Last week, the Obama administration proposed a Rule that would allow foreign entrepreneurs to come to the United States for up to five years to build a new company. The Rule will allow entrepreneurs across any industry to apply for temporary entry, but is particularly significant for the technology sector, which has been actively lobbying for a so-called “startup visa” for years.[1] According to estimates, immigrants have founded one quarter of high-tech startups across America, and more than 40 percent of Fortune 500 companies were founded by immigrants or the children of immigrants.[2]
Since the beginning of his tenure, President Obama has advocated for a special visa that would enable foreign entrepreneurs to create businesses in the United States. However, with Congressional gridlock over immigration, such a startup visa has yet to materialize.
After several failed attempts to pass legislation that would create such a visa, the Administration has pursued their vision in a roundabout way in the form of a ruling issued by the Department of Homeland Security (DHS). The ruling follows on an Executive Action, issued on November 20, 2014, in which the President ordered federal officials to find a way to “make it easier and faster for…entrepreneurs to stay and contribute to our economy.”
The aptly titled “International Entrepreneur Rule” does not require congressional authorization and takes advantage of loopholes in the Immigration and Nationality Act that permit the government to grant foreigners temporary entry into the U.S. for “significant public benefit.”[3] The Rule will go into effect following a 45-day comment period in which the public is invited to share their views on the proposal.
To qualify for temporary entry (or “parole”) of an initial two years under said Rule, an applicant must demonstrate that they
- have at least a 15% ownership stake in a startup;
- play an “central and active role” in the operations of said entity, “such that his or her knowledge, skills, or experience will substantially assist the entity with the growth and success of its business”; and
- have raised either $345,000 from private investors OR $100,000 from Federal, state, or local government entities.
Successful applicants can then extend their stay for an additional 3 years (for a maximum of 5 years) “if they can demonstrate that their entities have shown signs of significant growth” since the initial application and that the business continues “to have substantial potential for rapid growth and job creation.” To satisfy these criteria for extension, founders must
- continue running their businesses in the US;
- retain at least a 10% ownership stake in said entity; and
- demonstrate the startup’s “continued potential for rapid growth and job creation” by doing one of the following: raise an additional $500,000 from US investors, generate $500,000 in annual revenue with an average annualized revenue growth rate of 20%, or prove they’ve created at least 10 full-time jobs over those five years.[4]
Although there is no specific cap to the number of entrepreneurs admitted, the U.S. Citizenship and Immigration Services (USCIS) estimates that about 2,100 founders a year will qualify.[5]
In the 155-page proposal DHS outlines the benefits of putting in place a specific process by which foreign entrepreneurs can create and develop start-up entities with high growth potential in the United States. Such businesses are expected “to facilitate research and development in the country, create jobs for U.S. workers, and otherwise benefit the U.S. economy through increased business activity, innovation and dynamism.” An additional benefit to the proposed Rule is that it should “provide a transparent framework by which DHS will exercise its discretion to adjudicate such requests on a case-by-case basis.” [6]
The Ruling is being seen as an intermediate step on the road to comprehensive immigration reform, and the most that the President can accomplish on the issue, given the lack of Congressional support. While lauded by Silicon Valley and Venture Capitalists, the Rule will not resolve certain ongoing challenges facing foreign entrepreneurs.
One such problem, frequently noted by Silicon Valley firms as an impediment to growth, are caps on highly skilled engineers, which are typically in the United States on H-1B visas. Furthermore, many entrepreneurs may not qualify for temporary entry under this rule. For example, numerous startups are able to grow without taking on additional investment money. Additionally, many can operate successfully with just a few employees.[7]
If you are a foreign entrepreneur or investor looking to come the United States, you can count on e-Council Inc. to provide experienced professionals to assist you in fulfilling your American Dream. Our skilled professionals can walk you through the proposed ruling and other visa options to help identify the best path for you based on your needs and goals. Once we select the best visa option for you, e-Council will provide the full spectrum of services needed to develop a complete application that will be submitted to USCIS.
To inquire about our immigration concierge and quarterbacking services or to choose from a wide range of complementary visa offerings, please contact us at info@ecouncilinc.com or 1-866-724-0085.
e-Council Inc.’s website, newsletter and other forms of communication contain general information about legal matters. The information is not legal advice and should not be treated as such. You must not rely on the information on this website as an alternative to legal advice from an attorney or other professional legal services provider. For specific questions about any legal matter please consult with an attorney or other professional services provider.
[1] http://www.nytimes.com/2016/08/27/business/entrepreneur-immigration.html?_r=0
[2] http://www.wired.com/2016/08/white-house-proposes-new-immigration-rule-entrepreneurs/
[3] http://www.wired.com/2016/08/white-house-proposes-new-immigration-rule-entrepreneurs/
[4] https://www.uscis.gov/sites/default/files/USCIS/Laws/Articles/FR_2016-20663_793250_OFR.pdf
[5] http://www.nytimes.com/2016/08/27/business/entrepreneur-immigration.html?_r=0
[6] https://www.uscis.gov/sites/default/files/USCIS/Laws/Articles/FR_2016-20663_793250_OFR.pdf
[7] http://fortune.com/2016/08/29/obama-immigrant-entrepreneurs/