The proposed International Entrepreneur Rule received more than 750 comments during the public comment period, which ended last week. Many pointed out the hurdles foreign entrepreneurs would face qualifying for parole under the rule.
The International Entrepreneur Rule gives U.S. Citizenship and Immigration Services (USCIS) the discretion to grant parole—or a temporary stay in the U.S.—to immigrant entrepreneurs who provide a “significant public benefit.” That benefit comes from boosting the U.S. economy through the rapid growth of a successful startup, job creation and innovation.
I strongly support the intent of the rule. And I applaud the Department of Homeland Security for allowing the spouses of paroled entrepreneurs to apply for a work permit under the rule.
However, the rule as currently written contains ambiguities and restrictions that will discourage international entrepreneurs from taking the path of parole to create and grow their startup in the U.S. I believe the following changes to the International Entrepreneur Rule would better balance the appeal and process of parole to entrepreneurs with the rule’s intent.
Lower the Minimum Investment
The rule requires immigrant entrepreneurs to show their startup has received at least $345,000 from credible U.S. accelerator, angel or VC firms or at least $100,000 in government grants within the last year.
Reducing the investment requirement to $100,000, thus matching the minimum requirement for government grants and putting the amount more in line with what startups typically receive from accelerator programs. The top accelerator programs in the U.S. provide seed capital ranging from $75,000 to $300,000, with most in the $100,000 to $120,000 range.
Broaden Pool of Qualified Investors
About three-fourths of venture-backed firms in the U.S. don’t return investors’ capital, according to Shikhar Ghosh, a senior lecturer at Harvard Business School. Therefore, “qualified” investors with an established record of successful investments will not guarantee a startup’s success. What’s more, some of these investors, including newly formed angel investor or venture capital groups, will not have that established record.
Given that, USCIS should broaden what it considers an investor under the rule. Qualified sources of investment should also include:
- Bootstrapping (self-funding)
- Crowdfunding
- Investments from global accelerators, angel investors and venture capital firms
Including other sources of investment beyond angel investors and venture capitalists would help mitigate the level of control these investors could exert on international entrepreneurs. It would also mitigate some of the gender bias inherent in these funding systems.
Explain Vetting
Spell out what evidence will be considered reasonable to prove that investment funds come from legal sources. Documenting and verifying an investor’s source of funds is an arduous and time-consuming task, based on my experience doing so with visa applications.
Provide Temporary Visas
If the International Entrepreneur Rule allowed bootstrapping, entrepreneurs could potentially qualify for an E-2 visa before applying for parole. But other entrepreneurs would need a temporary visa that allows them to conduct business and work. Under a visitor visa, foreign entrepreneurs can negotiate contracts and consult with business associates. However, they would not be allowed to do any other work, and would only be allowed to stay in the U.S. for a few months.
Change Income Requirement
Lower or eliminate the household income requirement. To qualify for parole, a foreign entrepreneur must maintain a household income of at least 400% of the federal poverty level. A single person must maintain an annual income of at least $47,520, and a family of four would need at least $97,200.
However, startups often do not pay their founders—or pay them irregularly or compensate them in ways other than a salary. Moreover, some foreign entrepreneurs will need a visa to come to the U.S. to establish their business and find investors. Under a visitor visa, entrepreneurs will be unable to meet the income requirement.
Extend Parole Stay
Extend the maximum time international entrepreneurs would be eligible to receive parole to at least eight years from five. Allow entrepreneurs to receive an initial four years of parole followed by one, four-year extension. VC-backed startups typically go public or are purchased after seven to 10 years.
Safeguard Due Process
Allow appeals and motions to reconsider or reopen a case. Unintentional mistakes get made. USCIS has wide discretion to approve or reject applications. Given that, foreign entrepreneurs may avoid applying for parole without a formal process in place.
Enable Status Adjustment
Allow paroled entrepreneurs to change their parole status to an employment-based visa category. That would enable them to continue to grow their company in the U.S.
Add EB-2 NIW Benefit
Allow entrepreneurs who qualify for parole under the International Entrepreneur Rule to automatically qualify for an EB-2 National Interest Waiver. Paroled entrepreneurs need to focus more of their time and energy on growing their startup rather than meeting visa requirements.
What Happens Next?
USCIS will sift through the public comments. The final version of the International Entrepreneur Rule is expected to go into effect before President Obama leaves office in January.
Meanwhile, Republican presidential candidate Donald Trump has said he would reverse President Obama’s executive orders on immigration if elected. In contrast, Democratic presidential candidate Hillary Clinton supports a startup visa.
