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Immigrants launch nearly half of top U.S. start-ups, study finds

Immigrants are responsible for launching nearly half of the top start-ups in the country, according to a new report that makes a case for more favorable border policies toward foreign-born entrepreneurs.

Of the top 50 venture-backed companies in the U.S., 23 have at least one foreign-born founder while 37 have at least one immigrant in a major management position, according to the National Foundation for American Policy.

Natives of India, Israel, Canada, Iran and New Zealand are most likely to come to the U.S. to start companies or to take on positions such as chief executive, chief technology officer or vice president of engineering, the study found. Their businesses each employ an average of 150 people.

Examples include online handmade crafts retailer Etsy Inc. of Brooklyn, N.Y., which was launched in part by Swiss immigrant Haim Schoppik in 2005 and now has 185 workers.

“Policies that help retain talent in the United States are likely to yield both more start-up companies and the personnel needed to create more jobs and innovation in America,” according to the report.

The companies considered were ranked by research firm VentureSource and are all private, valued at less than $1 billion and had received venture capital funding within the last three years. The National Foundation report was funded by a grant from the Ewing Marion Kauffman Foundation.

The study’s findings “perhaps makes it even more imperative that the U.S. put out the ‘Welcome’ mat for these entrepreneurs who help create jobs and drive our economy,” wrote Emily Baker, a vice president of the National Venture Capital Assn. in a blog post this week.

Legislation currently in play in Congress could broaden the number of work visas given to immigrants and their families and also help retain foreign students with science, technology, engineering and math (STEM) degrees so they can launch businesses in the U.S.


Congress' small step toward immigration reform

Immigrant women share family recipes at cooking school start-up

-- Tiffany Hsu

Photo: Etsy Labs

White men with master's degrees: The profile of a venture capitalist

Prepare to be stunned: The vast majority of venture capitalists are white men.

So says a survey of 600 venture capital professionals released by the National Venture Capital Assn. and Dow Jones VentureSource this week -- an annual report first conducted in 2008.

Nearly 90% of investors are men. Adding in chief financial officers and other administrative positions in marketing and communications, the demographic makeup of the venture capital industry shows that 79% of members are men, 87% are white and 28% are under age 30.

Women are heavily represented among administrative staff, handling 62% of the roles there. As investors, they’re most active in the life sciences and clean-tech industries, making up 18% and 15% respectively.

Newer venture capitalists tend to be more diverse, with 77% of them Caucasian. Of fresh recruits, 17%  are Asian and 3% are black or Latino, compared to 9% and 2% generally across the industry.

Investors work hard, with 44% of them saying they clock more than 60 hours each week. And yet eight in 10 venture capitalists are married and three-fourths have children.

And they’re loyal to their companies, with 57% having only ever worked at one firm during their careers and 30% at two. Nearly half expect to be in the same place professionally five years down the line.

Venture capital professionals are well-educated. Two in 10 went to either Stanford or Harvard, while 8% attended the University of Pennsylvania and 5% hail from UC Berkeley. Seventy percent have master's degrees.

The industry is also plugged in: 85% are on LinkedIn, 62% have Facebook accounts and 33% use Twitter.


Venture capital fundraising drops to 8-year low

A tough year for California venture capital closes on a promising note

-- Tiffany Hsu

Photo: Bernardo Montoya / Reuters

Venture capital fundraising drops to 8-year low

The U.S. venture capital industry raised its lowest amount of money in eight years
The U.S. venture capital industry raised its lowest amount of money in eight years, stymied by a recent panoply of economic bad news.

Firms raised $1.7 billion in the third quarter, said the National Venture Capital Assn. That's 53% less than the $3.5 billion raised in the same period a year earlier and the smallest pot since the third quarter of 2003.

The year started out with heavy fundraising, garnering $7.6 billion in the first quarter.

But then the economic recovery began to sag. Europe found itself mired in a debt crisis. U.S. credit was downgraded. Companies began delaying or calling off anticipated initial public offerings -– Zynga, Groupon and Facebook have all yet to go public, despite rampant speculation.

"Economic instability continues to impact the ability of venture-backed companies to go public which, in turn, has prevented many venture firms from delivering solid returns to their investors," Mark Heesen, president of the venture capital group, said in a statement.

The industry, he said in a blog post, has been investing more than it's been raising since 2008 -– an overhang that will reach $20 billion by the end of the quarter.

"Just like a bubble," he wrote in the post, "this imbalance is not sustainable."

The report was conducted with Thomson Reuters.


Groupon, Zynga reportedly delay IPOs

Report: Facebook delays IPO until late 2012

Venture capital funding and deals rise in 2010

-- Tiffany Hsu

Photo credit: Brian van der Brug / Los Angeles Times

CalPERS, CalSTRS post solid investment returns

Investment returns at the nation's two largest public pension systems are back on track after suffering steep losses during the Great Recession of 2008-09.

The California Public Employees' Retirement System on Thursday reported that its investments grew by 12.5% in the calendar year that ended on Dec. 31. That's in line with a 12.1% gain posted for calendar year 2010.

