International Entrepreneur Rule — the Startup Visa Substitute — Suffers Setback

The International Entrepreneur Rule, the startup visa substitute that was set to go into effect next month, has been sent back to the White House’s Office of Management and Budget for review.

At a minimum, this action could mean delayed implementation of the rule designed to allow foreign entrepreneurs to create jobs and foster innovation by building their startups in the U.S. However, this action could also mean the end of the International Entrepreneur Rule before it even began.

Startup Visa Substitute

Unlike several other countries, the U.S. does not have a visa for immigrant entrepreneurs who start companies that create jobs. After Congress failed to create a startup visa, the Obama administration devised the International Entrepreneur Rule as a substitute. Finalized shortly before President Obama left office, the rule is slated to go into effect on July 17, 2017.

Under the rule, U.S. Citizenship and Immigration Services (USCIS) would have discretion to grant parole — or a temporary stay in the U.S. — to qualifying immigrant entrepreneurs. Immigrant entrepreneurs must show they have created startups with the potential for business growth, jobs, and innovation.

Parole would allow an initial stay of up to 30 months, with and extension of another 30 months. The spouse and children of paroled entrepreneurs would also be eligible for parole. Paroled spouses would be eligible to apply for a work permit.

Currently, parole is granted for humanitarian reasons or in situations deemed of significant benefit to the public, such allowing foreign nationals who are trial witnesses to come to the U.S. temporarily to testify. The International Entrepreneur Rule expands the definition of a significant public benefit to include job creation, economic growth, and innovation.

President Trump has expressed his support for merit-based immigration, which the International Entrepreneur Rule promotes. However, an executive order on border security and immigration enforcement signed by Trump in January indicates his opposition to expanding parole to foreign entrepreneurs.

The executive order requires the Secretary of Homeland Security, which oversees USCIS, to “take appropriate action to ensure that parole authority … is exercised only on a case-by-case basis in accordance with the plain language of the statute, and in all circumstances only when an individual demonstrates urgent humanitarian reasons or a significant public benefit derived from such parole.”

The Details

The eligibility requirements for parole under the International Entrepreneur Rule are rigorous. To qualify for parole, entrepreneurs would have to:

  • Have at least a 10% ownership interest in a qualifying startup.
  • Actively operate the startup.
  • Maintain a household income of more than 400% of the federal poverty level.

A qualified startup would have to:

  • Have been created within five years before applying for parole or receiving an investment or government grant.
  • Receive at least $250,000 in qualified investments or at least $100,000 in government grants within the past 18 months.
  • Show growth and job creation potential if it does not fully meet the monetary requirement.

A qualified investment would have to be from:

  • A U.S. citizen, a permanent U.S. resident, or a U.S. majority owned and operated entity. It cannot come from immediate family or an entity owned by a family member.
  • An investor that has not committed any security violations.
  • An investor that has invested more than $600,000 in startups in the past five years.
  • An entity whose investment in at least two startups yielded at least five full-time jobs for Americans or $500,000 in revenue and 20% annual growth.

Letter of Support

Shortly before the International Entrepreneur Rule went under review, 80 entrepreneurs, investors, and business group representatives from areas outside of the traditional tech hubs of Silicon Valley, New York, and Boston, sent a letter to Trump, urging him to allow the rule to go into effect as planned on July 17. The National Venture Capital Association (NVCA), a Washington, D.C., trade group, spearheaded the letter.

The letter states the rule is “desperately needed” for the U.S. to attract investment and foreign entrepreneurs. It notes that in the past few years, at least half of the 10 largest venture investments in the world occurred outside the U.S. “Our share of global venture investment dropped to 54% in 2016, when it was 81% only ten years earlier and 90% twenty years before that. Other countries understand that U.S. immigration policy often pushes away incredibly talented job creators, and our competitors are taking advantage.”

Need Alternatives?

Clearly, the International Entrepreneur Rule faces an uncertain future under the Trump administration. The Alcorn Immigration Law team is monitoring the situation.

In the meantime, if you’re a startup founder and want a consultation about immigration options for yourself, your family, or your employees, contact us! We support immigration for innovation. Many other immigration tools at our disposal can help you now.