Global Detroit, U-M Team on Program to Boost Immigrant-Led Startups
The American Dream was once a fairly simple concept: The nation would welcome strivers from across the world and invite them to pull themselves up by their bootstraps, work hard, pay taxes, and become contributing citizens. However, immigration has become a highly charged political issue in the current era, making things more complicated.
That’s one reason Global Detroit and the University of Michigan’s Economic Growth Institute have partnered on a program to help international student and immigrant entrepreneurs stay in the Great Lakes State and launch companies.
Called Global Entrepreneur-in-Residence (EIR), the program places foreign-born startup founders at universities to work as business coaches and mentors for up to 20 hours per week, which makes them eligible for H-1B visas. In between coaching duties, founders will work on building their startups with the goal of creating jobs for Michiganders. The William Davidson Foundation has provided support to run Global EIR at U-M for at least three years.
“It’s a coordinated effort to help immigrant startup founders more systematically,” says Steve Tobocman, Global Detroit’s executive director. “It started at the University of Massachusetts [in 2015] with a handful of entrepreneurs and then grew over time.”
Tobocman says the appeal of Global EIR is twofold: it has proven to be a legitimate way to assist immigrant founders in starting businesses and becoming permanent residents, and it’s a way to establish more high-growth startups no matter what’s happening with immigration policy at the federal level.
“As we get further away from comprehensive immigration reform and more into gridlock even on things that have widespread agreement,” international students and startup founders have been caught in the crossfire, Tobocman says.
International entrepreneurs have long played a key role in the US economy, particularly in Southeast Michigan. Tobocman notes that over the past 25 years, immigrants have helped launch one-quarter of all American tech startups. Of 87 “unicorn” startups that have valuations over $1 billion, more than half were launched by immigrants—nearly half of whom first came to this country as international students. As Rust Belt states like Michigan continue to struggle with brain drain and population loss, highly skilled immigrants have been a source of economic growth and job creation, he adds.
H1-B visas are intended for foreign-born workers in largely high-tech fields and must be sponsored by an employer. In 2003, the government cut the cap on the number of H1-B visas to 65,000 per year, meaning they are now highly sought after and in short supply. Because it’s hard to get an H1-B, some international students who stay in the US after graduation to start a business find themselves running out of time if their visas expire before they can get their companies off the ground. However, the H1-B cap does not apply to universities because the jobs they provide have an educational component, giving Global EIR participants a pathway to stay longer.
The nonprofit Global EIR program came about, says executive director Craig Montuori, as a result of advocacy work on behalf of a federal startup visa about a decade ago. Montuori, Foundry Group co-founder Brad Feld, and Flybridge Capital Partners co-chair Jeff Bussgang were frustrated with Beltway gridlock—even today, there is still no federal startup visa—and wanted to find a way to help foreign-born entrepreneurs that didn’t require the involvement of politicians or government permission.
Montuori says the Global EIR flagship program at UMass Boston, which has collected the most data, has supported 57 entrepreneurs since its inception in January 2015, attracted $440 million in investment capital, and created 886 jobs. Fourteen Global EIR programs have launched since 2015, with some more active than others. Global EIR provides the framework and guidance to colleges and universities, and they comes up with their own funding.
Montuori says the program had long been interested in starting a Detroit-area chapter, with Feld being especially keen on the Motor City and its connection to innovation. Detroit is a quintessentially American city in the midst of a comeback, he adds, and Global EIR was eager to be part of that effort.
“We wanted to bring international entrepreneurs into that story, to contribute to the narrative by attracting capital and boosting new business formation while creating jobs for local residents,” he says. “Global EIR is not a silver bullet, but it’s a key bridge. Our purpose in Michigan is to keep the promise of an open door for those that work hard. We’re super excited and confident that our Michigan program will have the same scale and impact as our Boston program.”
Global Detroit will recruit and vet applicants to the U-M program, and the university will screen and assess those who apply. Tobocman says the goal is to hire and support five to eight entrepreneurs over the next three years. Each entrepreneur in the Global EIR program will earn a salary for their business coaching work at the university. He says the ultimate goal, besides the successful launch of high-growth startups and new jobs created, is for Global EIR founders to gain avenues to permanent residency, whether it’s through an EB-5 investor visa, a visa for highly skilled immigrants, or something else. Both Tobocman and Montuori would like to see Global EIR expand to other Michigan locations.
“Right now, there’s not a clear pathway to launching companies for international entrepreneurs,” Tobocman adds. “Global EIR is about creating companies that will be part of the Michigan economy and be the Duo Security of the future, and keeping those companies in Michigan. One reason we’re pursuing these kinds of strategies is because we can do it under existing law and prepare for a future when there’s more movement [on immigration policy] in Washington, DC.”