Subscribe to our newsletter to receive business tips, learn about new funding programmes, join upcoming events, take e-learning courses, and more.
Take the first step to successfully starting and growing your business.
Join for free)
Posted: Fri 25th Aug 2023
Although 14.5% of the UK's population are immigrants, 39% of the country's top 100 fastest growing companies have a foreign-born founder or co-founder, new research reveals.
According to the study by The Entrepreneurs Network (TEN), the founders are drawn from across the globe, with 28 countries from five continents represented.
The US is the most common country of birth, followed by Italy, France, Canada, India and Germany. Of the 39 companies in the top 100, 21 have a founder born in an EU country.
The companies include fruit and vegetable subscription box company Oddbox started by France and India born Emilie Vanpoperinghe and Deepak Ravindran; AI video generator Synthesia with co-founders from Denmark, Germany and Spain, and digital bank Kroo, which was set up by Nazim Valimahomed, who was born in Uganda.
Despite foreign-born individuals playing a significantly disproportionate role in fast growth business compared to the UK's overall immigrant population, the proportion of business owners originating from overseas has fallen since a similar report was conducted in 2019. Back then, 49% of the UK's top 100 fastest growing firms had a foreign-born founder.
TEN, which analysed data from Beauhurst, highlighted one of the key reasons for the decrease as Brexit. The report said:
"While it is hard to be precise, new visa arrangements, plus a general sense among around the world that Britain was becoming a less welcoming place and a less attractive environment in which to start a business almost certainly will have caused some would-be top 100 foreign-born founders to think twice about relocating to the UK."
The study said the second major factor was the COVID-19 pandemic, when people were denied the ability to cross borders and come to the UK.
"Many immigrants within the UK returned to their nations of birth to be closer to their families," the report added. "It is not unreasonable to assume that this will have decreased the likelihood of a foreign-born entrepreneur scaling a business, or even simply a business idea."
Despite the decline in foreign-born founders, TEN said:
"...the report clearly shows the benefits which immigration can have for the UK economy, and that immigrants play a hugely disproportionate role when it comes to founding and running some of the most dynamic, innovative, and wealth-creating companies in the country."
The report made 10 recommendations for the government aimed at incentivising foreign-born entrepreneurs to come to the UK.
Among them were expanding the list of universities included in the High Potential Individual visa which currently allows recent graduates from 50 top international universities to come to the UK without a job offer for up to two years.
It also said the Youth Mobility Scheme, which permits 18-30 year-olds from certain countries to work in the UK for up to two years, should include “more countries with deep historical, cultural and economic ties with the UK”.
Another suggestion was copying the Canadian policy on H-1B visa holders.
The H-1B visa allows high-skilled professionals to come to the US for work but there are challenges if they want to start a business. Canada has recently started granting visas to H-1B visa-holders to accept work and launch their own companies. This means, the report said, that "the Canadian government spends almost no bureaucratic capacity in granting visas to skilled workers -- it simply 'piggybacks' on American bureaucracy which does the job for them".
A fourth idea was an “urgent review of visa fees to ensure they are, at a minimum, in line with other countries”.
The report said British visa fees can currently cost almost three times what they would in Australia, around 12 times more than in Canada and 43 times of what they would in Germany.
The report concluded:
"We should be proud that the UK is a magnet for international talent. But that does not mean we should rest on our laurels.
"While many countries are looking enviously at how the UK manages to attract brilliant minds and successful entrepreneurs, and are trying their level best to tempt them away from choosing Britain, countries like Canada are leading the way.
"If the UK is to keep on benefiting from foreign-born talent, we need to continually innovate. To this end, we have outlined a number of ways in which the UK can improve its visa offerings, minimise bureaucracy, and reduce the cost of immigration to immigrants and employers alike.
"Immigrants are among some of our nation's greatest wealth creators. Let them come, and they will build it."
