Difference between revisions of "Start-Up Visa (Blog Post)"

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{{McNair Projects
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{{BlogPost
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|Project Title=Immigration Policy and Entrepreneurship (Blog Post),
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|Has title=Start-Up Visa (Blog Post)
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|Topic Area=Policy,
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|Has author=Ramee Saleh & Tay Jacobe
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|Owner=Ramee Saleh,
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|Has content status=Published
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|Start Term=Fall 2016,
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|Has Graphics status=None
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|End Term=Fall 2016,
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|Has publication date=2017/02/09
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|Status=Active
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|Has processing notes=Ramee & Tay to finish 2/13/17
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|Priority=2,
 
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|Due Date=NA,
 
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|Stage=DRAFTED,
 
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|Deliverable=Blog Post,
 
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|Audience=General Public,
 
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|Keywords=Policy, Immigration, visa, Startups,
 
 
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The U.S. economy has largely recovered from the Great Recession with a solid streak of private sector job growth -- growth began again in 2009 and has averaged an annual growth rate of 2.1% since then -- but the economy can still be pushed for new and innovative ways to create jobs. Increasing high-skilled immigration has been touted by politicians as a potential economy-boosting solution because it promotes the growth of American service sectors and fulfills positions in critical STEm work-fields. New research from the Harvard Business School has shown that  immigrants are disproportionately represented in the field of entrepreneurship; despite the fact that immigrants comprise only 15% of the American population, they represent 24% of the pool of entrepreneurs.
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'''Starting an American “Start-Up” Visa'''
  
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Job growth by immigrants extends beyond small family businesses; immigrants increasingly have higher stakes in critical top-performing firms. A study by the Kauffman Foundation found that in 2012 these firms, in just engineering and high-tech sectors, “employed some 560,000 workers and generated $63 billion in sales.” Although the Harvard Business Review notes that immigrant-founded businesses are more likely to fail than native founded business, “those that survive experience greater employment growth”. Inc. Magazine generates a list of the 500 fastest growing companies in the United States and in 2014 20% of CEOs on the list were immigrants. There’s a clear trend here -- immigrants are disproportionately leading and creating high performing businesses, and that comes with jobs, billions in revenue, and increased prominence for the US in the financial-technology sector.
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On August 26, 2016 the Obama administration unveiled a new immigration proposal that included provisions for immigrant entrepreneurs: the International Entrepreneur Rule. This “start-up visa” intends to make it possible for foreign entrepreneurs to enter and remain in the United States. The rule aims to attract entrepreneurial talent, especially that in advanced technology fields. It also seeks to prevent the “brain drain” of international students who are unable to obtain H-1B visas after completing their educations at U.S. universities.  
  
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That trend has not gone unnoticed by the Obama administration, however. On August 26, 2016, the Department of Homeland Security proposed the “Immigrant Entrepreneur Rule” (nicknamed the “startup visa”). As currently written, the DHS would have discretionary case-by-case power to allow foreign entrepreneurs of startups to come into the country and stay. Eligibility is currently limited to those
 
  
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*“Who have a significant ownership interest in the startup (at least 15 percent) and have  an active and central role to its operations;
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OVERVIEW
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*Whose startup was formed in the United States within the past three years; and
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The proposed International Entrepreneur Rule would allow the U.S. Citizenship and Immigration Services to grant visas on a case-by-case basis. First-time applicants must own 15% of a start-up company created in the U.S. in the previous three years ago. They also need to demonstrate significant potential for growth and job creation. Applicants must play a significant role in the company’s management. Companies must have $345,000 in venture capital from investors with “established records of successful investments” or at least $100,000 from certain government funding. Entrepreneurs who do not meet these standards must show potential for rapid growth and contribution to the public good. If accepted, foreign entrepreneurs (and dependents upon application) will be granted a two-year stay. Entrepreneurs may apply to extend their stay for an additional three years after meeting certain qualifications. There is no extension after the first; the hope is that the entrepreneur can switch to a different visa or obtain a greencard.  
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*Whose startup has substantial and demonstrated potential for rapid business growth and job creation, as evidenced by:
 
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*Receiving significant investment of capital (at least $345,000) from certain qualified U.S. investors with established records of successful investments;
 
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*Receiving significant awards or grants (at least $100,000) from certain federal, state or local government entities; or
 
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*Partially satisfying one or both of the above criteria in addition to other reliable and compelling evidence of the startup entity’s substantial potential for rapid growth and job creation.”
 
