On December 2, 2009, noted venture capitalists Paul Kedrosky and Brad Feld published an editorial in the Wall Street Journal calling for a new visa category for foreign-born entrepreneurs.
It was one of the first pieces anyone had published in support of such a visa. At a time when Americans were getting used to the phrase "jobless recovery," Kedrosky and Feld were claiming an entrepreneur visa was just what the country needed to put more people to work:
In the 21st century [opportunities to disrupt the market] don't wait for our interminable, employment-based visa programs. As a result rather than saying 'Come and create jobs here' we, in effect, tell [immigrant entrepreneurs] to shove off. Come back when you have a few million in sales ? at which point they will be rooted elsewhere and creating jobs somewhere else.
Since publishing that editorial, Kedrosky, Feld, and others have been fanning the flames of the "startup visa movement," a push by venture capitalists and Silicon Valley heavyweights to attract more foreign born innovators to the U.S.
In Congress, that push was made manifest in 2010's StartUp Act, sponsored in the Senate by John Kerry (D-MA) and Richard Lugar (R-IN). It was reintroduced this year mostly without any changes.
The current bill before lawmakers calls for roughly something like this: A foreign national who wants to start a company must obtain a minimum of $100,000 in financing from a qualified American investor. After two years, the business the immigrant starts must have created at least 5 new jobs and raised at least $500,000 in additional capital investment or have generated at least $500,000 in revenue.
The bill offers similar options for current H-1B visa holders who want to stay here or foreign-born students who graduated from an American university with a math or science degree. To get the visa, those individuals would only need to create 3 new jobs in two years.
Instead of just making more visas available each year, the StartUp Act would actually reallocate a portion of the 10,000 visas annually allotted to EB5 immigrant investors. Since the EB5 visa program is underutilized, this is seen as a good way to create a new visa category without making more visas available for issue.
A detailed overview of the bill is available on Senator Kerry's Website.
Will it pass? It didn't in 2010. And the bill's inclusion of certain tax incentives for new businesses may make it hard for it to even leave committee in 2011. As Diana Ransom points out in an Entrepreneur.com article entitled, "The Startup Act: A Nonstarter?," convincing Congress "to adopt provisions that would trigger even a short-term expense at this point may be difficult."
To learn more about the hurdles faced by the StartUp Act, EB5info contacted Brad Feld, who since his Wall Street Journal editorial has been one of the most active proponents of an entrepreneur visa.
According to Feld, the biggest stumbling blocks for the bill to overcome aren't tax exemptions, but misconceptions about what it entails:
Lack of focus by Congress on any immigration related stuff [will be a major hurdle]. In addition, there are many representatives who will only focus on 'comprehensive immigration reform' and view the Startup Visa Act incorrectly in this context since it's a jobs oriented program that is a minor modification on an existing visa category.
That existing visa category, of course, is the EB5 visa.
"I don't think it's a zero sum game, so I don't think there's anything for folks involved in the existing EB-5 program to lose," said Feld. "I don't have a judgement on the existing program. I do know that the EB-5 program is underutilized and, as a result, adding minor modifications that are incorporated in the Startup Visa Act will use it more effectively."
Lots of influential people agree. If the almost impassioned discussion of an entrepreneur visa at last month's public meeting of the President's Council on Jobs and Competitiveness is any indication, the StartUp Act (or something like it, at least) enjoys strong support in the business community.
And with so many EB5 visas sitting around unused every year, some would consider it a no-brainer that we hand those out to qualified innovators who want to start companies in America.
Otherwise, those immigrants will almost surely go somewhere else. Reporting for NPR this month, Wendy Kaufman recounted the story of Andrew Nicol, an Australian entrepreneur who lost his employer-sponsored U.S. visa when he decided to start a company. With no way to legally pursue his vision in America, he took advantage of a Chilean program that offers entrepreneurs $40,000 and a visa.
Nicol's business targets consumers in New York City, but he's running everything from Santiago.
In order to keep entrepreneurs like Nicol from choosing Chile over the U.S., Robert Litan of the Kauffman Foundation thinks the government should go beyond the StartUp Act and just give visas to anyone who wants to start a company here. "There are a lot of people who can start businesses without a lot of money," he told Entrepreneur.com last year.
Litan thinks stipulations that entrepreneurs must secure a certain dollar amount before getting a visa will limit opportunities to a select group of well-connected immigrants. He admits, however, that the StartUp Act is a step in the right direction.
Either way, what it all comes down to is that current policies keep entrepreneurs out of of America and encourage them to set up shop in places like Chile.
As Feld and Kedrosky explained in their 2009 editorial, the U.S. "has a culture of risk taking, capital formation, and an economic dynamism that is the envy of the world. This gives us a competitive edge that we should not let slip through our fingers."