International Entrepreneurs Rule (Obama's Startup Visa Alternative)- Detailed Summary by Tahmina

Final International Entrepreneur rules were released on January 13th 2017. Here is my updated blog post.

International Entrepreneurs Rule

A Simplified Summary by Tahmina Watson

On August 26, 2016, USCIS announced proposed new rules for international entrepreneurs in an attempt to create an alternative to a Startup Visa. In a coordinated effort, The White House published an article on Medium announcing the rules as well as holding a conference call with stakeholders on the new rules. As a longtime advocate for the startup visa and author of a booked title The Startup Visa: Key to Job Growth and Economic Prosperity in America, I applaud the administration for the introduction of the long awaited new rules

In the 155 page document, there are many details that were not listed in the USCIS summary and it is important to read the rules carefully. Public comment is a crucial part of this process to ensure reasonable and achievable measures are put in place. The public have 45 days to comment on the proposed rules when they will be published to the Federal Register which are not yet up (as of Sunday August 28). In this document, I seek to summarize the rules as simply as possible.

It is clear from these rules that the administration has spent much time researching and considering the best possible measures for entrepreneurs. I am also elated to see reference in footnotes to news articles in which I was quoted!

Many of the provisions are similar to the Invest Visa provisions of the comprehensive immigration reform bill of 2013 which I thought was a very good Startup Visa bill. Visit my blog and read my book for details of that bill. You can also do a keyword search on my blog for ‘startup visa’ if you want historical information of the various bills that have failed in Congress, resulting in these new rules from the administration.

If you have any questions, you are welcome to contact me at [email protected].

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What kind of startup will qualify?

The key throughout the proposed rule is ‘significant public benefit’ and ‘substantial potential for rapid growth and job creation”. These two defining phrases shape the rules.

The rules as drafted require the startup to show the following:

That it was created within the last 3 years of the application filing date.
Must be formed in the US and operating lawfully in the US.
Must have substantial potential to experience rapid growth and job creation through significant attraction of capital investment or government grants and awards.
It excludes small businesses that are intended to generate income for the small business owners and their families.

How can I qualify as an entrepreneur?

USCIS will look for an entrepreneur who is ‘well positioned to advance’ his/her startup. The rules require the entrepreneur to prove 2 things:

That he/she owns a substantial interest in the startup- which has been defined as at least 15% of the entity at the time of application and must maintain at least 10% throughout the parole period. And,
Has a central and active role in the operations of the startup.

What kind of investment in the startup will qualify?

There are two types of investments that will qualify:

Capital from qualified U.S. investors with established records of successful investments.
Awards and grants from Federal, State or local government.

Who is a Qualified US investor and what are qualified investments?

A qualified US investor can be a venture capitalist, angel investor or startup accelerator. If an individual, must be a US citizen or a green card holder. If an organization, must be located in the US and controlled by US citizens.
The investment from a qualified investor must be at least $345,000.
The investor must have made similar investments over the last 5 years and that at least 2 of the investment entities (startups) have generated at least $500,000 in revenue OR at least 5 full-time jobs.
The investment must have been received within 365 days or 1 year of filing the application.
The total sum can be a combination of investments made by one or more qualified investors.

What kind of Grants or Awards will qualify?

A grant or an award for economic development from a Federal, State or local government will qualify.
It can NOT be a contract for goods or services that looks like an award/grant.
Minimum sum must be $100,000.

What if I don’t raise the above amount of money- can I still qualify?

Yes. The rules provide alternative criteria for applicants who partially meet the above investments. If you do not meet the above requirement readily, you can show the following:

You have raised a substantial level of investment even if lower than the above amounts.
Provide ‘reliable and compelling’ evidence that the startup will provide significant public benefit and has substantial potential for rapid growth and job creation.

How do I apply?

A new form has been created for this particular application- Form I-941.
Filing fee will be $1200.
An additional biometrics fee of $85 will be required.
Must undertake biometrics-meaning fingerprinting and background check.
If in the US, you will attend a USCIS field office for biometrics. If outside the US, you will attend your local consulate.

