On Wednesday evening, Republican presidential candidate Donald Trump attempted to clarify his plan for immigration reform and continued to grab (largely negative) headlines. With a lot of hype focused on this particular speech, it's important not to overlook an immigration development that occurred last week intending to enhance options for a group of job creators and innovators: immigrant entrepreneurs.
Even though they account for only about 13 percent of the population, immigrants created more than a quarter of new businesses in the United States in 2014, and more than 20 percent of the Inc. 500 CEOs are immigrants. More than half of billion-dollar startups in the United States were founded by immigrants, according to a March report from the National Foundation for American Policy (NFAP). The study also reveals that immigrant founders created an average of 760 jobs per company in the United States, and the value of those companies is $168 billion, which, the NFAP points out, is close to half the value of the stock markets of Russia or Mexico. In addition, more than 40 percent of Fortune 500 companies were founded by immigrants or the children of immigrants, according to a study by the Partnership for a New American Economy.
On Fri., Aug. 26, U.S. Citizenship and Immigration Services (USCIS), proposed the International Entrepreneur Rule, which would allow foreign entrepreneurs who "provide a significant public benefit through the substantial and demonstrated potential for rapid business growth and job creation" to live in the United States for up to five years. The long-awaited rule, which is part of President Barack Obama's 2014 immigration executive actions, would include an initial two-year grant of parole to a qualifying "International Entrepreneur," with one additional three-year renewal allowed. On a case-by-case basis, the Department of Homeland Security would be able to parole eligible entrepreneurs of startup enterprises:
- Who have a significant ownership interest in the startup (at least 15 percent) and have an active and central role to its operations;
- Whose startup was formed in the United States within the past three years; and
- Whose startup has substantial and demonstrated potential for rapid business growth and job creation, as evidenced by: receiving significant investment of capital (at least $345,000) from certain qualified U.S. investors with established records of successful investments; receiving significant awards or grants (at least $100,000) from certain federal, state or local government entities; or partially satisfying one or both of the aforementioned criteria in addition to other reliable and compelling evidence of the startup entity's substantial potential for rapid growth and job creation.
Despite the countless contributions of immigrant entrepreneurs to America's economy, the current U.S. immigration system is not ideal for them. There is no specific visa option for startup founders. The E-2 investor visa is an option, but it's restricted to citizens of designated treaty countries. Another option is the H-1B visa, which typically applies to those wanting to work in the United States for an employer and poses significant challenges for those interested in self-sponsorship. Additionally, the H-1B visa is subject to a lottery system, for which 236,000 petitions for temporary high-skilled workers were received this year for only 85,000 available visas. Jyoti Bansal, founder of AppDynamics, which works with HBO to ensure smooth streaming of online viewing, came to the United States on an H-1B in 2000. He was restricted to working for other startups until he received his employment-based green card an agonizingly long seven years later. He started AppDynamics in 2008, and today the company employs more than 900 people and is valued at $1.9 billion.
Unfortunately, the International Entrepreneur Rule is merely a stopgap in lieu of legislation to fix our broken immigration system. The strict requirements and investment demands will severely limit those able to take advantage of the rule, and, in fact, the DHS estimates that only about 2,940 entrepreneurs will be eligible for parole each year. Not exactly a ringing endorsement for all of the best and brightest from around the world to be part of the next wave of U.S. innovation.
The rule is open to public comment for 45 days. If you'd like to weigh in to ensure that the policy best helps entrepreneurs create jobs, and ultimately continues to boost the American economy, you can do so here. We'll be sharing our thoughts on our Immigration Blog in the coming weeks on how the rule should be simplified, strengthened and improved after the comment period.