In an exciting step for international business, the White House announced a new rule at the end of August 2016 which will enable foreign entrepreneurs to start and grow high potential companies in the US. The quid pro quo is significant public benefit for the US through job creation and innovation.
With prior immigration reform attempts having stalled in Congress, President Obama is once again using a resource available to him – executive orders – to move immigration reform forward. While it’s not a law, creating the Entrepreneur Rule is a very positive move in the right direction and has been welcomed by US business owners, venture capital firms and other US investors as well as international entrepreneurs.
The International Entrepreneur Rule would offer “parole” to international investors who partner with American investors to create new businesses providing significant public benefit through the creation of new jobs and businesses in the US.
To qualify, international entrepreneurs:
- must have at least 15% ownership of a US company founded in the last three years;
- must have an active and central role in the company’s operations;
- must have raised at least $345,000 from qualified U.S. investors OR at least $100,000 from federal, state, or local government agencies.
- partially satisfying one or both of the investment criteria may suffice if there’s sufficient compelling evidence of substantial potential for rapid growth and job creation.
Under the proposed rule, a qualified international entrepreneur would be granted a two-year period of stay, with the option to renew their status for an additional three years if the company is doing well.
Spouses of qualifying entrepreneurs may apply for work authorization. Entrepreneurs currently in the US in a different visa category may apply for parole but if approved, must leave the US and request to be paroled on re-entry as it’s not possible to change from another non-immigrant category to parole while remaining in the US.
A minimum of $345,000 investment may be too high in some cases, but partially satisfying that requirement may be sufficient, provided that a company meets certain criteria for business growth and job creation. As of yet these criteria have not been specified. Also, approval is granted on a case by case basis with a maximum of three per company – it’s not yet clear how this will work.
The entrepreneur will be limited to working with the startup in question. As the purpose is to enable foreign entrepreneurs to grow their new business in the US, and not to obtain new sources of employment, DHS believes this is a reasonable restriction. In reality, entrepreneurs very often identify and create new opportunities wherever they happen to be, and restricting the founder to the US enterprise may have a stalling effect on innovation.
Have Your Say
Public comment is invited until October 17th, 2016.
If you have an opinion or view on the proposed rule, please post it on the relevant US government website –via: https://www.federalregister.gov/documents/2016/08/31/2016-20663/international-entrepreneur-rule
All going well, the rule will take effect before President Obama leaves office on January 20, 2017.
We will provide updates as the story unfolds.