The U.S. Needs More Foreign Entrepreneurs, Not Fewer
The startup ecosystem in the U.S. often paves the way globally for innovation and technological trends. Entrepreneurs around the world view the U.S. as a mecca for launching businesses because of the availability of capital, engineering talent, and entrepreneurial culture. Some of the biggest tech brand names were started by immigrant founders who came to this country for those very reasons, including Google, Tesla, Instagram, WeWork, and eBay. But, this competitive advantage is now being threatened by a Department of Homeland Security (DHS) plan to rescind the International Entrepreneur Rule (IER).
In 2016, the Obama administration introduced the IER, often referred to as a “startup visa”, to give foreign entrepreneurs a pathway to start their businesses in the U.S., creating more jobs and contributing their innovations to the U.S. economy. It requires that the entrepreneur have at least a 10% stake in their company and $250,000 in funding from an accredited American investor or $100,000 from a government agency. It only grants entrepreneurs temporary parole in the U.S. for 30 months, at which point each individual case is reviewed and eligible for a further 30 month extension contingent upon meeting certain criteria, specifically creating jobs in the U.S. and securing more funding.
Now, the Trump administration is planning to rescind it altogether after having already delayed its implementation. At the same time, countries across the world including Canada, Singapore, Chile, and the UK have introduced their own versions of a “startup visa” in an attempt to attract top entrepreneurial talent and grow their own startup ecosystems. These other countries clearly understand the value of attracting foreign-born entrepreneurs, and the U.S. should too.
In the face of this growing and fierce competition for talented entrepreneurs, rescinding the IER sends a hostile message to the global tech industry. Decreasing the number of foreign-born entrepreneurs that launch businesses in the U.S. would be devastating to the American startup ecosystem. Immigrants are twice as likely to start their own companies compared to American-born citizens. Certain regions of the U.S. rely heavily on immigrants for economic revival and development. Detroit is often the poster child for this, but the trend extends far beyond. After all, startups are responsible for all net new job creation in the U.S.
While the IER alone does not do enough to attract foreign-born entrepreneurs to the country, it’s a step in the right direction and one that the U.S. startup ecosystem badly needs. With the IER in place, the U.S. government will be well placed to continue building systems and avenues for immigrant entrepreneurs to relocate here. For instance, as in the U.K., the U.S. could expand toward a tiered system of visas, wherein entrepreneurs with different levels of investment are eligible for different types of visas. The current requirement of $250,000 in investment funding is steep for some entrepreneurs and the U.K. government has a much lower requirement for entrepreneurs deemed as “high potential” in order to cater to a wider pool of immigrant entrepreneurs. In Canada, the government has recruited certain venture capitalists, angel investor groups, and incubators to partake in the visa program, making the program both credible and smooth for applicants. This too is something the U.S. could emulate. However, removing the IER altogether will limit these future possibilities and any potential for a full-fledged “startup visa” program.
Aside from the benefits that immigrant entrepreneurs bring to the U.S. economy, this policy move is contradictory given the administration’s other publicly known stances on technology and innovation. For a government that is so closely scrutinizing foreign investment in technology companies and giving agencies the power to reject investments in U.S. companies from countries that pose a national security threat, the commitment to retaining and attracting the highest caliber of innovation in the U.S. isn’t evident. Lawmakers are currently pushing to strengthen the role of the Committee of Foreign Investment in the United States (CFIUS) in monitoring business investment from a national security perspective. If the government believes that certain countries, such as China, should not have increased access to sensitive technologies that give them a strategic advantage, then policies should be designed to encourage the growth of those technologies within the U.S. Rescinding the IER does the opposite of this and could push entrepreneurs to launch their companies in these very countries which have been identified as national security concerns.
The U.S. has for many years now maintained its status as a leader in technological innovation, but countries around the world are ramping up their efforts to rival the U.S. Rescinding the IER only serves to threaten the U.S’s reputation in such a competitive environment. If the U.S. is to continue leading the way for startups and tech companies, the talent must be brought here and not pushed elsewhere, where it becomes competition.