Immigrants tend to be bigger risk-takers than people born in California when it comes to starting a business. Here’s why that’s good for the economy.
Immigrants take big risks coming to California. When they get here, many decide to take another risk: launching their own company.
Immigrants are actually more likely to start a business than people born here. California consistently ranks as one of the states most reliant on immigrants for new business creation.
“California is very much a hotbed of immigrant entrepreneurship,” said Bill Kerr, Harvard Business School professor.
Nationwide, about 25% of new companies are founded by immigrants, according to Kerr’s research. But that rises to about 42% in California. Immigrants in California are starting everything from strip-mall restaurants to some of the state’s largest employers.
From Pho 79—an unassuming Vietnamese restaurant in Orange County that recently won a prestigious James Beard award—to tech giants like Google (co-founded by Russian-born Sergey Brin), immigrant entrepreneurs have shaped California’s economy at all levels.
Chancee Martorell, executive director of the Thai Community Development Center, is trying to keep that entrepreneurial spirit alive in the heart of Los Angeles’s Thai community. “Otherwise, you end up just seeing a community of chain stores that really have no history in the community,” Martorell said.
Later this year, her nonprofit will open a new food hall called the Thai Town Marketplace. It’s currently under construction in East Hollywood. The stalls will be run by low-income immigrants starting their first businesses.
The Thai Community Development Center is building the food hall. They’ll provide small-business training and charge each stall owner below market-rate rent.
“They just need to bring the stove, the oven and their ingredients,” Martorell said.
Preserving immigrant-owned mom and pop businesses in today’s L.A.
Martorell led the campaign to officially designate this neighborhood as Thai Town 20 years ago. The Thai Town Marketplace has been her passion project for more than a decade.
She has seen rents for commercial space going up and low-income residents still struggling to get traditional business loans. Many don’t have bank accounts. They may not be able to meet certain credit requirements, or they can struggle to break through cultural bias and language barriers.
Martorell’s Thai immigrant parents tried their hand at entrepreneurship. Her father briefly owned a grocery store, and her mother owned a cafe. She wants this food hall to maintain Thai Town’s cultural identity and give today’s immigrants their shot at opening a small business.
“We really have to work hard to preserve mom and pop, immigrant-owned businesses,” she said. “Because it’s becoming more and more difficult, challenging and riskier—and just economically not feasible for them to continue.”
Iririn Srirada will have a prime piece of real estate in the food hall. Her stall will face the sidewalk. She’s calling it So Zaap. “It means delicious. So delicious,” she said.
Srirada moved to Los Angeles 14 years ago from northeastern Thailand. She’s currently testing her budding food business a few days a week at the East Hollywood Farmers’ Market.
One recent afternoon, her dad was helping out, grinding fresh ingredients in a mortar and pestle for a spicy and sweet papaya salad.
“I’m trying to bring in Thai food that’s authentic,” Srirada said, “from the beginnings of my family, making it that real way.”
Los Angeles has the largest Thai population outside of Thailand. Srirada is betting a lot of people here crave something closer to what they would get back in Thailand.
Since coming to L.A., she’s had a lot of different jobs. She’s driven for Uber and been a server in a restaurant. She prefers being her own boss.
“It’s a happier situation than being under someone,” Srirada said. “It’s just better.”
Working in someone else’s restaurant wasn’t ideal, she said, but it’s where she discovered a valuable skill. “They didn’t have sweet desserts,” Srirada said. “So I made mango sticky rice for them.”
It was a hit with customers. She branched out, selling her food at a Thai temple in North Hollywood. So Zaap is her first attempt at starting her own business.
It’s hard, tiring work, but she said, “I love it a lot, and I hope that everything goes well.”
Why immigrants are more likely to start a business
Back in Thailand, Sririda had a successful career in the makeup industry. Her original plan coming to Los Angeles was to break into Hollywood as a makeup artist for film and TV. But she couldn’t get her foot in the door.
That’s a pretty common story for immigrants who launch their own companies, said Kerr, the Harvard professor.
Immigrants can find it difficult to transfer their skills to the United States. They may have degrees from universities not recognized by U.S. employers, or professional certifications that can’t be used outside their home country. A lack of good job opportunities can push them into entrepreneurship.
“They may find starting their own company to be the most attractive option,” Kerr said.
But entrepreneurship is not a fallback for everyone. Many come to California with a specific business plan in mind.
“Especially if you are launching a scalable, nationally and internationally focused business,” Kerr said. Those able to move may prefer to launch their tech startup in Silicon Valley, for instance.
Nearly half of California’s Fortune 500 companies were started by immigrants or the children of immigrants. And that’s a boon for job creation and tax revenue throughout the state. “They are really the engines for our local economy,” said Linda Lopez, who heads the Los Angeles Mayor’s Office of Immigrant Affairs.
Lopez said it’s not just big companies. Nearly two-thirds of L.A.’s “main street” businesses—dry cleaners, restaurants and nail salons, for example—are immigrant-owned, according to a 2015 study from the Fiscal Policy Institute and the Americas Society/Council of the Americas.
“[Immigrant-owned] businesses generate about $3.5 billion, or 45.6% of all self-employed income in the city,” Lopez said.
Back at the East Hollywood Farmers’ Market, Srirada has big plans for So Zaap. After a few years in the food hall, she hopes to move into her own space.
“We should open up more locations,” she said. “Here, we should have enough savings that I can go out and continue competing with others. I can keep going.”