The International Entrepreneur Rule
IDEA is Northeastern University’s Venture Accelerator. We provide entrepreneurs the support, in-kind resources and educational experience of developing a business from core concept to launch. We currently have 200 ventures in the program — fueled by students, alum, and faculty.
A few days ago, The White House Office of Science and Technology Policy announced a proposal for a new rule, intended to help the world’s most talented entrepreneurs start and scale innovative companies in the United States. The rule would allow foreign startup founders who’ve raised money from American investors to come to the United States for two to five years, with the possibility of staying longer if they gain traction.
I’ve seen a number of international founders struggle with their immigration status and at times shy away from entrepreneurship, as it’s a difficult path to obtain permanent status.
At a time when so much of the public discourse rightly includes debates over the importance of diversity and inclusivity, Northeastern is unwavering and steadfast in its commitment to a global education. We realize that we are stronger when we work together and expand the scope of our education beyond our campus here in Boston. In fact, over 25% of our students are international. Moreover, many IDEA ventures are founded by international students or alum, or are operating outside of the US all together.
For example, Sam Marley, co-founder of Blurr hails from the U.K. Their team has seen significant traction in their app. However, as the rules exist now, his path after graduation is unclear
While immigration reform must be reviewed from a moral perspective, the economic implications it could have are also extremely significant — particularly through the lens of entrepreneurship.
Under the current system, there is no clear and direct immigration pathway for a foreign entrepreneur to start and grow their business in the U.S. While business is conducted globally, our immigration system has not evolved accordingly, to allowing a greater movement of talent.
Ironically, immigrant entrepreneurs play a large and vital role to the U.S. economy. Roughly 40% of Fortune 500 companies have an immigrant connection, including AT&T, Mattel, Kohl’s and Nordstrom.
When looking at the impact that businesses with a strong immigrant connection have, the data is overwhelmingly positive.
Firstly, immigrants are a stakeholder in many and diverse types of companies. Immigrants have founded 51% of U.S. billion-dollar startups and created on average 760 jobs per company in the U.S.
Furthermore, roughly 25% of all small businesses in America are founded by immigrants. And lastly, immigrants start more than 25% of all businesses in seven of the eight sectors of the economy that the U.S. government expects to grow the fastest over the next decade, including construction, healthcare, and retail trade.
For some perspective, these immigrant-led companies employ one in 10 American workers.
And as far as spending goes, between 2008 and 2012, foreign students contributed $21.8 billion in tuition and $12.8 billion in other spending to the U.S. economy. That’s crazy.
It is increasingly clear that the American economy benefits greatly from the contributions of immigrants. Immigrants are starting companies, solving interesting problems across all industries and sectors, and creating jobs. To ignore the activity level of immigrant entrepreneurship is simply egregious.
The proposed rule by the Obama administration roughly stipulates the following criteria to qualify for this rule:
- Entrepreneurs must have at least 15 percent ownership of a startup and are deemed to have a central role in its operations
- Individuals whose startups show the promise to provide “rapid business growth and job creation”
- The startup must have received at least $345,000 from “certain qualified U.S. investors with established records of successful investments” or to demonstrate that it will receive at least $100,000 in federal, state, or local grants
Not only will it benefit the entrepreneur themselves, but it will serve as a catalyst and multiplier for longer term economic growth. Analysts believe this program will create jobs for native-born workers. For every foreign-born STEM graduate, roughly 2.62 jobs are created for Americans.
It’ll also help reduce the “brain drain” phenomenon with STEM graduates in our country. More than 70% of students in STEM graduate programs are immigrants.
The rule is currently in review and open for public comment for 45 days. President Obama, who has long wanted to create a “startup visa,” was able to take executive action under the current law which allows him to grant status to those that will create a “significant public benefit.”
To remain economically competitive, tech and business companies have asked for an “entrepreneur visa” for years, and I believe this is a step in the right direction.
What makes this rule unique is that it’s currently in the draft stage, and the administration is asking for people to provide their input on how the rule can be fine-tuned to benefit as many entrepreneurs as possible. This is an exciting opportunity to influence a policy that will directly impact the tech community — please follow this link to provide your feedback
Hopefully this is the start of a much larger conversation pertaining to immigration reform as it relates to entrepreneurship. Foreign students still can’t always stay in the US after graduating from our schools.
The broader “start-up” visa to help potential founders has not been able to navigate through congressional gridlock. We need to reform and expand our H1-B high-skilled visa program — as over 200,000 people lost out this year alone and weren’t able to get a visa. And over the long term, we need Congress to fix the green card process so people who qualify for permanent residency don’t have to wait a decade or more.
Furthermore, putting undocumented individuals who are otherwise law-abiding and pay back taxes on a path to citizenship would make available substantial payroll taxes to states. Together, these reforms could increase U.S. GDP by 3.3%, lower the federal deficit by $200 billion over the next 10 years, and add $300 billion more to the Social Security Trust Fund.
At Northeastern and at IDEA , we celebrate our commitment to a global education and a diverse community. This rule is a step in the right direction to continue helping immigrants and people from all over come together to solve interesting problems — because that’s ultimately what this University and this country are about.
The data shows that broader immigration reform is essential, the costs are just too high.
To learn more about IDEA, see our latest impact report here.
For more information visit northeastern.edu/idea.
Special thanks to FWD.us for the data and inspiration behind this post. Founded by Mark Zuckerberg, Bill Gates and other leading tech entrepreneurs, FWD.us is helping educate and advance the agenda for common sense immigration reform. Check out their work here.
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