Without the proposed International Entrepreneur Rule, which gives temporary permission to foreign founders to create their startups in the U.S., those founders faced a chicken-and-egg problem.
Startup founders need to prove to angel investors and venture capitalists that their immigration status is figured out before they get funded. Investors don’t want to worry that a startup founder will be deported or forced to leave the country a few months after they make their investment.
Before the International Entrepreneur Rule, which the Department of Homeland Security officially proposed today, entrepreneurs raising outside funding had few options for remaining legally in the U.S.
Currently, some lucky foreign entrepreneurs could bootstrap their visa status through a startup under the right circumstances. However, the startup would have to evolve into a very successful company to land the founder a green card later on — much later on. Entrepreneurs willing to spend a year outside the U.S. to start a subsidiary of the startup company in his or her home country, and work there for at least a year could qualify for a visa and green card for international managers and executives.
All the other visa and green card currently available to startup founders have big downsides as well:
H-1Bs not only require a sponsoring employer, but the H-1B visa lottery makes it very difficult to get selected.
- EB-2 and EB-3 green cards that require labor certifications are difficult to obtain because of the lengthy process and the Department of Labor conducts audits if the green-card recipient owns an interest in the sponsoring company.
- O-1A visas and EB-1A green cards for extraordinary ability and EB-2 National Interest Waivers are challenging to obtain for new founders. The required level of success and accomplishments is extremely high.
- EB-5 investor green cards require a personal investment of at least $500,000 and most startup founders operate on a shoestring budget and try to bootstrap.
- Even the E-2 investor visa, which “only” requires between $100,000 and $200,000, is often too much for most founders. Also, it is unavailable to individuals from many countries that work in STEM-related fields, such as China and India.
- Entrepreneurs can work for themselves with the 24-month STEM OPT (Optional Practical Training Program) extension, but it can be prohibitively complicated. Entrepreneurs need to incorporate their company and enroll in e-Verify, an online system that compares employee information with several federal government databases. In addition, another team member must sign-off on the training program.
Now More Options
Under the proposed International Entrepreneur Rule, startup founders would be eligible for parole—a temporary stay in the U.S. granted on a case-by-case basis by United States Citizenship and Immigration Services (USCIS). USCIS has the discretion to grant parole in humanitarian cases or in situations where entry would yield a significant public benefit to the U.S.
The entrepreneur rule allows USCIS to grant parole to entrepreneurs who provide a significant public benefit by creating jobs and boosting the U.S. economy. Foreign entrepreneurs would be allowed to work temporarily in the U.S. for up to five years : two years initially, followed by a one-time, three-year extension.
The International Entrepreneur Rule will enable foreign entrepreneurs to come to or remain in Silicon Valley so they can start getting traction and build their companies. After they reach a certain level of success, it may be easier to transfer to another one of visa or green-card options listed above, such as the visas and green cards based on extraordinary ability. The entrepreneur rule will go into effect after a 45-day comment period.
Having an immigration attorney guide you through formulating a long-term strategy may help your chances of success.