While under 15% of UK residents are foreign-born, 39% of the UK’s fastest-growing startups have at least one immigrant co-founder.

Our new Job Creators 2023 report is a reminder of the massive contribution immigrant entrepreneurs make to the UK economy. It reveals:

• 39% of the UK’s fastest-growing startups have at least one immigrant co-founder.

• Within this segment, 14% were set up by a foreign-born founder or a team of foreign-born co-founders, and 25% were set up as a joint venture of a British-born co-founder and a foreign-born co-founder.

• The foreign-born founders in our Top 100 list hail from 28 different countries from five different continents. The most common nationality is American, followed by Italian, French, Canadian, Indian and German.

Compared to our 2019 Job Creators research, which revealed that 49% of the UK’s fastest-growing companies of that year had at least one migrant co-founder, we recorded a 10 percentage point drop. Although this may not be a trend, it should nevertheless be a reminder for UK policymakers to continue working to attract foreign talent.

Natural entrepreneurs?

As we made the case in Passport to Progress, immigrants are natural entrepreneurs and innovators. The very act of migrating shows both grit and a willingness to take risks. As outsiders, immigrants are less liable to fall prey to status quo bias and are better able to spot opportunities for doing things differently.

In the UK, immigrants are more likely to own and run businesses. In the US, they own disproportionately more patents.

However, not all startups have the same impact. High-growth venture-backed businesses have an outsized impact on employment, productivity, and exports.

Evidence from the US suggests that not only are immigrants more likely to start companies, they’re more likely to start companies that have high-growth potential. In Silicon Valley, over half of all engineering and technology companies have at least one immigrant founder; including Google, Facebook, and Tesla to name just a few.

Immigrants are overrepresented among the most successful companies in the US. A project started by the non-partisan policy organisation New American Economy and continued by the Center for American Entrepreneurship looked at the national origin of the founders of Fortune 500 companies. It found that 43% of companies in the 2017 Fortune 500 were founded or co-founded by an immigrant or the child of an immigrant.

Key Findings

The Immigrant Founders of the Top 100

To test whether immigrants were overrepresented among the fastest-growing companies in the UK, we analysed Beauhurst’s data both in 2019 and 2023 to identify the 100 startups, scale-ups and fast-growing companies that have seen the largest increase in value.

39% of the UK’s fastest-growing startups have at least one immigrant co-founder.

Despite the foreign-born population of the UK standing under 15%, we can reveal that 39% of the 100 fastest-growing companies in the UK have foreign-born founders or co-founders. These include companies such as Oddbox, Zapp, Synthesia, Kroo, and Zilch.

From AI and Cybersecurity to Fintech and Food & Drink, immigrants have founded or co-founded 39 of the companies in the Top 100 list. The immigrant co-founders listed come from a wide range of backgrounds. Some came to the UK to study, others to work, and some even fled conflict.

The immigrant co-founders of the UK’s fastest-growing businesses come from 28 different countries.

The foreign-born founders of the fastest-growing companies in the UK are drawn from all across the globe, coming from 28 countries and five different continents. The USA was the most common country of birth for foreign-born founders, followed by Italy, France, Canada, India and Germany. Twenty-one of the 39 companies in the Top 100 have a founder born in an EU country.

Looking at the global regions where foreign-born founders in the Top 100 come from, European countries dominate the 2023 Top 100, as they did the 2019 Top 100. This is followed by North American countries, and then those from Asia and then the Middle East.

Since 2019, migrants’ contribution to the Top 100 fell 10 percentage points.

The proportion of foreign-born founders of Top 100 firms has decreased by 10 percentage points between 2019 and 2023. To what extent we should read into this is another question, however.

Since 2019, two obvious events have likely had a pronounced impact on the nationalities of individuals which will be setting up companies in the UK.

The first is Brexit. While the vote to leave the EU might have taken place in 2016, the UK did not officially withdraw from the bloc until 31 January 2020, and free movement continued to exist until 31 December 2020.

The second factor is the Covid-19 pandemic. During the pandemic, many people were denied the ability to cross borders and come to the UK, and it stands to reason that this reduced the pool of potential foreign-born founders of a Top 100 company. Moreover, many immigrants within the UK returned to their nations of birth to be closer to their families.

However, as we said to the Financial Times’s Sifted, for this decrease to be a blip rather than a trend, British policymakers should implement reforms that can keep the UK attractive to talented individuals worldwide.

Policy

How to retain the UK’s status as a top destination for entrepreneurial talent

Immigrant entrepreneurs play a vital role in driving the UK economy forward. By creating jobs, attracting foreign investment, and disrupting tired, old industries, immigrant founders make an important contribution to life in the UK.

Immigration policy in Britain has undergone a dramatic reshaping in recent years, prompted principally by the UK’s withdrawal from the EU. Irrespective of one’s opinion on Brexit, however, there is a definite opportunity for making changes to our overall immigration framework in a way there didn’t seem to be previously. We propose the following actionable policies to keep Britain attractive.