The smaller California State Teachers' Retirement System ended the year with a 12.7% return.

Both funds' total performance bested their selected market benchmarks.

"We repositioned our portfolio to take full advantage of the overall gains in the market last year," said CalPERS Chief Investment Officer Joseph Dear. "The strong returns we saw in 2010 prove that our top-to-bottom evaluation of all our investments is paying off for our beneficiaries and our employers."

As of Jan. 18, CalPERS' total investment portfolio was valued at $228.5 billion. That's still 12% off its historic high of $260 billion in October 2007 but considerably better than the recession low of $160 billion in March 2009.

Last year, CalPERS' investment performance topped market benchmarks in all areas except real estate. Global stocks returned 14.6%, fixed income and bonds 11.6% and so-called alternative investments, such as venture capital, private equity, returned 21.5%.

Only CalPERS' real estate investments lost money last year, falling by 5.1%, compared with a market benchmark that grew by 9.3%.

CalPERS' performance for both its alternative investments and real estate reflected returns through the third quarter of last year because of a lag in reporting all financial data.

Growth in CalSTRS investments has pushed the fund back to its October 2008 level at $146.4 billion.

"This is very encouraging news, but the historic market declines of the 2008-09 financial crisis showed us that CalSTRS cannot solely invest its way to healthy long-term funding," said Chief Executive Officer Jack Ehnes.

Ehnes and his board of directors plan to ask the Legislature this year for a boost in employer contributions to the retirement fund. CalSTRS still faces a shortfall in the money it needs to meet its long-term financial obligations, Ehnes said.

For its part, CalPERS already has begun boosting contributions paid by its member employers, including state and local governments and school districts.

-- Marc Lifsher

Innovative or insane? Cutting-edge green concepts hit the market

If the green geniuses of the clean-tech world have their way, you won't have to be a Jetson to drive around in a car running on fuel produced from thin air. Soon, you could be eating dinner using utensils made from algae as the lights overhead shine using power beamed down from space. Gee-whiz ideas -- and the investments that fund them -- are coming fast and furious, Tiffany Hsu writes.




Union accuses China of illegal trade tactics in clean-tech sector

A major U.S. union came out swinging against China on Thursday, saying in fiery terms that the Asian giant was using illegal trade tactics to strong-arm Americans out of clean-tech jobs.

The United Steelworkers filed a 5,800-page petition with the U.S. trade representative alleging that China was giving Chinese firms unfair advantages over American companies.

The document complains that China used billions of dollars in subsidies, performance requirements, preferential practices and protectionist and predatory activities to dominate the solar and wind industries and other clean-energy sectors.

“This case draws a line in the sand,” said Leo W. Gerard, the union’s international president, in a statement. “We can’t rely on unending diplomatic niceties and non-productive photo opportunities masquerading as serious talks. We’re hemorrhaging jobs, seeing our bilateral trade deficit skyrocket and jeopardizing our future.”

Union Vice President Tom Conway proceeded to accuse China of “breaking every rule in the book.” Sen. Charles Schumer (D-N.Y.) jumped in, adding in a statement that “there is no question that China is ignoring trade rules so that it can cheat its way to first place in the clean-energy manufacturing race.”

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A tough year for California venture capital closes on a promising note

The venture capital market in California slumped through a rough 2009 before showing signs of life in the last quarter, according to a report released Friday.

The weak period mirrored a national down year for these investments.

Venture capitalists dolled out $10.4 billion in 1,033 deals last year, compared with $15.6 billion in 1,246 deals in 2008. The one-third drop in value for California investing was slightly worse than the 31% drop nationally.

The numbers are part of a quarterly report from Dow Jones VentureSource, which bases its data on surveys of professional venture capital firms. National figures were released Thursday night.

Though overall value dipped from the third quarter to the fourth, the final three months fared better than the same months in 2008. Total investments in California companies increased 6% for the quarter over the previous year's quarter to $2.8 billion.

Jessica Canning, global research director for VentureSource, said the decline in California was expected. But she was surprised to find the brunt of the drag coming from the Bay Area -- mostly the result of a slowly recovering information technology industry.

“Overall Southern California has held up a little stronger,” she said.

Scott Sangster, president of Tech Coast Angels Los Angeles, a group of investors that funds local start-ups, said he expects investment volume and value to improve this year.

"There's nothing wrong with the creative spirit, the entrepreneurial spirit in Southern California," he said. "When we look back a year from now, 2010 numbers will be substantially bigger than 2009."

His group invested in 25 local companies last year for a total of $5 million, compared with 31 deals for $7 million in 2008.

The drop in venture capital hit the Los Angeles metropolitan area particularly hard. Investors doled out only $621.9 million in the last year, a 47% decrease compared with the year before.

Nationwide, venture funding of healthcare companies last year leap-frogged the long-time favorite, information technology, but in greater Los Angeles, IT captured more dollars -- $186.6 million -- than any other industry in the area.

-- Robert Faturechi


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