Why We need Startup Visa laws for Immigrant Entrepreneurs

Why We need Startup Visa laws for Immigrant Entrepreneurs

–          Tahmina Watson, immigration attorney

With the recent election, America’s voters have placed renewed trust in President Obama, and immigration remains a hot topic.  In the days following the election, there was already chitter-chatter about comprehensive immigration reform in 2013. Wouldn’t that be great! I will look forward to this dream finally becoming a reality.  In the meantime, I hope the effort to accommodate immigrant entrepreneurs will continue.

This is not a complex issue; in fact, it can be distilled to a single cogent point: there is global competition for immigrant entrepreneurs. Every country wants the next Facebook, Google or Microsoft founder. The United States is in this bid for top talent too, except that the US is very slow in acting, and as a result, companies in the US are failing to recruit and maintain many talented people.

Students from all over the world come to the US to be educated at the best schools, but they are not allowed to remain in the US—either because there is no suitable visa or not enough of the existing visas. As a solution to this specific problem, the  Science, Technology, Engineering and Math (STEM) Jobs Act introduced on September 18, 2012 by Rep. Lamar Smith created a new visa category for foreign PhD and Masters-level graduates in the STEM fields. Regrettably, the bill failed miserably at the time. However, the bill was approved by the House on November 30 despite strong opposition from the Obama administration and now there may be hope it could pass through the Senate. Time will tell.

Perhaps even more frustrating is the fact that the path to a green card is excruciatingly difficult and slow, even for someone lucky enough to have obtained a work visa.  The past year has seen some erratic movement in visa availability. Visa availability is based on the Visa Bulletin, a monthly report issued by the Department of State and divided into ‘all countries,’ ‘India,’ ‘China,’ ‘Mexico’ and ‘Philippines.’ It is also divided into preference categories based on educational level. For example, categories include employment-based (EB) first preference (someone who has extraordinary qualifications such as winning a Nobel prize), second preference (someone with an advanced degree), third preference (someone with a bachelor’s degree) and so on. Also, the number of visas available varies according to the number issued in the previous month. Unfortunately, this can result in a decades-long wait. To reduce such waiting times, The Fairness to High-Skilled Immigrants Act introduced on September 22, 2011 by Rep. Chaffetz , sought to eliminate the per-country numerical limitations for employment–based immigrants and change the per-country numerical limitations for family-based immigrants. The bill failed.

Take, for instance, what happened in July 2012. The Visa Bulletin reported a three-year retrogression in the EB second preference category for ‘all countries.’ This particular category traditionally has not had any wait. Visas only became ‘current’ or ‘available’ in November 2012. This blow came soon after an announcement that there were simply no visas available for people with advanced degrees from India and China. The system is clearly in need for an overhaul; it does not provide viable options for entrepreneurs.

Various versions of the Startup Act provide visas and green cards specifically for entrepreneurs. In 2010, Senators John Kerry and Dick Lugar introduced the original Start-Up Act. In 2011, a variation of the bill was introduced by Sen. Jerry Moran to no avail.  And in May 2012, Senators Mark Warner, Marco Rubio, Chris Coons and Moran introduced the Start-Up Act 2.0. But none of these has been enacted as law. For anyone wondering why we need new law, here is a summary of the existing options for the self-employed entrepreneur:

EB5 Immigrant Investor visa:

The current investor visa program established in 1990, allows for immediate permanent residence for those who: (1) invest $1 million in any business in any part of the US and generate 10 jobs; or (2) invest $500,000 in a targeted employment area or a regional center and generate 10 new full-time jobs.  The law defines a targeted employment area as either rural or in a location of high unemployment.

The bootstrapped, hardworking, talented and creative entrepreneur generally does not have the amount of money required here. This visa is for the investor who is not interested in being the next Facebook founder, who wants to ‘dump’ money in a safe and successful project that will allow him or her to fulfill the requirements to obtain a green card.

The E-2 Treaty Investor visa:

Citizens of countries with which the US maintains a treaty of commerce and navigation can apply for the E-2 visa.  This is a great visa for someone with the financial ability to open a business in the US.  Yet it has its limitations. The amount of money required for a successful visa is around $100,000.00 minimum, even though the law simply requires a ‘substantial’ investment. More importantly, the visa only enables one to own and run the business, so it is not a path to permanent residency.  As long as you have the business, you are permitted to live and work in the US.  The second problem is that not all countries maintain the required treaties with the US. So, the majority of graduates and high-skilled workers coming from India and mainland China are not eligible for the visa. I see many clients who are otherwise eligible but cannot benefit from this visa.

