The Power of Adversity Muscle

Originally published on Sandhill.com on 4/11/2017

We invest in companies founded by immigrants. Are we Anti-American? Actually, it’s the opposite: Unshackled supports foreign-born entrepreneurs at the earliest stages because they are likely to set up successful, high-growth companies in the U.S.

We know this from experience. As venture investors, we have spent years examining startups for indicators of future success. We soon recognized a familiar pattern — immigrant founders consistently proved to be uniquely savvy, determined and energetic.

Unshackled began to call this combination of tested grit, resiliency and determination, “adversity muscle.” For many entrepreneurs, it is the competitive edge that sets their companies apart.

Immigrant founders have “traveled” far to be in America — not just in miles, but in experiences along their entire life path. Some come from small villages in countries with billions of people and had to beat the odds to arrive in the U.S. as a business leader.

The distance they’ve traveled is directly correlated to the adversity they’ve faced and the muscle they’ve built along the way. In leaving their homeland, immigrants arrive in a new country as nobodies: no financial stability, no personal networks, and often, no support structure. Their only choice is to begin working hard and hope for success or they’ll find themselves on a return flight home.

It’s a high stakes game: Go big or go home.

That’s why we’ve found the best founders are those who have overcome challenges and bounced back — immigrants or not. But having endured a variety of challenges coming to America, foreign founders don’t expect a smooth road to success. They will withstand hearing, “No.” “No.” “No.” “No.” “No.” in order to eventually arrive at the all-important “Yes.”

At Unshackled, we see adversity muscle at work in the companies we back every day.

Of course, few business leaders walk a straight path. Everyone zigs and zags on the path to success. But the fact is, most immigrants have encountered tougher “zags.” For example, one of our portfolio founders grew up in small village without reliable access to water. Instead of giving in to the challenges, he became an expert in technology and business. By the time he turned 28, he received his master’s degree from USC, published seven books on artificial intelligence (AI) and is now leveraging that technology to help American water facilities prevent infrastructure failures that can result in the loss of billions — in both water gallons and profit dollars, annually. His life experiences built his grit and shaped his determination.

I’m a first generation American. After working with my co-founder, Nitin Pachisia, and other immigrant entrepreneurs, I have gained tremendous empathy for the adversity muscle gained on their journeys — including those of my parents. I never fully appreciated the struggles they must have endured as they settled our family in the U.S. during the 1960s-1980s.

Today, Unshackled’s portfolio has founders hailing from each of the six inhabited continents. They come from 15 countries of birth, speak 30 unique languages and more than 25 percent of our teams have a female executive. All of them came to the U.S. to pursue their American dream.

The shared characteristic of all these entrepreneurs — and all successful people, for that matter — is that someone believed in them early in their lives. Unshackled aims to play the role of believer in their entrepreneurial lives. We know the power and energy of our founding teams is unmistakable. Holding onto the courage of their convictions when the odds are stacked against them has instilled a potential for greatness.

And we’ve seen our immigrant founders thrive in this environment. In three years, Unshackled’s fund performance is in the top decile of those started in 2014. We also boast one of the lowest failure rates. It is clear our thesis of supporting immigrant early-stage entrepreneurs is working.

The determination and brilliance of immigrant businesspeople is what makes America one of the most competitive countries in the world. U.S. universities are today’s “Ellis Island,” with over 1 million foreign students passing through their halls in 2016. In fact, 76 percent of patent awards from America’s top ten patent-generating universities in 2011 had a foreign-born inventor on the team.

The U.S. has a long tradition of being the land where the best in the world come to build businesses that benefit everyone. More than 40 percent of Fortune 500 companies were founded by immigrants or children of immigrants. But that trend has changed and we’re not reticent to say that American immigration policy is broken. We have spoken on CNN and CNBC and we have authored a white paper calling for the specific policy changes needed to encourage the best foreign students and workers to settle and innovate here, not back in their home country — a proven job creation strategy.

At Unshackled, our goal is to create 100,000 domestic jobs. Someday, we will hear an American from our heartlands go on TV thanking a foreign-born entrepreneur for putting food on the dinner table. The common denominator? Both employer and employee have the adversity muscle to succeed in the global economy.

w/b Manan Mehta, founding partner of Unshackled Ventures.