Much of the recent immigration debate in the press and by politicians is over border security and what degree of status to grant those unlawfully present.
It is understandable that people (politicians) would want to focus here: these issues fire up their political bases on both sides in an election year. But there are many other necessary changes to our broken immigration system that should not be left out of any future reform efforts.
One problem I’ve written about before is the way the current system chains employment-based immigrants to an antiquated and inflexible process, with few options for startups and entrepreneurs. These employees end up waiting in a green card backlog that can take decades, unable to change jobs, accept better offers, or make long-term plans.
The President has talked at length about wanting to create a startup visa. In his speech in November, 2014 about executive action, he vowed to make it “easier and faster” for foreign entrepreneurs to work in the U.S.
But the President isn’t in charge of creating new visa categories, and there is little he can do to give more visas (as opposed to “deferred action”) than those Congress creates by statute.
What Are the Current Options for Startups and Entrepreneurs?
If you want to come to the United States to start a business, your options are especially limited. If you are already here and run a business, they might be even more limited.
As Amit Paka recently wrote
Building your own startup, or even joining one, can be the best career move; it offers remarkable potential for growth by wearing multiple hats in an expanding organization. The labor market benefits from this flexibility not just with an improved and adaptable workforce, but also one that creates jobs. The immigration process impedes all these possibilities.
Amit explained that to get his permanent residence, he had to stay working for the same company for years while waiting for his visa number to be available. While this process took years, in the tech industry “whole new job categories are created overnight” which can require you to “transition to new roles, educate yourself, work on different products or switch companies altogether.” The current system for permanent employment-based visa petitioning just doesn’t allow for that.
The process Amit described is for immigrants working for someone else; how does that apply to entrepreneurs and startups? The answer is that there really aren’t any good options for a person who just wants to create a new company. Because of this many people have to go through this first process, working for a different company first, until they get their green card.
The only other options for entrepreneurs each have giant problems. A very good overview, at least as a place to start, is this graphic from Anna Vital:
So, why don’t these options work for most entrepreneurs? Because even the best options listed above have steep limitations.
The E-2 Treaty Trader Visa (Temporary)
The most natural fit for entrepreneurs is the temporary E-2 treaty trader visa, but it’s not permanent and doesn’t work for everyone. One of the biggest problems is that you have to be from a country with whom the US has an investment treaty. China and India do not.
And given that it isn’t permanent, the immigrant can start a successful business here but might not be allowed to stay to see it succeed. The Department of Homeland Security can decide on a whim to not renew you one year and you have to leave. Note: the chart is not comprehensive and not completely accurate. For example, E-2 visas don’t have a minimum of $100,000 investment, and you don’t have to start a company (you can also buy one).
The L-1 Visa For Intracompany Transferees or Employees With Specialized Knowledge (Temporary)
This is not a visa designed for entrepreneurs, but it has been used that way (and has received increasing Congressional scrutiny because of it).
The L-1 visa is supposed to give companies flexibility to send management employees or those with specialized knowledge from their businesses outside the US to work at their businesses in the US.
The L-1A is for a person who has managed a company outside the U.S. to come to the United States to manage an affiliate or subsidiary office. The L-1B is for a professional employee with specialized knowledge relating to the organization’s interests to transfer from one of its affiliated foreign offices to one of its offices in the United States.
Both visas require a company outside the U.S., and the employee has to have worked for that company before transferring to the United States. So, like the E-2, this isn’t for everyone.
You could envision scenarios where this might work for an entrepreneur who has already started a company overseas and wants to start an affiliate here. But for a traditional startup in Silicon Valley, this makes little sense. And because some have used this visa when it doesn’t really apply, the level of scrutiny has increased.
The EB-5 Visa (Permanent)
Another option which has received extensive press lately is the EB-5 investment-based visa. Put simply, if you invest at least $500,000 of your own money into a business (or $1 Million in certain areas) and your investment creates 10 jobs, you could eventually get your permanent residence based on your investment alone.
While that sounds promising, the problems abound.
For example, many startups are not funded by just one person, and many entrepreneurs have a great idea but have to get investors to make their ideas come to life. EB-5 only works if you use your own money.
Also, the amount of money a single person has to put up requires you to be independently wealthy – which isn’t the case with many young founders.
What Has Been Proposed?
While the first details of this “action” were spelled out in November, 2014 directive from the Secretary of Homeland Security, nothing has been done.
The plan, if it actually happens will include changes for both permanent and temporary visas for entrepreneurs:
Lawful permanent residency (also known as a “green card”): As defined by Congress, the “EB-2″ visa category is available to applicants who can demonstrate either an advanced degree or exceptional ability. Typically, a U.S. company must sponsor the application, but this requirement can be waived if it would be in our national interest. DHS will provide a detailed standard for this “national interest waiver,” so that entrepreneurs have greater clarity on when they might self-petition for a green card on this basis. With this clarity, we hope to promote greater use of this immigration option in order to boost job creation and grow our economy.
Temporary status: Under existing authority granted by Congress, DHS may allow an individual to work in the United States when doing so would yield a “significant public benefit.” DHS will design a program to grant this temporary “parole status” to inventors, researchers, and entrepreneurs who may not qualify for the green card pathway described above, but who promise significant public benefit. This program is also likely to include criteria related to creating jobs, attracting investment, and generating revenue within the United States. As a discretionary program with case-by-case determinations, it will not be subject to statutory caps. Eligible individuals will be subject to income and resource threshold requirements and therefore will not be eligible for certain Federal public benefits.
Those sound like great ideas, but as we approach a year since the President’s announcement it gets more and more unlikely these are actually going to happen before the Presidential election next year. I surely hope the President will do some of what is described here, but am not holding my breath.
Is there a Startup Visa?
If you read Twitter, it would be easy to make the mistake of thinking there is actually a thing called a startup visa. But FWD.us has been doing a good job of documenting the reality: there is no Startup visa, which means founders have to cobble together temporary visas that don’t exactly fit (if they’re even eligible).
So What Can Congress Do to Create Options for Entrepreneurs?
First, the House could take up the Senate immigration bill that has been stalled now for over a year. The Senate’s immigration bill creates a new visa category for startups and entrepreneurs. The President has said he would sign it.
Congress could also increase the visa numbers for employment-based categories to reduce the visa backlog that Amit Paka writes about.
Congress could also get bold and overhaul the entire system (throwing out the per-country quotas and annual caps) and start over. The biggest problem with the visa categories and priority system is its lack of flexibility. Congress sets a visa cap in 1990 and here in 2015 we’re stuck with those numbers. Business changes too fast for that to make sense. But much like my skepticism of the President’s additional immigration actions happening this year, on this I’m not holding my breath.