Arnoldo Muller-Molina, a Costa Rican native with a PhD in artificial intelligence, could have moved his fledgling tech startup to Silicon Valley or New York City. Instead, he chose St. Louis, Missouri, a city more renowned for its sports teams than a flourishing immigrant population.
Muller-Molina says he didn’t want the high cost of establishing himself on either coast and he disdained the intense competition in those communities. He received a $50,000 grant to move his database company SimMachines to St. Louis, where he was given free legal assistance, help in obtaining an EB5 investor visa, and free mentoring services. The money and services came from Arch Grants, a global startup competition based in St. Louis that was founded in part to draw immigrant entrepreneurs to the “Gateway City.”
Immigrants have long been drawn to the vitality and economic opportunity offered by New York, Los Angeles, and Silicon Valley. And if new immigrant legislation passes, those areas will reap the benefits of attracting educated entrepreneurs.
But Rust Belt cities like St. Louis, Cincinnati, and Dayton, Ohio, don’t have the same allure. The loss of manufacturing jobs and declining populations have intensified efforts in these cities (and others like Pittsburgh and Detroit) to attract new immigrant entrepreneurs and startups to help revitalize ailing economies. A 2011 study from the American Enterprise Institute concluded that immigrants with advanced degrees as well as immigrants of any skill level on temporary visas create jobs for native-born Americans.
Facebook founder Mark Zuckerberg has recently touted the innovations that immigrant entrepreneurs bring to the economy and is a supporter of the new immigration legislation.
“It’s important to have this kind of vibrancy and talent to make for a growing economy,” said Jerry Schlichter, a St. Louis-based attorney who founded Arch Grants in 2011, and gave two of the first 15 awards to international startups (including SimMachines in June 2012). “We need to have this kind of international educated workforce to compete in a global economy.”
Schlichter and others who are trying to lure immigrant businesses to their cities recognize that it’s a daunting challenge. Since 9/11, many immigrants have been stymied by burdensome visa restrictions and anti-immigration legislation passed in Arizona, Alabama and multiple municipalities.
THE BENEFITS OF IMMIGRANT BUSINESSES
A 2012 study from the Ewing Kauffman Foundation found that the number of immigrant-founded tech companies has dropped from 25.3 percent to 24.3 percent of all tech company startups since 2005. In Silicon Valley, the percentage of immigrant-founded startups declined from 52.4 percent to 43.9 percent.
A study published by St. Louis University in June 2012 found that “increasing the number of immigrants will raise employment, grow income, boost real wages, reverse declining home prices and lower unemployment rates.” St. Louis has seen its population decline by 62.7 percent since 1950, and according to a recent report from the Brookings Institution, the city ranks 80th of 100 metropolitan areas in job growth since the recession ended. It ranks 83rd in recovery of home prices, and its unemployment rate is 7.4 percent, compared to the 6.6 percent rate for the state of Missouri.
Muller-Molina started SimMachines in his native Costa Rica in 2011, but wanted to bring his business to the U.S. Since moving to St. Louis last year, the “big data” company has secured contracts with a former NASA astronaut working on a plasma propulsion engine for the International Space Station, and is collaborating with Washington University Medical School on MRI technology.
SimMachines, which is creating applications that analyze data for these organizations, is an example of how a small immigrant-led business can bring innovation and jobs to a mid-size city. Though the company is small with only five employees, Muller-Molina plans to hire 15 additional employees this year.
Current immigration laws, says Schlichter, make it difficult to attract innovative entrepreneurs like Muller-Molina. He also says that St. Louis and the rest of the country are losing out on a pool of Indian and Chinese graduates who are taking their life science, engineering and technology degrees back to their native countries.
New immigration legislation aims to provide more visas for specialized workers and help meet demand for both high and low-skilled employees in industries like agriculture and technology through guest worker programs.
Foreign-born entrepreneurs also “serve as bridges” to open new markets with their respective homelands, according to Dane Stangler, research director at the Kauffman Foundation. “Transnational businesses play an important role in facilitating international trade, investment and tourism,” write the authors of a 2012 report from the U.S. Chamber of Commerce and the Immigration Policy Center of the American Immigration Council.
Immigrants are more than twice as likely start a business in the U.S. as non-immigrants, according to a study by The Partnership for a New American Economy, a bipartisan group of mayors and business leaders across the country. In 2011, immigrants started 28 percent of all new business, while only accounting for 13 percent of the U.S. population.
On March 6, Cincinnati passed a resolution declaring itself an “immigrant friendly city,” in part to reverse the trend of a declining population. The Metropolitan Area Religious Coalition of Cincinnati (MARCC), an interfaith group, introduced to Southwestern Ohio a declaration of principles that “urge, local, state, and regional governments to act on a comprehensive immigration policy.”
“Immigrants develop cutting-edge technologies and companies,” said Margaret Fox, the executive director of MARCC. “Cincinnati has put out its welcome mat to receive them and their families.”
In Dayton, the city has opened its own welcome mat to immigrants in a move that municipal leaders hope will jump-start a faltering economy. The “Welcome Dayton” program seeks to attract immigrant entrepreneurs to a city of 141,000. Between 2000 and 2009, Dayton recorded a 7.2 percent decline in population.
Tim Riordan, the Dayton city manager, says the city is taking a long-term approach in hopes of drawing immigrants to a region that has a poor track record in doing so. “I don’t want you to give you the impression this is going to be easy,” Riordan said about the plan. “We did it because it was the right thing to do.”
Riordan says the city is working with the University of Dayton to retain its foreign-born graduates and help them obtain EB5 visas that will allow them to start businesses and to invest in the community. (EB5 visas are available only to those who invest $1,000,000 or at least $500,000 in a high unemployment or rural area.)
“I don’t think it’s a panacea,” said Jamie Longazel, an assistant professor of sociology at the University of Dayton and an expert in immigration policy, of the Dayton plan. “I do think they’re sending a powerful symbolic message.”