Immigrants may only make up a shade under 15% of the UK’s population, but they are outsize contributors to its tech sector.
According to new research from think tank The Entrepreneurs Network (TEN) — based on data from Beauhurst — foreign-born entrepreneurs have founded 39% of the country’s 100 fastest-growing companies.
However, Brexit and Covid appear to have knocked Britain’s continuing ability to attract foreign entrepreneurs. When TEN last conducted a similar study in 2019, the comparable figure was 49%.
“We have seen the UK become less welcoming to foreign talent. It is not a pure financial decision. It is also a personal decision whether people want to build their lives in a country,” says TEN founder Philip Salter.
The foreign-born founders in the latest report come from 28 different countries, with the US, Italy, France, Canada, India and Germany topping the list. Despite Brexit, London has continued to act as a talent magnet across Europe with 21 of the 39 founders coming from the EU.
And though Brexit and political noise around immigration may have scared off some founders, others say they are still bullish on the UK.
Nazim Valimahomed, the Ugandan-born founder of the digital bank Kroo who contributed to the TEN report, says that Britain remained a great place to launch a business, particularly for fintechs. “I have never felt uncomfortable or excluded because of my background,” he says. Many immigrant founders were grateful for the opportunities offered to them in their new home countries and were driven to make a contribution of their own. “The combination is very powerful,” Valimahomed says.
The extraordinary contribution that foreign-born founders have made to other tech centres, especially Silicon Valley, is well established. Immigrant entrepreneurs in the US founded 55% of the 582 tech unicorns that existed in 2022, according to a report by The National Foundation for American Policy. The current chief executives of Microsoft, Alphabet and IBM were all born in India.
Resilience and adaptability
Ramzi Rafih, founder and general partner of No Label Ventures, a $15m early-stage venture fund that specifically invests in immigrant-founded companies, says he viewed many foreign-born entrepreneurs as second-time founders, who were therefore more likely to succeed. By moving abroad, they had already exhibited the resilience and adaptability needed to become a successful entrepreneur.
Continental Europe was becoming increasingly attractive to foreign entrepreneurs, Rafih says, as the tech ecosystem matured. He cited data showing that graduates from the Indian Institutes of Technology (IIT), among the most courted cohorts of technologists in the world, were increasingly looking to Europe. The ratio of IIT graduates with more than 10 years’ experience living in the US and Europe is 5:1, according to LinkedIn data. But for those with less than 10 years’ experience, the ratio is 2:1. Within Europe, the UK accounts for 35% of IIT graduates in the region, but Germany and France are gaining fast, he says.
“The UK is still a top destination for international talent,” Rafih says. “But the UK has a retention problem.” Of the eight investments that No Label Ventures has made, four have been in France and two in the UK.
TEN made several recommendations to improve Britain’s attractiveness to foreign entrepreneurs, including simplifying bureaucracy and cutting the cost of visa applications. “The cost of visas is prohibitive and much higher than other countries,” says Salter. For skilled workers on a path to permanent residency, British visa fees are almost 12 times those in Canada and 43 times in Germany (see below).
TEN also recommended expanding the High Potential Individual visa scheme, mostly targeted at foreign academics, and the Global Talent visa scheme. Britain should also copy Canada’s example by automatically giving holders of US H-1B visas the right to work in the UK.