them.”
The Bay State offers uniquely fertile ground for young entrepreneurs, Bussgang told the New Boston Post by email this week.
“Massachusetts is one of the top startup ecosystems in the world because it has the four main elements ecosystems require,” he said. “First, intellectual capital, universities, entrepreneurs. Second, seed capital, angels [startup investors], and advisors. Third, venture capital to scale, experienced growth stage executives and advisors. And fourth, scale companies to partner with, poach from and sell to.”
Immigrants founded more than half of all “unicorns,” or recent startups valued at over $1 billion, according to briefing materials supplied to the state Legislature, which must approve funding for the initiative. Fortune magazine in January listed five local examples: Actifio, a Waltham-based software maker; Intarcia Therapuetics, a Boston-based biotechnology firm; Moderna Therapeutics, a biotech based in Cambridge; DraftKings, the online fantasy sports gaming company in Boston, and Westborough-based SimpliVity, a software developer.
And then there’s Israel-based Infinidat, a six-year-old data storage company that plans to double its local staff in Waltham by year-end, according to the Boston Business Journal.
Bussgang points to Actifio’s founder as a prime example of the type of entrepreneur the global program should target. Ash Ashutosh came to the U.S. from India to study at Pennsylvania State University, earning both an undergraduate and graduate degree in electrical engineering there. He was fortunate to land a job in the technology industry and eventually decided to start his own business, Bussgang said in an article published in the Boston Globe last month. Actifio is his third startup and already employs 350 people.
Not all foreign students are lucky enough to find companies to provide them with H-1B visas after they graduate, since there are a limited number of them available through commercial sponsors. Those who want to begin businesses of their own right out of school are often left in the lurch as a result.
Just how big a deal this is was illustrated by Bussgang in the Globe article, which he wrote with Bill Brah, the executive director of the UMass Venture Development Center.
“It’s estimated that there are more than 1,000 aspiring international entrepreneurs attending universities in Massachusetts who want to stay after they graduate and launch a company,” they wrote. “Most aren’t lucky enough to win the H-1B lottery. Others don’t try, and instead start their companies overseas.”
This is where the Global Entrepreneur in Residence program aims to help.
Begun in 2015, the program has already produced impressive results. Ten entrepreneurs received H-1B visas through it, and nine companies they created locally have collectively raised over $50 million in venture funding while creating 150 jobs, according to the legislative briefing materials. In March, the program got a vote of confidence when Boston-based law firm Goodwin Proctor became its second private-sector backer.
While Massachusetts pioneered the local H-1B cap workaround, other states aren’t far behind. Colorado and New York both plan to offer similar programs to keep and attract international entrepreneurs in their states. In Massachusetts, the goal is to sign up 25 to 30 entrepreneurs each year to build a reputation for the state among innovative entrepreneurs as the best place to get started.
“Two years ago, I had the opportunity to testify before the Senate and share a few stories of star students from Harvard, MIT and elsewhere who, upon graduation, aspired to start their own companies,” Bussgang said on the alliance website. “They had big ideas, great teams and venture capital all lined up. But our country told them to collect their PhDs and MBAs and get out – we didn’t want them creating jobs here in Massachusetts or elsewhere in America.”
After being stymied in Washington, Bussgang turned his attention to finding a solution locally. And now the region is starting to reap the benefits.