Start-Up Visa (Blog Post)

Jump to navigation Jump to search

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


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.


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.


See google doc.

Google Doc

Google doc with a draft that includes updated data as of 2/3/2017: