How Migration Influences Startups


Guest post by James Burbank, editor in chief at BizzMarkBlog

There are more than a few anthropologists and historians who will tell you that the history of mankind is the history of mankind’s migrations.

This is true for our ancient history and the moment when humans crossed from Africa to Asia and then beyond; and it is just as true for our more recent history, like for instance the Great Migration of African Americans from Southern states to North between 1916 and 1970s. It is not like Australia didn’t have its fair share of momentous migrations throughout its history either.

Since migrations affect pretty much every aspect of life, they also affect the world of business. Often times, the migrations are in fact caused by promises of “good business” somewhere else. Considering the fact we live in the Age of the Startup, one of the best ways to see how modern migrations and events surrounding them affect the world of business is to explore how they affect world’s startups.

(The author would also like to add that none of the facts and opinions included in this article have been included for the purposes of promoting or deriding any political decision or stance. The author has long been absolutely disillusioned with anything that has anything to do with politics. This article is about startups and business.)

Why Startups are so Migration-Sensitive?

Before we try and figure out exactly what is going on in the startup world these days and how various migration decision and trends will affect the ecosystem, we should probably say a thing or two about what makes startups so sensitive to migration shifts and sudden changes.

The biggest reason for this is also one of the biggest strengths of the startup ecosystem – its diversity. It is not that difficult to find a startup operating out of Latvia which employs a couple of Latvians, two Brazilians, a Lebanese or two and a couple of coders from Israel. This is a purely hypothetical example, but you get the picture.

In a situation where certain political decisions limit the ability of members of certain nationalities to reside and work in certain countries, the ripple effects can be tremendous.

Furthermore, startups often employ people who are still in college or just out of college and whose visa and immigrant statuses are at a very sensitive point. In such situations, particularly momentous changes can complicate things to such an extent that it becomes near impossible for such people to remain in the countries where they are already parts of startups.

Biggest Recent Events

Following a long period where relatively little happened on the migration front, at least for students and young professionals, these last few months have truly come hurtling like an out of control semi.

Brexit

The UK’s unexpected decision to leave the European Union has been one of the more important events on the world’s political stage in decades and it has already started affecting the world of business and startups.

While Brexit has yet to be formalized and carried out, entrepreneurs are already noticing certain effects of the referendum. Due to the uncertainties surrounding the UK’s future (especially when it comes to free movement of people), experts are saying that the country’s startup scene will probably suffer tremendously.

Just a few days ago, Taavet Hinrikus (an Estonian, by the way) who co-founded one of world’s most successful fintech startups TransferWise, said that if he were to found his startup today, he wouldn’t choose London as its base of operation.

Trump vs. Silicon Valley

For people who follow what is going on in the American startup ecosystem, lately it has all been about the battle between the new President of the United States and a “united front” of Silicon Valley companies which claim that the new immigration laws the President has been pushing forward will cripple U.S.’s startup scene and the country’s ability to stay competitive when it comes to tech and R&D in general.

Since then, the immigration ban has been halted by U.S.’s ridiculously complex legal system and things have cooled down somewhat. Still, the majority of experts agree that limiting the influx of immigrants into the United States will result in fewer startups being founded and existing ones becoming weaker.

Death of Visa 457

Earlier this month, Prime Minister Malcolm Turnbull announced that Australian government will put an end to the 457 temporary working visa program which allowed Australian businesses to sponsor skilled workers to come to the country and work for them.

The famed 457 visa (which had often been misunderstood itself) will be replaced by two new visa programs which will be more restrictive and which will reduce the number of skilled workers that are allowed in the country. Another major effect is that unlike with Visa 457, these new programs will not allow subsequent permanent residency outcomes (people becoming permanent residents). You can read more about it here.

While most experts agree that it is probably still too early to tell what kind of an effect this decision will have on the Australian’s startup ecosystem, there have already been cases where it has had very negative effects. Caitre’d has been the most media-covered such case so far.

Around the World

However, it is not only in the English-speaking world that immigration shaped and will be shaping the startup ecosystem. For instance, Israel’s specific approach to immigration has been lauded as one of the reasons why their startup scene has traditionally been so strong.

An increased migration of Russian startups to the United States has also been debated hotly since 2015, often with very heavy political overtones taking over the discourse.

More currently, we are seeing certain startup scenes trying to position themselves as more attractive in response to the aforementioned changes in the American and UK’s migration policies. For instance, Canadians believe they could attract the talent that would otherwise have gone to the U.S. while various European countries (mostly Germany and Netherlands) believe they are the natural new destinations for startups that would have chosen the UK if not for Brexit.

Closing Word

At the moment, no one knows what shape the global startup scene will take over the next couple of years.

One thing is for sure, things haven’t been this complicated and fluid in a long, long time.

We will just have to wait and see.


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