“I am not throwin’ away my shot.” That famous refrain has become something of a verbal trailer for Lin-Manuel Miranda’s mega-hit musical, “Hamilton.” “Hamilton” is one of the most successful Broadway shows of all time. As of early June 2020, “Hamilton” had grossed $649.9 million in New York City performances alone. What’s more, Disney+ paid $75 million for broadcast rights on its platform. Accounting for touring, merchandise, and other sources of revenue, the production has brought in more than $1 billion in revenue so far. Beyond its revenue-generating prowess, the production has made an indelible impression on scores of fans across the globe. Michelle Obama remarked about “Hamilton:” “It was ... the best piece of art in any form that I have ever seen in my life.”
“Immigrants: we get the job done.” That line, too, has become famous from the musical. However, it’s much more than a famous line. It has become a musical mascot for the success of immigrants in business. Time and again, immigrant founders have proven themselves a demographic that overperforms in business — a phenomenon I dub “the Hamilton Effect.”
Immigrant Founders’ Impact on the Startup Industry
However, this phenomenon isn’t just based on the Broadway musical. There’s research to back it up: According to a July 2022 policy brief by the National Foundation for American Policy (or NFAP), over half of American startups valued at $1 billion or more were founded by immigrants. NFAP also found that 64% of U.S. billion-dollar companies, or unicorns, have founders or co-founders that are either immigrants themselves or children of immigrants.
Additionally, nearly 80% of unicorn companies in America have immigrants involved in the business, whether they’re founders or hold leadership roles. More than 44% of companies on the 2019 Fortune 500 companies list were founded by a first- or second-generation immigrant.
Creating Space for Underrepresented Startup Founders
So, what does all of this mean? It means the smart money is on immigrants. Of our current 17 portfolio companies, five are founded by first- or second-generation immigrants. Among the high-flyers in our portfolio, several are founded or co-founded by those immigrants. And, like the lead in “Hamilton,” they’re getting the job done, pushing our gains up and to the right: Since 2015, we’re posting a net IRR of 30%*, ranking us among the top 5% of VCs in our class globally.**
This Hamilton Effect is an important part of why we have launched our Opportunity Fund that will invest at least $25 million in diversity and inclusion in tech, including founders who are immigrants, people of color, women, or identify as LGBTQIA+.
Whether it’s Steve Jobs, Jeff Bezos, or Sergey Brin, immigrants and their children have long ascended to the pinnacles of tech business success. As such, the Hamilton Effect continues to remain strong in the American tech business landscape. Venture capital investors would do well to take note and invest accordingly, lest they throw away their shot.
Want to get involved in creating more opportunities for startups led by underrepresented — including immigrant — founders? Contact us.
*annualized to fiscal year
**Benchmark: micro venture capital investors (Source: PitchBook)