Build on the High Potential Individual visa

The High Potential Individual (HPI) visa was introduced in 2022 by Rishi Sunak when he was Chancellor of the Exchequer. It gives a pathway for recent graduates from 50 top international universities to come to the UK without a job offer for up to two years.

Yet, while the HPI visa certainly represents a step in the right direction for welcoming international talent, it is not without its flaws. Many of the world’s best universities do not make the list of the 50 institutions eligible for the visa due to the government’s methodology.

In June 2022, we published True Potential, which sets out an alternative which may more accurately capture those universities which produce talented graduates as defined by the economic output they go on to generate. By utilising Glassdoor data on graduates’ earnings, we showed that many of the universities which produce high-earning graduates are not included on the HPI eligibility list. There is room for improvement and these universities should be included.

Reform and expand the Youth Mobility Scheme

The Youth Mobility Scheme is another successful initiative that allows 18-30-year-olds from Australia, New Zealand, Canada, San Marino, Monaco and Iceland to easily come and work in the UK for up to two years. This represents another attractive route to the UK. However, it is another plank of our immigration system which is under-delivering on its potential.

The two-year time limit serves as a barrier to individuals putting down deeper roots than they otherwise would – whether that is progressing further within companies, or considering setting ones up of their own. To reverse this, we believe the Youth Mobility Scheme should count towards an individual’s Indefinite Leave to Remain.

Secondly, the Youth Mobility Scheme should include more countries with deep historical, cultural and economic ties with the UK. Adding the likes of the US, Singapore and other European countries, with which the UK shares deep ties and strong trading relationships, would make a great difference.

Offer certainty on the Global Talent visa for tech professionals and expand it to search for more talent

The Global Talent visa, which was introduced in February 2020, is one of the most important visa schemes for the UK in attracting high-skilled talent in the fields of arts, technology and research. However, it has long been accused of lacking clarity, especially since Tech Nation, the independent endorsement body for technology professionals, closed down. The Home Office urgently needs to clarify the future of the Global Talent visa for tech professionals.

This should also be seen as the moment to reform and expand the Global Talent visa. Right now, the UK does not have a visa scheme specifically designed for innovators with a proven track record. The Global Talent visa should include innovators with a track record of success to come and work in the UK, without making them go through the bureaucratic hurdles of other visa routes.

Introduce a Global Talent Exam to spot and recruit the brightest minds worldwide

Policymakers should not only look out for people who have already proven their talent, but proactively search for blossoming talent around the world. To achieve this, the Government should trial a ‘Global Talent Exam’, open to everyone worldwide, designed to understand the applicants’ skills, talents and intelligence. The high-achievers on this ‘exam’ should then be interviewed by designated ‘talent searchers’ who will be responsible for making the decision on these candidates’ final outcomes.

Utilise other advanced economies’ innovative immigration systems

Canada is the outlier in the Western world when it comes to immigration. Despite having a birth rate lower than the UK, the Canadian population is growing at nearly double the rate of Britain – with high-skilled immigration behind much of this growth.

One thing Canada has done well is picking the right people and granting them easier visa routes than other nations. For instance, the Canadian Government offers H-1B visa holders in the US the right to work and launch their own businesses in Canada. The UK should copy the Canadian policy on H1-B visa holders and expand it to other selective schemes that grant people with extraordinary abilities the right to migrate.

Reduce visa fees

Compared to similar economies, British visa fees are far more expensive. For skilled workers on a path to permanent residency, they can cost nearly three times what they would in Australia, around 12 times what they would in Canada and around 43 times what they would in Germany.

All these countries are already more popular destinations for potential migrants yet despite this, effort is not being made to make the UK’s visa fees more competitive. The Government should urgently review visa fees to ensure they are, at a minimum, in line with other countries to which productive immigrants may wish to move.

Allow applicants to make use of the fast-track option for free when the Home Office fails to meet its own estimated times

Work visas can take up to eight weeks to be processed, even though they may be for time-sensitive jobs. During our research, we heard how it can take longer than six months for some applicants for the Innovator Founder visa to receive their visas. For many entrepreneurs, startups and scaleups, these timeframes are simply unworkable.

When the Home Office fails to meet its own estimated times for approving applications, applicants should be able to make use of the fast-track service for free.

Conclusion

The case for keeping Britain open

Our Job Creators and Passport to Progress reports make a powerful case for keeping Britain open to international talent. The fact that 39% of our fastest-growing businesses have at least one immigrant co-founder highlights the valuable contribution immigrants make to the UK by creating jobs, enhancing innovation and unlocking growth.

The job is now for politicians to make the positive argument for immigration and fix the visa system to remain open to entrepreneurial talent.

Case Studies