A new proposal from the Obama Administration would allow some international entrepreneurs to build their companies and create jobs in the US.
The US could soon see an influx of startups created by immigrant entrepreneurs. On Friday, the Obama Administration announced that it will publish a proposed International Entrepreneur Rule to enhance opportunities for international startup founders to build their businesses in the US.
The rule will be open for a 45-day comment period, and the Department of Homeland Security (DHS) plans to finalize it by the end of the year.
"This is an important new step by the Obama administration that is going to have a big impact on our innovation economy by tapping the talent of immigrant entrepreneurs," said Tom Kalil, deputy director for technology and innovation at the White House Office of Science and Technology Policy, on a press call.
The proposed rule would allow the DHS to give individual international entrepreneurs temporary admission to the US on a case-by-case basis to build or scale their startups. Initially, it would be for a period up to two years, followed by an additional period of three years, if they can demonstrate the potential for rapid business growth, job creation, and innovation.
To gain two-year entry to the US, an entrepreneur must demonstrate that the startup formed in the US at least three years prior, that they hold at least 15% ownership in the company, and that they have raised at least $350,000 from reputable US investors, or grants of at least $100,000 from federal, state, or local governments.
To stay for an additional three years, the entrepreneur must show that the startup still has potential for growth and job creation. They also must have at least a 10% stake in the company, and either an investment of at least $500,000 from investors, prior annual revenue of over $500,000, the creation of 10 full time jobs, or 20% year-on-year growth.
If applicants do not meet those criteria, but can prove that their company provides a significant public benefit in another way, they will be considered as well.
Should an entrepreneur desire to stay in the US beyond five years, they will become eligible for other immigration paths, like the EB-2 visa, or others made available for highly-skilled individuals, said Leon Rodriguez, director of US Citizenship and Immigration Services, on the press call. The entrepreneurs will not be eligible for public benefits, but will be permitted to bring their families to the US with them, Rodriguez added.
Stability for international entrepreneurs
Immigrant entrepreneurs impact the economy greatly, Kalil said on the call, listing several statistics: More than 40% of Fortune 500 companies were founded by immigrants or children of immigrants, which employ more than 10 million people globally. Immigrants are also 30% more likely to start a company in the US than native-born Americans.
International entrepreneurs co-founded more than half of the high tech startups in the US, including Ebay, Google, Instagram, and YouTube, Kalil added.
Max Levchin, co-founder of PayPal, Slide, Affirm, and Glow, came to the US from the former USSR in 1991, at age 16.
"I'm an immigrant, I'm a CEO, an entrepreneur, and an investor," Levchin said on the press call. "I'm very excited by this proposal to make it easier for the world's best and brightest folks to come to America and make more jobs."
It's important to offer immigrant entrepreneurs stability and certainty, so that they do not have to leave the company that could become the next PayPal, Levchin said. "It's staggering how many foreign students ask for advice for starting a company when they go back to their country, because they do not believe they can do it here," he added. "If we want the US to remain a global economic powerhouse, we have to figure out how to fix this problem."
The White House said it plans to begin accepting applications as soon as possible after the 45 day public comment period. Kalil said he expects to receive about 3,000 applications initially under the rule, but there is no cap on the number that are accepted.
The 3 big takeaways for TechRepublic readers
- On Friday, the White House announced a new proposed International Entrepreneur Rule that would allow immigrant entrepreneurs to come to the US for a set period of time to build up their startups.
- In order to qualify for the rule, an immigrant applicant must meet certain criteria including ownership in the company, certain amounts of investment or grant funding, and demonstrating how the company can offer rapid growth and job opportunities.
- There will be a 45 day comment period, and the White House plans to begin accepting applications shortly after.
- How tech has powered economic growth in the US Midwest since the Great Recession (TechRepublic)
- White House to invest $400m in 5G research (ZDNet)
- What Hillary Clinton's technology policy agenda means for business (TechRepublic)
- White House to hire its first chief information security officer (ZDNet)
- RNC 2016: 4 things Peter Thiel said about tech, the economy, and Silicon Valley (TechRepublic)