H-1B Specialty Occupation:

In August 2011, the US Citizenship and Immigration Services (USCIS) announced a policy shift in approving business owners to apply for H-1B visas with proof of an employer-employee relationship between the owner and the company. The new policy has been a success and many entrepreneurs have benefited.

However, there are still problems with the policy.  H-1B visas have many stringent requirements, including proof that the owner will be paid the prevailing wage as a salary. The typical start-up company does not always have the funds for this. In addition, USCIS has challenged practically every aspect of such petitions. This has resulted in denials even for obviously approvable cases.

L-1 intracompany transferee:

This is a well utilized visa allowing certain personnel to transfer from a foreign branch to the US as long as they have worked for the foreign branch for at least one year in the past three. However, recently almost all L visas for new companies have faced incredible scrutiny and unreasonable denials.

This visa simply does not fit the circumstances of most entrepreneurs. An applicant must have worked in an overseas branch of the company for at least one of the last three years, whereas most entrepreneurs who want to open a business in the US are either present as a student or on other visa and not transferring from a foreign branch to the US.

O-1 visa:

Dubbed the ‘genius’ visa, the O-1 visa is reserved for those who can prove that they are at the top echelon of their profession and are indeed ‘extraordinary’. Some of the requirements include proving that the applicant has acquired national or international acclaim, that they have been written about in the media, that they have judged people in their expertise, they made significant contribution in their field, etc.

However, the evidentiary documentation to prove such a high burden is extremely difficult. In addition, not all entrepreneurs would be able to fulfill such requirements because starting a new company does not necessarily require one to be a ‘genius’.

National Interest Waiver for entrepreneurs: 

When the above H-1B policy change was announced, the USCIS also announced that they would allow entrepreneurs to apply for green cards under the existing National Interest Waiver (NIW) law. NIW is typically utilized by medical researchers who can prove that their research will benefit the nation (for example, finding a cure for cancer). The new policy suggests that if an entrepreneur can demonstrate that her business will benefit the economy on a national level, she will be approved for permanent residency.

In theory, it makes sense to utilize existing laws while new laws are being debated. The approach is commendable. However, as yet there are no success stories. In a recent inquiry made with USCIS, I was informed that there is no way to identify such cases.

Nevertheless, the biggest problem in these petitions is a more fundamental issue: whether the entrepreneur can prove that his or her venture will have nationwide benefits. In my opinion, a typical start-up company may generate jobs locally, but may not be able to meet the waiver’s requirement that the benefit be national in scope.

Entrepreneurs in Residence (EIR):

To its credit, the USCIS has been working on an initiative called Entrepreneurs in Residence (EIR), launched in February 2012. The initiative seeks to evaluate current laws and regulations so that the Service can create policy updates for existing visas in accordance with the modern and practical business world. For example, the program will assess whether there is a way in which one can apply for an H-1B visa and perhaps show stocks and equity in the business instead of cash in the bank for wages.

While I commend and welcome the EIR initiative as an interim solution, the system is not quick. On November 28, 2012, the USCIS launched ‘Entrepreneur Pathways’, an online resource guiding immigrant entrepreneurs about various visa options. The White House blogged about the intention to have fair adjudications on such petitions as did the USCIS on its blog. However, as yet there is no legal guidance on how existing laws will be interpreted to help meet stringent visa requirements. Hopefully, legal guidance is imminent.

* * *

Each of the above visas has its place in the immigration system.  The existing visas work well for certain cases. However, they are not suitable for the average immigrant who wants to start a new business venture, who seeks to grow the business and create new jobs. All the visas above assume that a huge amount of money is required to create a new business. Perhaps traditionally that was the case. But in the modern world of snazzy technology and broadband internet, one does not need much money to start a successful business. Facebook and Google are examples of such success, started by founders during college and graduate school, respectively.  Immigration policies must reflect that too.

Therefore new laws are essential in holding onto the talented people who can create jobs and boost our economy. A version of the Start-Up Act is likely to do just that. It is a win-win solution for both the immigrant and the US. I urge Congress to take this issue seriously and pass new laws as soon as possible to help the US to maximize the competitive advantage engendered by the hard work and new know-how in the hands of highly capable foreign entrepreneurs. Growth of the US economy will depend on it.