Do I need to be earning an income already?

I’m afraid so. The US wants to ensure that you do not become a public charge. As such, the rule proposes that the household income an applicant is 400% above the Federal poverty guideline. That means, if a federal household income for a family of 2 is $20,020, then the entrepreneur will need to show a household income of $80,080.00.

This income can be a combination of income from your spouse’s annual income too. These new provisions will allow your spouse to receive a work authorization.

What happens if my application is denied?

Unfortunately, you cannot appeal such a decision. It is important to remember that this is a discretionary provision and does not confer a right to a ‘visa’. The rules do not state you cannot apply again though. The USCIS however can reopen a case on its own motion. Should the USCIS wish, the parole can also be revoked or terminated at any time.

Can my co-founders file too?

Yes. However, only up to 3 co-founders can apply from the same startup. This is in line with the Invest Visa provisions from the comprehensive immigration reform bill 2013.

How long will I get to stay in the US on this parole?

You will initially get 2 years. You can apply to renew the parole and will receive 3 more years. It is hoped that the business will be established enough to move on to a different immigrant or non-immigrant visa category (though, you may have to leave the US to get the new visa).

What about my family?

Your spouse and children will be allowed to get parole too and live with you in the US. They will have to use the traditional application Form I-131 and also go through biometrics and background checks. Children under 14 do not pay the $85 biometrics fee though. The administration is mindful of family unity to ensure peace of mind.

What kind of work authorization will I get?

Thankfully, the administration has thought this out well. Work authorization will be incident to approval. That means you will get permission to work without having to apply for the traditional work authorization that can sometimes take up to 6 months to receive, the delay for which could hinder your startup. For HR and I-9 purpose, the parole will be stamped to show work authorization and together with your passport, you will be able to satisfy that you have permission to work.

Your spouse will have to apply for work authorization in the traditional way though using form I-765 and pay the appropriate fees. No work authorization for children.

Do I have compliance issues to note?

Yes. Any change affecting the startup- referred to as ‘material changes’ must be reported immediately. Material change could be a criminal charge, conviction, plea or any other criminal case or government administrative proceeding against the entrepreneur or the startup. Also, if at any time your ownership falls below 10%, your parole can be terminated or revoked.

Can I apply to renew my parole?

If you want to renew your parole, you must to do the following:

File another Form I-941 within 90 days of expiration of current parole. Timing is important or else your parole will be terminated.
To qualify your business must still be a startup and you must still be an entrepreneur as described above. You will have to prove the following
You have received additional qualified investment during the parole period making the total investment $500,000. OR
Generated annual revenue of $500,000 with at least 20% average growth during the initial parole period. OR
Created at least 10 full-time job for at least 35 hours a week for workers that are US citizens or green card holders.

What if I don’t meet all the requirements for re-parole?

Fear not. The government has thought of this too. If you cannot meet the requirements fully, then you will have to show ‘reliable and compelling’ evidence that you have accomplished a substantial amount of the re-parole requirements as mentioned above.

What happens while my re-parole is pending- can I work?

Yes. Consistent with other non-immigrant visa categories, you will receive 240 days work permission while your re-parole application is pending.

Are there circumstances under which I could lose my parole?

Yes. Parole can be terminated at any time if it is thought your startup no longer serves a significant public benefit. This could be at any time, even without notice. There will be automatic termination at the end of the parole period or if your equity drops below 10%. If you receive a notice of intent to terminate, you will get 30 days to rebut any allegations.

If there is a violation that results termination of parole of your spouse or child, you can still remain in the US. The violator will not be able to remain.

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The above are proposed rules only and not final rules. This is your opportunity to get your voice heard and provide input as to how these rules can be better. You can submit your comments online or by mail. The email address for submission is [email protected].

If you are an entrepreneur, stakeholder, investment organization or have any interest in these provisions, please feel free contact me for more information whether for collaboration, comment formulation or preparing and informing entrepreneurs.