Sam Dumitriu, research director, The Entrepreneurs Network
One silver lining to Brexit for sceptical liberals like myself is that it’s an opportunity to have a more nuanced and intelligent debate on immigration. Wishful thinking? Perhaps, but since the referendum attitudes have shifted. Both Remainers and Leavers are more positive about the effect of migration on the UK.
Progress in the immigration debate depends on the public having access to all of the facts. But we at The Entrepreneurs Network noticed there was a gap in the debate. Too often the media focused on whether or not migrant workers took jobs or drove down wages. They neglected the job-creating impact of immigrant entrepreneurs entirely.
Data from the Centre for Entrepreneurs found that immigrants were more entrepreneurial than the general population. However, while their data told us about the quantity of immigrant founded businesses, it told us little about their quality. That’s important, because the debate in government has shifted from startups to scaleups. To put it bluntly, there’s a difference between opening a cafe and founding Deliveroo or JustEat (coincidentally both London businesses were founded by immigrants).
Research from economist AnnaLee Saxenian found that In Silicon Valley, over half of all engineering and technology companies had at least one immigrant founder. To test if immigrant entrepreneurs were the driving force behind the UK’s recent scaleup success stories, we used data on Britain’s 100 fastest growing companies from Beauhurst and Syndicate Room.
Our findings were powerful. While just 14% of UK residents are foreign-born, 49% of the UK’s fastest-growing startups have at least one foreign-born co-founder. With the immigrant co-founders of the UK’s fastest growing businesses hailing from 29 different countries. It was a vital reminder of how openness to talent benefits us all. The immigrant founded startups on the list alone had attracted £3.7bn worth of investment.
Among the most successful new business, immigrant founders were even better represented: 11 of the UK’s 16 startup unicorns have at least one foreign-born co-founder.
Yet the visa system for foreign entrepreneurs is broken. The government was right to replace Tier 1 Entrepreneur and Graduate Entrepreneur visas with the new Innovator and Start Up visas giving incubators, accelerators, and venture capital firms a key role as external endorsing bodies. But the implementation was botched.
At the time the previous Tier 1 Entrepreneur visa route was closed and replaced with the new Innovator visa, there were no endorsing bodies ready to accept applications, and only one of the 30 initial endorsing bodies had any information about the visa on their website.
In the first quarter since the Innovator visa route opened just two applications were successful. At least four of the initial 30 endorsing bodies have already dropped out. Reform should be pressing priority. We are all poorer when the visa system prevents job creators moving to the UK.
At this general election, we need politicians to offer solutions to the problems faced by startups. That’s why The Entrepreneurs Network has teamed up with Coadec (The Coalition for a Digital Economy) to write a Startup Manifesto. A key part of which looks at fixing the visa system for foreign entrepreneurs and to make it easier for startups to access talent from outside of the UK.
Each party should be committed to making the UK the best place to start and scale a business. Our manifesto (out Sunday November 24) will set out in detail how to make that ambition a reality.