  
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While the public has until October 10, 2016 to submit suggestions before a final rule is put in place, many in the tech industry are approve of such a proposal as a step in the right direction. Tim Ryan, co-founder of Startup San Diego, even advocates for less stringent requirements but thinks that even as is the rule should prevent “brain drain” of highly-educated international students back to their home countries. Bernhard Schroeder, director at San Diego State University’s Lavin Entrepreneurship Center, offers the caveat of making sure the rule does not allow unproductive workers to stay in the US but agrees that it could help the country economically if it helps companies flourish like it is intended. After the United States Citizenship and Immigration Services responds to public comments the final rule will not be put in place until approved by the Federal Registrar.
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ANALYSIS
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The proposed rule has received early praise; Tim Ryan, the co-founder of Startup San Diego Tim Ryan, applauded the proposal as a step in the right direction . However, the actual impact on entrepreneurs and their fledgling startups is uncertain. The proposed rule would impact a limited number of entrepreneurs. The DHS estimates that a mere 2,940 would qualify if the rule is enacted, In contrast, 315,857 H1-B visas were approved in the 2014 fiscal year. The high level of investment required may be unreasonable. Y Combinator, widely considered the world’s best startup accelerator, which offers start-ups a maximum of $120,000 in investment funding. However, companies are expected to have at least $345,000. This money must come from investors with a record of repeated investment successes. Some proponents of an initiative like this worry that there simply will not be a reputable investors able to provide that level of funding. Or, if a group of investors can fulfill the requirement, they may not all have the necessary experience.
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Would the rule change bring high-tech talent to the U.S.? The requirement that the company must have been founded in the U.S.  and that the applicant has a significant role in the company may end up limiting the pool to those already in the US who need a new visa to permit them to stay. This may help international students at US universities who are unable to acquire H-1B visas.Thus, the visa may help keep entrepreneurial talent here while failing to attract new recruits.
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Lastly, there is an issue of time -- entrepreneurs only have five years. Currently, the visa can only be renewed once with the hopes the applicant can move to a different visa category altogether. Combined with the high levels of investment required for initial application and renewal, this may put a heavy strain on startups. TechCrunch puts the average time of an “IPO-track start-up” at about seven years, although it can take up to 10 years. Ultimately this is an additional risk to potential investors. There is a possibility that a company, or at least key members of it, could lose official immigration status in the US. For these reasons, it is likely that the impact of this version of a US start-up visa will be limited. Especially if the majority of recipients are foreign nationals working in companies that are predominantly comprised of US nationals.
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CONCLUSION
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The effects of the Obama Administration's proposed rule are unknown . The eligibility requirements are so rigorous and the time period allotted by the visa is so short that there is a reasonable claim that not much will change at all. If the 115th Congress remains as stagnant as the 114th or if President-elect Trump repeals the order, then there may be little hope of any legislation to create a truly meaningful start-up visa. This rule could be implemented as early as next January, but it’s questionable whether it will survive the new administration. While Trump vows to “establish new immigration controls to boost wages and to ensure that open jobs are offered to American workers first,” his exact plans for administering H-1B visas or start-up visas are unclear. It will come down to whose voices convince him -- the lucrative tech industry that relies on foreign labor or his fierce supporters who want restrictions on immigration; both are up in the air.
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==References==
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See google doc.
 +
 
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==Google Doc==
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https://docs.google.com/a/rice.edu/document/d/1jaD1UYW4hLcgW9PBlzvIvdKJCTOyS2BH_dPDOobrDJc/edit?usp=sharing
 +
 
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Google doc with a draft that includes updated data as of 2/3/2017: https://docs.google.com/a/rice.edu/document/d/18CyiYIiinjrYPaVKbEOjGPLAg0SgrBhvNMvzKlobI5M/edit?usp=sharing

Latest revision as of 16:34, 2 March 2017


Blogpost.png
Blog Post
Title Start-Up Visa (Blog Post)
Author Ramee Saleh & Tay Jacobe
Series
Content status Published
Publication date
Notes Ramee & Tay to finish 2/13/17
Image
© edegan.com, 2016

Starting an American “Start-Up” Visa

On August 26, 2016 the Obama administration unveiled a new immigration proposal that included provisions for immigrant entrepreneurs: the International Entrepreneur Rule. This “start-up visa” intends to make it possible for foreign entrepreneurs to enter and remain in the United States. The rule aims to attract entrepreneurial talent, especially that in advanced technology fields. It also seeks to prevent the “brain drain” of international students who are unable to obtain H-1B visas after completing their educations at U.S. universities.


