Longtime angel investor Semyon Dukach started One Way Ventures to invest in immigrant entrepreneurs after he noticed how well their startups performed. As a refugee from the Soviet Union, he knew the grit and resourcefulness it took to start over somewhere new. Learn how investing in immigrant talent has paid off for Dukach, the immigrant founders and the economy!
Transcript
Denzil Mohammed: I’m Denzil Mohammed and this is JobMakers.
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An investment in immigrants is an investment in America. Immigrants are part of our communities, schools, companies, and they come here with a one-way ticket. When it comes to their entrepreneurial spirit, there’s obviously tremendous value there. Semyon Dukach knows this all too well. An entrepreneur himself, who was born in Russia, the early restrictive moves of the Trump administration, particularly the Muslim Ban, prompted him to take action. So in 2017, he started a seed stage fund for immigrant tech founders, One Way Ventures. In his 20 years of angel investing, Semyon had noticed a trend. Immigrant led companies repeatedly outperform the rest of his portfolio. Indeed, immigrants make up less than 14 percent of the US population, but started 24 percent of high tech startups and founded or co-founded 55 percent of America’s billion dollar startups. But Semyon doesn’t see through just the economic lens and views much of our immigration policy as inhumane and misguided, as you’ll find out in this week’s JobMakers podcast.
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Semyon Dukach, thank you for joining us on JobMakers. How are you?
Semyon Dukach: Great, thanks for having me.
Denzil Mohammed: So tell us a little bit about your current venture, One Way Ventures.
Semyon Dukach: One Way Ventures is a venture capital fund that invests in technology companies that are started by immigrants.
Denzil Mohammed: And why do you think this focus on immigrants is particularly important?
Semyon Dukach: Well, it fits our mission and sense of identity in that we are all immigrants and we really believe that people should have the same opportunities to work to create companies to do whatever peaceful thing they want to do regardless of where they have been, regardless of what paperwork they may have. We generally identify with other immigrants more than with necessarily people, just people who came from the countries that we specifically came from. So we also believe in expanding identity in that way, but specifically for venture capital, it’s also where lucrative investment works. Immigrants are much more likely, all things being equal, to build a really large disruptive business, and in venture capital, the returns to investors, I often drew by an outlier. Someone built something really big. So, so over half of all the unicorns have been started by immigrants, whereas only one-fourth of the early stage VC investments are invested by immigrants. So it’s kind of a natural focus for us for those reasons.
Denzil Mohammed: It says on your website 55 percent of $1,000,000 startups are started by immigrants. And of course we know that throughout American history, immigrants have always been inherently entrepreneurial. It’s something I often say, which is that the act of migrating is itself an entrepreneurial act. And you have previously said that immigration is fundamentally entrepreneurial experience. I want to get into your personal experience first. Your family came here as refugees from the Soviet Union. What was that experience like? You were 11 at the time, right?
Semyon Dukach: Yeah, I was a kid. My parents, I think, did a pretty brave thing, in that they left their country to live in and went into a total unknown. They had very little information about the outside world, and they also couldn’t bring very much with them. I think it was about $100 that they would let you exchange, right? And then you give up your citizenship. You give up most of your relationships, right? You don’t expect to ever be able to go back. So it’s pretty amazing, really. But I’m very grateful to my parents, having done that, largely thinking of me and my sister. Delighted to be with them.
Denzil Mohammed: What is the move really for? You and your sister to have a better future, a more secure future?
Semyon Dukach: I think that was probably the biggest part of it, yeah, but I think for my father in particular, he was quite tired of that sense of dishonesty, you know, lies that remain in society over there.
Denzil Mohammed: I recently interviewed a journalist called Jo Napolitano, who’s coming out with a book on refugee students and their fight to have good schooling in education, and she had spent some time on the U.S. border and saw how much education and opportunity was really such a driving force for even parents to send unaccompanied minors through the perilous journey to the U.S. Tell me a little bit about what the experience was like as an 11 year old moving to the U.S. What was that like? What was going to school, learning the language?
