This week, we learned that President Trump’s administration will take steps to delay the implementation of the International Entrepreneur Rule, commonly called the “Entrepreneur Startup Visa.”
Obama’s International Entrepreneur Rule
The International Entrepreneur Rule was announced by President Obama in late 2016 as a way to facilitate entrepreneurs from other countries opening new businesses in the United States. Before the rule was announced, people interested in opening businesses in the United States would have to get a visitor visa or some other permission to come to the United States in order to sign contracts, attend meetings, and take other necessary actions to start a new enterprise.
While getting a visitor visa might seem simple, in reality, visitor visas are issued in the discretion of U.S. Consular officers, and are often arbitrarily denied. Even those who have visitor visas can be refused entry or subjected to harsh scrutiny by U.S. Customs and Border Protection when arriving at an airport or land border.
The International Entrepreneur Rule Criteria
The International Entrepreneur Rule was a step toward making it easier for people seeking to open new businesses here in the United States. To qualify, applicants had to meet the following criteria:
- Have a significant ownership interest in the startup (at least 15 percent) and have an active and central role to its operations;
- The startup must have been formed in the United States within the past three years; and
- The startup had to show 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 above criteria in addition to other reliable and compelling evidence of the startup entity’s substantial potential for rapid growth and job creation.
A Setback For The U.S. In The Global Race For Talent
I felt that the rule was not perfect, and much more could be done to facilitate the establishment of new businesses by international entrepreneurs. For example, entrepreneurs from other countries may experience difficulty in securing funds from U.S. investors or awards or grants from federal, state or local government entities.
Many entrepreneurs are prepared to invest their own funds in order to start a new enterprise in the United States. While the International Entrepreneur rule did not encompass those investors, it was a first step toward more options for individuals looking to start new businesses in the United States.
Now the Trump administration has issued a memo requesting comments on the rule that it will delay the implementation of this program until March 14, 2018, and notes that the program may ultimately be eliminated.
Mark Zuckerberg, Facebook founder and supporter of FWD.us, a bi-partisan organization supporting immigration reform, called the delay in implementation of the rule “a setback for the United States in the global race for talent.”
Why Do We Need The International Entrepreneur Rule?
Some may ask why the International Entrepreneur Rule was needed. The United States has the EB-5 immigrant investor program and the E-2 Treaty Investor Visa. While these are available options, they are limited:
Filing a petition for permanent residence under the EB-5 program does not allow an investor to remain in the United States during its pendency, which can easily be 18 months or more. In short, it does not allow a person to be in the United States to build the business.
In addition, the EB-5 program requires a minimum investment of $500,000 and an investor must show that the investment will create at least 10-full time jobs for U.S. workers within a period of a few years. But not all investors have $500,000 to invest at the outset, and Some businesses are unable to create at least 10 full-time jobs within their first few years.
The E-2 visa also has its limitations: only nationals of treaty countries may apply for the E-2 visa. Thus, nationals of China, for example, are unable to obtain E-2 visas. In addition, the E-2 requires a showing that an investor is making a “substantial” investment, and that the enterprise will not simply be “marginal.”
“Substantial” and “marginal” terms are subject to interpretation by consular officers, so regardless of the amount of money an individual might invest, an officer may determine that the investment is not “substantial,” that the enterprise is simply “marginal.”
Meaning, that it does little more than provide a basic income for the investor or that the investor has not shown sufficient growth projection of the business to demonstrate that he or she can actually “develop and direct” the business. In short, only nationals of treaty countries can apply, and those who can apply are subject to the discretion of a consular officer’s interpretation of data and information.
U.S. Immigration System Not Adapted for Innovation
Opening a business is an intensive process. The determination of securing funding, finding employees, and location all require a startup business owner’s full attention.
Right now, the U.S. does not have a viable option to help would-be startup business owners get their businesses going. They are forced to try to visit the United States to conduct these activities, and their travels in and out of the US mean that they risk being refused entry or experiencing other difficulties at the port of entry.
The immigration debate often centers on undocumented immigrants, and their issues and legal options deserve attention. However, over the last 20 years, the U.S. immigration system has not adapted to encourage entrepreneurship and innovation.
When Donald Trump first announced his candidacy in 2015, I wrote that although he presented himself a successful, business-minded person, he did not indicate any understanding of the contribution that immigrants make to our country as highly-skilled, highly-educated individuals and as entrepreneurs and innovators.
We don’t yet know if the International Entrepreneur Rule will be withdrawn or if its implementation will simply be delayed. However, the rule is limited. Some of America’s most successful entrepreneurs have voiced support for this rule and other reforms to our immigration system. Until the Trump administration makes efforts to support immigrant business owners and entrepreneurs, the options are limited.
If you are seeking to open a business in the United States, contact an experienced immigration attorney to help you. If you would like to schedule a consultation with the Law Office of Kathryn N. Karam, P.C., click here: