It’s no secret that the immigration-to-innovation continuum does not come without its fair share of considerable difficulties. More often than not, it’s just another David vs. Goliath story, asÂ young immigrant entrepreneurs continue to face heightened roadblocks in their journey towards the American dream: launching successful small businesses.
According to theÂ Ewing Marion Kauffman Foundation, though “immigrant entrepreneur activity peaked in 2010 during the economic slowdown” and has “risen substantially” in recent years, numerous problems still loom at large for minority-owned businessâ€”most notably,Â lack of funding. Research alsoÂ showsÂ thatÂ Latino-owned businesses, along with black-owned businesses, often have a higher failure rate than white-owned and Asian-owned business.
Still, despite all this, the United States has actually become extremely dependent on minority-owned businesses for economic survival, as they continue to contribute aboutÂ $468 billionÂ every year and createÂ two-out-of-every-three new jobs in the country, which has led to sixty-one consecutive months of job growth.Â The Kauffman FoundationÂ also reportsÂ that whileÂ 13 percent of the U.S. population is foreign-born, almost a quarterÂ of the tech and engineering companies created between 2006 and 2012 had an immigrant founder. In Silicon Valley alone, that figure was 44 percent (among those founders areÂ WhatsAppÂ CEO Jan Koum andÂ Instagramâ€™s technical lead,Â Mike Krieger.).
The reality is that America is becoming more pluralistic than ever before, withÂ minority groups seen to become theÂ majority by 2020. Further, the number of young people of color currently enrolled in entrepreneurship programs in major universities or participating as employees in startups has grown significantly in the last decade. AÂ October 2014 reportÂ released by the White House Council of Economic Advisors suggests that Millennials not only represent the largest generation in the U.S.– comprising roughly one-third of the total population– but are among the most “highly educated U.S. generation today, and Millennial women are attending college and attaining degrees in far greater numbers than counterparts in earlier generations.â€ They also carry a â€œdiversity [that] sets them apart from other generations.â€
Further, Stephen Palacios, executive director of the research firm Added Value recently affirmed in aÂ MediaPost articleÂ that Millennial mindsets are inherently different in another critical way from their forebears because â€œthey see themselves finding much greater professional and financial success than their parents.â€
SBA Administrator Maria Contreras-Sweet — a member of President Barack Obama’s cabinet since April 2014–alsoÂ adds:Â “Millennials have no boundaries. They’re ready to innovate, to disrupt old industries, and there’s a wakening, a movement taking place across the countryâ€¦ [They] have this very special energy.â€
â€œ[All of this] will more than likely lead to an explosion in the percentage of young entrepreneurs who are people of color in the coming years,â€ says Ron Miller, the CEO ofÂ StartEngine,Â a Santa Monica-based platform offering up and coming entrepreneurs with â€œany of the resources needed to post their companies and their offerings, and for ethnic communities to then respond back.â€
Simply put, in order for America to continue growing as an economic superpower,Â young minority entrepreneurs will need to have the same equal access to launching their startup or growth companies without having to deal with extra hurdles being thrown their way because they happen to be of a different skin color. The time has come for people ofÂ all races, ages, and backgroundsÂ to receive a fair shot at launching innovative ideas and companies that could potentially go on to change the world. If we donâ€™t open up our eyes and our minds, itâ€™s safe to say that we could find ourselves having passed up what could have been the nextÂ Google,Â Facebook, Airbnb,Â orÂ Dropbox.
As President Obama mentioned in his 2015 State of the Union Address, it isÂ now or neverÂ to “pass an agenda that helps [minority businesses] succeedâ€ and to â€œtear down regulations that prevent aspiring entrepreneurs from getting the financing to grow.â€
â€œSpectacular ideas, in general, should be funded based on the merits of the idea itself, not the color of their creatorsâ€™ skins,â€ Miller says. And while most Americans would agree with that, very few entrepreneurs of colorâ€”not to mention Millennials– are ever successful when it comes to getting people to fund their startup or growth companies (they typically receive less than 10 percent of all funding given out and usually end up last in the race when competing for investors).
Fortunately, this all changed with the Obama Administrationâ€™sÂ â€œgame-changingâ€Â passing of the JOBS Act in 2012, as numerous barriers in the business community have finally been knocked down in support of minority-owned companies, who can now fight for equal access to capital on a non-discriminating and much more-leveled playing field. Regardless of ethnic background, entrepreneurs of all sorts are able to take full advantage of what is officially known asÂ the â€œJumpstart Our Business Startups (JOBS) Act.â€ The act opens up the floodgates and allows, for the first time in 80 years, non-accredited investors (those who have less than $1 million in assets) to also invest in private offerings that will provide various small firms and startups with the finances to get started. Until now, SEC rules have restricted IPO and startupÂ investing to $3.5 million “accredited” investors, but under these new rules, as many as 233.7 million Americans will be able to invest in startups.
The wealth and productivity of America as a whole will indeed prosper along with the implementation of the new JOBS Act rules come May 16, 2016, which will be the first time companies can start taking advantage of Title III. This new year is also bound to be a particularly prosperous one for minority entrepreneurs, especially those of the Millennial generation who have strong interests inÂ starting and owning their own businesses.Â The time is now for the “glass ceiling” to be broken, and by allowing â€œthe other 98% of the populationâ€ to invest, Miller says, a â€œradical difference is sure to be made.â€
He adds: â€œInvestments [now have] an extra â€˜structure,â€™ or legal regulatory and communication framework to help minority communities further connect with each other and support each other. For a bunch of â€˜rich old white guys,â€™ these new mechanisms are not so important because they already have the resources and opportunities to invest and get support. But because ethnic minorities, statistically, are underrepresented, these changes will be all the more powerful.â€
Plus, as the upcoming presidential election season gets underway, Contreras-Sweet says that it is even more crucial for minority Millennials to understand all the elements for success in small business and entrepreneurship. “The really important [and] powerful point to make here is [to] think about other countries like Greece [and] like Italyâ€ with a declining economy but with a whole new group of young entrepreneurs trying toÂ build a new startup cultureÂ to get the country back on track.
â€œ[We] really want to embrace everybody to make sure that we maximize and optimize our productivity, per person,” she says.