Semyon Dukach: Yeah, well, first we were in Europe for some time. We were in Austria and then over in Italy, near Rome for a couple of months. Where ’cause we also know papers, right. Like it’s, so it’s, they kept your passport. It was, you were, basically renouncing your motherland. You were kind of viewed almost as a traitor, in a sense. And so when you left, you had nothing, right? And so it took so long to establish some basic credentials, identity papers of some sort. And then to apply for refugee status in the U.S. we had to be granted that. But when we arrived in the US, it was 1979, we flew into JFK airport in New York City, and were taken in by one of the charitable organizations that helps refugees with a lot of funding from the federal government as well, I think. We lived in the projects in New Jersey for a while. Eventually my father got a job in Texas. We moved to Texas. Then, things started to normalize. But at the very beginning of it, I remember my parents being scared, right? Like for me it’s kind of an exciting adventure, but, I could also sense that how out of their comfort zone they were. And of course, the language, the culture, everything is super confusing. I remember like around the airport we stopped at a Burger King or McDonald’s or whatever and then like that going in there with a $10.00 bill in order to get us all food. We came back with, you know, four meals and some coins ’cause, that’s what it cost to buy meals for four people. At the time, it was about 10 bucks. He, you know, he was all white ’cause he only had like 100. He expected to get, you know, 9.50 in change. So, that was memorable. And then, for me as a kid, there was plenty of violence, I guess bullying. Kids that be tough on other boys who don’t understand the culture ’cause they don’t know what to look at, how to act. That’s how I got into fights. I got beat up.
Denzil Mohammed: People often very much underestimate just how fast, particularly refugees need to get settled. And you arrived, I would assume, before the formal resettlement program began in the U.S. and so what happens today is very different to how it was back then. But the kind of financial assistance you received from the government would have been just for a few months, and your family really was forced to find some sort of stability really fast, right?
Semyon Dukach: Yeah, I mean, I think there were charitable organizations that shared that burden of assistance. I don’t know how long it would have lasted, certainly not forever. It couldn’t have been more than six months, though. We also didn’t speak a word of the language, but we eventually we figured it out.
Denzil Mohammed: So unpack this idea of migration being an entrepreneurial experience. Can you sort of get into the qualities or characteristics of a migrant or refugee that makes them inherently entrepreneurial?
Semyon Dukach: Well, I mean, you going against the mainstream, against the grain. It’s not a normal thing to do in a society to pick up and leave and go somewhere else isn’t weird unusual I think, right? Most people would never do that and they think the analogy would be for someone to go leave to create a new company. You’re also thinking, you know, it’s a lot of faith in human decision. It’s a lot of being willing to do a little bit less safe, less obvious choice. And plenty of people will advise you not go straight and don’t when you’re starting your first business, people say don’t leave the jobs, like, be careful. And they will tell you, don’t leave us. Don’t leave your homeland, don’t leave your support networks. I think some people probably feel betrayed when you leave. I mean you might leave Paris, France, behind, or whatever, and they might not necessarily wish success upon you. They might be hoping you’ll fail and come back, which is why one of the reasons it’s so difficult to go back, right? Cause, you don’t want to admit that they were right and you were wrong. So once you cut those ties, you sort of, you have to keep going. And then it’s entrepreneurial that, you know when you get to where you’re going, you just don’t really understand how the world works, right? Like you don’t understand the culture. Often you don’t understand the language. And so, in the same sense, when you starting some new little start-up to try to compete with big companies, you might have an advantage to some particular thing. But if you don’t really understand how the business works, how their market works, what all the relationships are that affected the resellers, right, the suppliers, like there’s many things you just don’t know. And the only advantage is that you can move faster and you have less fear and less to protect. Like, the reason the startup can beat a big company is that the big company has a lot more to lose. So in everyday decisions, they have to go carefully. At least with the existing customers, they can’t just radically change the product. And they wouldn’t be able to if they wanted them to, because there have so many entrenched, comfortable people doing things the way they do things. And when you’re starting over, you could do a lot more. Likewise, when you come to a new country, you’re not constrained by the social strata, the social structures of the existing network. Yeah, it’s hard to build a network from scratch, but on the other hand, the sky is the limit when you’re building it from scratch. You don’t know anything about it. You’re like a new person.
Denzil Mohammed: You’re inherently a risktaker, right?
Semyon Dukach: Well, I think every entrepreneur is inherently a risktaker.
Denzil Mohammed: But in a place where you have to learn how to take the bus and tax regulations and all sorts of things.
Semyon Dukach: That’s right.
Denzil Mohammed: Prior to One Way Ventures, you had started several technology companies and you were the director of Techstars in Boston. But, One Way Ventures, really, from what I can tell, started out from a moment of activism, right?
Semyon Dukach: Little bit, yeah. I mean I was already planning to be Techstars and start some kind of an investment fund, but I didn’t really know what kind and ended up going to the airport to protest at a moment where, early in the Trump administration, they stopped people right in airports and turned them around because of where they were born, not even their paperwork or citizenship status, just instead, their place of birth, which seemed kind of unfair and arbitrary. And so, I was up there jumping up and down, yelling with signs, which I hadn’t done since I was in college because we realized that the immigration system didn’t care about people personally. And it sort of clicked and I decided to the bank would be different, so the fund as well.
