A new rule proposed by President Obama’s administration would broaden the opportunities for immigrant entrepreneurs to start companies in the United States. The Department of Homeland Security [DHS] would allow these entrepreneurs to stay between two to five years with the option to apply to stay longer.
In announcing the proposed rule (dubbed the International Entrepreneur Rule), administration officials highlighted the fact that 40% of Fortune 500 companies were started by immigrants or children of immigrants, and that one in four small business and high-tech start-ups were launched with the help of immigrants. “[The] DHS is proposing clear criteria to identify on a case-by-case basis entrepreneurs who would provide significant public benefit to the United States,” wrote White House officials Tom Kalil and Doug Rand in a post announcing the rule.
The rules utilize an existing provision called “humanitarian parole” through U.S. Citizenship and Immigration Services that allows temporary entry for immigrants based on “urgent humanitarian reasons” or “significant public benefit.” The DHS’s website says that “humanitarian parole is used sparingly to bring someone who is otherwise inadmissible into the United States for a temporary period of time due to a compelling emergency.” With the new rule, the Obama administration is seeking to expand its usage, with about 3,000 immigrants expected to apply.
Under the provisions of the rule, immigrant entrepreneurs would be allowed to stay for two years if they qualify by owning at least 50% of their company and having raised at least $345,000 from established U.S. startup investors or $100,000 from government agencies.
They may stay an additional three years if they retain 10% of their business (which must remain in the U.S.) and either raise $500,000 from investors, generate $500,000 in annual revenue with at least 20% growth or create 10-full time jobs. After that, entrepreneurs can apply to stay longer through existing visas.
The rule is part of Obama’s efforts during his tenure to create a “startup visa” to attract more immigrant entrepreneurs. The rule is subject to a 45-day comment period, after which the administration is hopeful that it will be enacted by the conclusion of Obama’s presidency in January.
In an article for the White House, Paypal co-founder Max Levchin argued that many immigrants dream up business ideas while attending college in America, but can’t see them through because they lose visa lotteries and are unable to stay in the country. “The next great companies are being conceived right now, in countless dorm rooms and garages around the world,” wrote Levchin, who was born in the Ukraine and immigrated with his family in 1991. “So many of these entrepreneurs yearn to grow their companies here in America, where the opportunities are still limitless. And when these companies are started and capitalized here, it creates jobs for Americans and grows our economy.”
TechCrunch writer John Mannes argued that the proposed rule will be limited in its effect, in part because the investment amount exceeds what most startups typically generate in the first few years. Also, he wrote, “ventures that serve a public good but are not primed to scale or generate massive revenue will be overlooked in favor of companies that can offer more typical venture returns.”
Republican presidential nominee Donald Trump has been critical of visas for foreign-born workers in specialty jobs. Hillary Clinton, on the other hand, has been supportive of a startup visa for entrepreneurs, and has pledged to “staple” green cards for masters and Ph.D. graduates in the fields of science, technology, engineering and mathematics.
Entrepreneurship in America has reached a record low in recent years. As little as four years ago, 70,000 more businesses were closing than were being started.