Both political parties in America claim to love entrepreneurs. Barack Obama waxes lyrical about “a society that empowers the inventor and the innovator; where men and women can take a chance on a dream.” Mitt Romney, who once started a company himself, says much the same. Yet America’s immigration system is strangely unwelcoming to foreign entrepreneurs, even as other nations roll out the red carpet.For plenty of historical and cultural reasons, the home of Hollywood and Silicon Valley is frequently still the first choice for people who want to start a business. But not at any price. The tale of Claudio Carnino, a young Italian who wanted to create games for mobile phones that other firms could then use to advertise their products, is fairly typical. Investors in Rhode Island were willing to back him, but only if he could stay in the country. Mr Carnino discovered that he was likely to be refused a visa, and that even if he got one, he would face a long wait–in which case his games would probably be out of date before he got it. So he took his idea to Chile instead. He was granted a visa in two weeks, and is now on his second start-up, running a firm called FanChimp that helps companies find new customers through Facebook. Chile is one of several countries to have made a big effort to attract entrepreneurs.
Britain offers visas to people with promising ideas who attract £50,000 ($77,000) of venture capital to back them. Singapore requires an investment of only $40,000. New Zealand demands no specific sum, but grants permanent residency after two years if the business is “beneficial to New Zealand”. Chile vets business plans and gives the best ones $40,000 without taking any equity in return. America, by contrast, has no specific visa for start-ups. It does give visas to investors, but the terms are so tough–applicants must typically put up $1m–that the annual quota of 10,000 such visas often goes unfilled.
No immigration system is perfect. All must juggle competing interests. Some citizens simply dislike foreigners, and their views cannot be wished away. Some countries are crowded–though that does not stop Singapore from welcoming foreign talent. All countries, however, need entrepreneurs to create new businesses, new products and new jobs. And migrants are unusually likely to have the necessary get-up-and-go: 40% of Fortune 500 companies were founded by immigrants or their children. There is no easy way to spot the next Andy Grove or Vinod Khosla (the foreign-born co-founders of Intel and Sun Microsystems). But the costs of trying are negligible.
How much does it cost to stamp a passport?
Like governments elsewhere, America’s politicians are pretty lousy venture capitalists. But it seems a little odd, if a private investor wants to risk money on a new venture, for a government to strangle the business at birth simply because the founder is a foreigner. If the sum to be invested is above a certain minimum–say, $10,000, which is plenty for an online start-up–the entrepreneur should get a visa. And he or she should get it quickly. America often leaves would-be immigrants in limbo for years. Other countries, such as Canada and New Zealand, have streamlined and digitised the process. The country that gave the world McDonald’s should understand that speed matters.
There are fortunately other entrances to America for entrepreneurs: on student visas, as employees or, like Sergey Brin of Google, as children. But here, too, America is lagging. Relative to its population, Australia grants 13 times as many permanent visas on the basis of skills. It isn’t just the boost from China’s boom that explains why Oz is growing faster.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.