OVERVIEW The proposed International Entrepreneur Rule would allow the U.S. Citizenship and Immigration Services to grant visas on a case-by-case basis. First-time applicants must own 15% of a start-up company created in the U.S. in the previous three years ago. They also need to demonstrate significant potential for growth and job creation. Applicants must play a significant role in the company’s management. Companies must have $345,000 in venture capital from investors with “established records of successful investments” or at least $100,000 from certain government funding. Entrepreneurs who do not meet these standards must show potential for rapid growth and contribution to the public good. If accepted, foreign entrepreneurs (and dependents upon application) will be granted a two-year stay. Entrepreneurs may apply to extend their stay for an additional three years after meeting certain qualifications. There is no extension after the first; the hope is that the entrepreneur can switch to a different visa or obtain a greencard.


ANALYSIS

The proposed rule has received early praise; Tim Ryan, the co-founder of Startup San Diego Tim Ryan, applauded the proposal as a step in the right direction . However, the actual impact on entrepreneurs and their fledgling startups is uncertain. The proposed rule would impact a limited number of entrepreneurs. The DHS estimates that a mere 2,940 would qualify if the rule is enacted, In contrast, 315,857 H1-B visas were approved in the 2014 fiscal year. The high level of investment required may be unreasonable. Y Combinator, widely considered the world’s best startup accelerator, which offers start-ups a maximum of $120,000 in investment funding. However, companies are expected to have at least $345,000. This money must come from investors with a record of repeated investment successes. Some proponents of an initiative like this worry that there simply will not be a reputable investors able to provide that level of funding. Or, if a group of investors can fulfill the requirement, they may not all have the necessary experience.


Would the rule change bring high-tech talent to the U.S.? The requirement that the company must have been founded in the U.S. and that the applicant has a significant role in the company may end up limiting the pool to those already in the US who need a new visa to permit them to stay. This may help international students at US universities who are unable to acquire H-1B visas.Thus, the visa may help keep entrepreneurial talent here while failing to attract new recruits.

Lastly, there is an issue of time -- entrepreneurs only have five years. Currently, the visa can only be renewed once with the hopes the applicant can move to a different visa category altogether. Combined with the high levels of investment required for initial application and renewal, this may put a heavy strain on startups. TechCrunch puts the average time of an “IPO-track start-up” at about seven years, although it can take up to 10 years. Ultimately this is an additional risk to potential investors. There is a possibility that a company, or at least key members of it, could lose official immigration status in the US. For these reasons, it is likely that the impact of this version of a US start-up visa will be limited. Especially if the majority of recipients are foreign nationals working in companies that are predominantly comprised of US nationals.


CONCLUSION

The effects of the Obama Administration's proposed rule are unknown . The eligibility requirements are so rigorous and the time period allotted by the visa is so short that there is a reasonable claim that not much will change at all. If the 115th Congress remains as stagnant as the 114th or if President-elect Trump repeals the order, then there may be little hope of any legislation to create a truly meaningful start-up visa. This rule could be implemented as early as next January, but it’s questionable whether it will survive the new administration. While Trump vows to “establish new immigration controls to boost wages and to ensure that open jobs are offered to American workers first,” his exact plans for administering H-1B visas or start-up visas are unclear. It will come down to whose voices convince him -- the lucrative tech industry that relies on foreign labor or his fierce supporters who want restrictions on immigration; both are up in the air.


References

See google doc.

Google Doc

https://docs.google.com/a/rice.edu/document/d/1jaD1UYW4hLcgW9PBlzvIvdKJCTOyS2BH_dPDOobrDJc/edit?usp=sharing

Google doc with a draft that includes updated data as of 2/3/2017: https://docs.google.com/a/rice.edu/document/d/18CyiYIiinjrYPaVKbEOjGPLAg0SgrBhvNMvzKlobI5M/edit?usp=sharing

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