It would surprise many people that there really is no good way for a foreign national from India or elsewhere to gain permanent residence (a green card) by starting a new company. In fact, it is difficult to even gain a temporary visa as the founder of a new business.
EB-5 Is Not a True Immigrant Entrepreneur Visa
The closest America has today to an immigrant entrepreneur visa is the EB-5 (employment-based fifth preference) immigrant investor visa. The immigrant investor visa became part of the Immigration and Nationality Act in 1990. To receive such a visa, which awards permanent residence (a green card), an individual must invest either $1 million or $500,000 (if in a Regional Center) and create at least 10 jobs. “Approximately 90 to 95 percent of individual Form I-526 petitions filed each year are filed by Alien Investors who are investing in Regional Center-affiliated commercial enterprises,” according to U.S. Citizenship and Immigration Services. While it is clear attracting capital to the United States is positive, EB-5 primarily helps existing projects, rather than facilitates or rewards startup activity.
In addition, Congress and agency regulations have not made it easy for potential immigrant investor visa holders. This is one reason the EB-5 category has never come close to utilizing fully the 10,000 allocation of immigrant visas available under the statute.
American Tradition Favors Establishing an Entrepreneur Visa
While there is no reason to eliminate the immigrant investor visa category – and, in fact, there is a strong case to be made for streamlining its requirements to making it more accessible to potential investors – it goes against America’s tradition to reward cash investments but not entrepreneurial talent in U.S. immigration law. For a long time, the United States favored talent and hard work over cash. An entire genre of literature, the Horatio Alger stories, featured rags to riches heroes. The stories of many of today’s immigrants who become successful entrepreneurs illustrate that talent is a better indicator of success than a healthy bank balance.
Bills in Congress
A number of bills in Congress have been introduced that would establish an immigrant entrepreneur visa. The Startup Act (S. 1965), introduced by Senators Jerry Moran (R-KS) and Mark Warner (D-VA), would create a new green card category for entrepreneurs, focusing on highly-skilled foreign nationals with an existing tie to the United States. The bill “creates a new visa for up to 75,000 immigrant entrepreneurs who hold an H-1B visa or have completed graduate level work in a STEM [science, technology, engineering and math] field, and who during the 1-year period after the new visa is issued register at least one new business entity which employs at least two full-time, non-family member employees, and invests or raises capital investments of at least $100,000,” according to a summary of the legislation provided by the bill’s authors. “If these requirements are satisfied, the entrepreneur would have three additional years to remain in the U.S. and operate his or her business. During the three-year period, the entrepreneur must employ at least five, full-time, non-family members for the business entity. At the end of the three years, a recipient may apply to remove the conditional status.”
The Startup Visa Act of 2011 (S. 565), introduced by Senators John Kerry (D-MA) and Richard Lugar (R-IN), would make an immigrant visa available to a foreign national who raises at least $100,000 from a “qualified venture capitalist, a qualified super angel investor, or a qualified government entity” and creates five full time jobs in the United States (other than for a spouse, son or daughter), raises $500,000 in capital investment, or has an unexpired H-1B visa or a graduate degree in a STEM field from a U.S. university and attracts $20,000 in investment from a qualified investor and creates at least three jobs and generates revenue, or raises capital of, $100,000 within two years.
Legislation by Rep. Zoe Lofgren (D-CA), H.R. 2161 (The IDEA Act) contains similar provisions on establishing an immigrant entrepreneur visa to those contained in S. 565 and S. 1965. However, it also contains a section that eschews capital requirements and enables a foreign-born entrepreneur to receive an immigrant visa if he or she creates 10 or more full-time U.S. jobs within two years, without regard to the amount of outside capital raised.
It is unclear whether Congress will act on any of these bills. Legislative measures that place less emphasis on the amount of capital a foreign national invests or raises fit best within the American tradition of entrepreneurship. It also conforms to today’s reality of how businesses get started. Giving foreign nationals who start new companies deserve an opportunity to follow through on their dreams and, in the process, create jobs and wealth in America.