Denzil Mohammed: So that particular moment catalyzed this idea of supporting immigrants in order to thrive. What has the experience been like so far with One Way Ventures?
Semyon Dukach: It’s been great. You know, we made a lot of investments, we first fundraised, then invested in about 50 companies, had quite a bit of success. And we were able to raise a larger fund. I mean, there there’s lots to learn about building a venture capital fund, but one thing we haven’t measured on this core thesis of backing immigrants. In fact, I would say we have become stricter in how we define immigrants than how we were at the beginning, We see more and more just how strong founders can be.
Denzil Mohammed: Have you sort of witnessed firsthand the damage of these restrictive immigration policies of the past four years when it comes to their entrepreneurial ecosystem here in Boston?
Semyon Dukach: As someone who is an American citizen that has some positive feelings for the country I live in, it does concern me when America starts cutting back on immigration, you know it’s gonna hurt America. But as far as you know, One Way Ventures, it’s probably better for the fund if it’s hard to immigrate, like because this is only stronger. The people who manage to get here anyway, if it’s harder, are going to be even more likely to build a big business, right? And if there was a world where there was no borders and visas that people can just come, well, this thesis wouldn’t necessarily immediately generate good results, right? Because if anyone could come, and it wasn’t hard, and then we have to find some other thing that people went through that was really hard in order to decide what kind of people to back because, then, the fundamental thesis of people who went through a really hard thing are more likely to overcome the challenges ahead of them than somebody who had relatively privileged and easy path to get to where they are. Right. That’s the core thesis.
Denzil Mohammed: I remember talking to Johannes Fruehauf, who founded BioLabs in Cambridge, talking about, you know, it’s not the aristocrats who migrate to other countries. It’s people who have their backs against the wall, whether they take a plane ride or they cross a desert.
Semyon Dukach: We don’t view ourselves as directly philanthropic in any way. It’s not a consideration of ours whether an immigrant founder needs extra money, needs extra help, which, that’s just not what we do, you know. We just want to invest in the absolutely strongest people that are gonna probably succeed without our investment. Probably lots of people want to invest in their companies And I would say our dedication to our mission to our beliefs only make it easier for us to convince these founders to accept our money. It’s really them that are doing us the favor most of the time. And the reason they’re doing it is that they like our thesis and they like our approach. And they know that we are genuine. And so it works out in that way. Also we have a very strong network. At this point, we have a lot of portfolio founders who willing to help each other. We have LPs who are investors in our fund who often themselves were immigrant entrepreneurs who had success or they were friendly with immigrants or were immigrants themselves. And so there’s 160 of those people and most of them are very eager to help the people who are building their companies and they’re doing it not just because [inaudible], they’re doing it because they like our idea of helping people expand their identity and creating this, like, powerful mafia of immigrant founders, right, that’s collectively more successful than all the founders who were born in this country, as a group. It’s really the most successful group of all.
Denzil Mohammed: Talk a little bit about the kinds of companies you choose to invest in. I realize that it covers a range of different kinds of services, right?
Semyon Dukach: Products, models, services, enhancement services, yeah, pretty general fund but pretty broad. It’s generally some kind of technology. Because it needs something that’s defensible as it scales, as it grows. And we mostly we look at the strength of the founding team, and what the market says is a unique, differentiated, ideal or other business model differentiation, something that will we believe will grow to be large and keep going larger, even in the face of bigger competition.
Denzil Mohammed: We often hear that Boston has many advantages when it comes to starting businesses and growing businesses, but one of them being that we have all these people from around the world. Could you explain to an American audience the real value of that kind of cosmopolitan workforce?
Semyon Dukach: Yeah, I mean, I would say probably the biggest value drivers would be the people who actually starting the large destructive companies, people investing in the big businesses. People like, Elon Musk, Sergey Brin, who really build gigantic, successful companies, who come here as immigrants. You know that’s probably the most, like, I forgot the value. But I would say that the people who come just to work some job also bring value because they can do the job better and cheaper than someone else. And I would actually argue that even the migrants will come without any education, the people who walk on foot from Honduras, like across the border illegally and have zero education and have all kinds of other issues, you know, they’ll probably consume some services in the very beginning just to get on their feet. But I would say they actually add tremendous value in that then they’re very social as a group like, you know, most poor people indoors don’t walk 2,000 miles to get to the Mexican border. Like you gotta think about the people who actually do that. They are generally the ones with the most dedication, the strongest work ethic, right? They’re the ones, if you gonna hire people, for some job that doesn’t require an education, I mean, I would hire those people in a second over people who didn’t go through the journey, right? They get preselected, they pretested. They’re the best people. So it’s, yeah, America is a country that benefits from a more open immigration policy and I suppose it might benefit a little more from encouraging the highly educated people who bring the value of the education with them. And their culture. But it also benefits, I think, from the less educated ones, from the general diversity of the people who come. But I just want to draw a distinction for your audience in that I actually don’t believe that it’s appropriate to ask the question of, to ask questions, to ask, you know, whether these people bring value to America, what kind of value they bring to America. You know I know there’s a lot of evidence that shows that they bring the tremendous value, but I don’t think it actually maters. I believe in this radical notion of equality of opportunity and universal human rights. I think that a lot of Americans move, almost all Americans, actually, they really did believe in that same idea, this idea that all people are created equal, that the random circumstances of your birth not limit your potential. It doesn’t guarantee you anything, but it shouldn’t stop you from applying for a job or trying to start a business or whatever; it just shouldn’t matter. Like it used to be that if you were born with dark skin in America, you were automatically a slave for the rest of your life and you could never do anything at all but be a slave. And today, almost no one believes that that’s acceptable. Almost no one believes that you could limit job applicants to a certain race. Like people don’t think that’s fair or just and I just see a huge inconsistency there because if you actually, you truly don’t think it’s fair or just to allow a company, you know, to only hire people of a certain race, how could you possibly believe that it’s fair to us to arbitrarily say that if you happen to be born on the same side of this line, on the other side of the little river or whatever, you know you don’t get to choose where you weren’t any more than what color were like, you know. You just come into this world, right? How did that determine whether you can apply for a job and get a job or start a company in America? It shouldn’t. It can’t. So, to get back to my original point, yes, the immigrants who come here, bring value into America, and yes, America will be financially better off, economically better off and culturally it better off, really from the diversity if it lets more people in and lets them in easier.
Denzil Mohammed: There was a lot of talk in the past few years about reducing family reunification, which is the cornerstone of our immigration policy, generally in favor of a skills-based system. I imagine I know what your thoughts on that is. Our own research has shown that even for highly skilled professionals, social capital is actually the most important asset that they have in order to climb the ladder and to succeed. How do you feel about this notion of choosing people based on skills?
Semyon Dukach: Well, it would be just like if instead of the last Emancipation Proclamation, Abraham Lincoln, had just said, you know what, let’s free the black people who have particularly good skills and let’s start with them and then maybe we’ll maybe reunify some families, so if they have a sister or brother they have some freedom. I would feel that that’s immoral and wrong. I would feel that you gotta do the right thing. And those aren’t the right questions to ask. So I really don’t care whether you do it based on family ties or skill reunification. I think it’s wrong to prevent people from crossing the border from taking a job. And I think saying, hey, these are our American jobs, they’re not going to share them with someone else, this is wrong and immoral. And the wrong occurs.
Denzil Mohammed: How do you feel about America as the country that took you and your family? How do you feel about America as a home for immigrants and refugees?
Semyon Dukach: Generally, more positive than most of the rest of the world. I think America, has been at the forefront of letting people in, right? And historically has been living ways, and there have been periods of greater and greater freedom, you know? But generally speaking, Americans take a lot of people in. So has Australia. So has Canada. America is not the only country that’s done that. So has Brazil to some extent, and generally, all of those countries have done well as a result. But America, particularly, owes most of its success to the immigration policies of the last couple 100 years. And, some to the geography, and a lot probably to the original ideas of the founding fathers, which include the ideas that I’m alluding to, maybe not quite to that extent. Tolerance is important here, the freedom of expression, First Amendment stuff. Like there’s a lot of things about America that make it attractive to people come, but then the actual fact that people are allowed to come is also critical to the success. So yeah, I mean, I’m grateful to America for taking in my family for sure. I’m also proud to be in America to the extent that America does these things, but I’m also still disappointed with America like I am with most other countries, in that we’re not yet at the level of acceptance of others that I think is necessary.
Denzil Mohammed: Semyon Dukach, thank you so much for speaking with us on JobMakers. It was really an honor to talk with you.
Semyon Dukach: Thanks very much for having me. Thank you for the work that you do.
Denzil Mohammed: And thank you for the work that you do. JobMakers is a weekly podcast produced by Pioneer Institute, a think tank in Boston, and The Immigrant Learning Center, a not-for-profit that gives immigrants a voice. I’m so happy that you joined us with this week’s inspiring story of another immigrant entrepreneur. If you know someone we should talk to, email Denzil. That’s D-E-N-Z-I-L at jobmakerspodcast.org, and please leave us a review. I’m Denzil Mohammed. Join us next Thursday at noon for another JobMakers podcast.