Soon after Tahmina Watson founded her immigration law firm in 2009, she began to hear the same complaint from her clients, would-be entrepreneurs working for U.S. companies: they couldn’t leave their jobs to launch their startups unless they also left the United States. That’s because the United States doesn’t offer a startup visa that specifically allows entrepreneurs who meet certain requirements to come to or remain in the country. Although the Startup Visa Act was first introduced with bipartisan support in 2010, no version of the law has passed in the years since.
“The U.S. immigration system is based on models established in the 1950s and 60s that don’t accommodate entrepreneurship,” said Ms. Watson, who has expanded her blog on the topic into a book, The Startup Visa: Key to Job Growth and Economic Prosperity in America. In a recent conversation, she talked about what Procter & Gamble and WhatsApp have in common, how other countries are courting the entrepreneurs we discourage, and why U.S. policies on legal immigration are just as problematic as those on illegal immigration.
Adriana Gardella: Why should we care whether foreign-born entrepreneurs are able to found and grow their businesses in the United States?
Tahmina Watson: Each year, the U.S. loses millions in revenue and sends hundreds of thousands of jobs to other countries that are willing to embrace foreign entrepreneurs, many of them educated and trained at American colleges and universities. The Kauffmann Foundation predicts that, without a startup visa, the U.S. will miss the chance to create 1.6 million jobs over the next 10 years. Historically, immigrant entrepreneurs have been a major economic force. Immigrants or their children founded 40% of the Fortune 500. Companies like WhatsApp, which has a foreign cofounder, are part of a tradition that includes Procter & Gamble, which was founded by two immigrants—from England and Ireland—in 1837.
Gardella: What hurdles do today’s immigrant entrepreneurs face?
Watson: Our current business visa options essentially view entrepreneurs as square pegs to be fit into various categories that don’t work for founders. For example, the H-1B employment visa is problematic because the immigrant typically can’t be self-employed and the employer must pay a ‘prevailing wage,’ which most startups can’t afford. And, the availability of these visas is strictly limited—recently there were 233,000 applications for just 65,000 slots. There are also visas for individuals with ‘extraordinary’ abilities—so-called genius visas. But the bar is prohibitively high, requiring the applicant to be at the top echelon of his or her career, as evidenced by, say, an Academy Award or Nobel Prize. The typical founder, perhaps working from a college dorm room, won’t yet be so well-recognized. The U.S. also has visas for investors, but the amount of money that must be invested is, again, too high for most startups. There’s also a visa category for intra-company transfers, and something called a national interest waiver, which is a green card application process with wait times that can be decades-long for immigrants from certain countries, including India and China. It uses a test that asks whether the work has the potential to be in the national interest, and is most often used by medical researchers.
Gardella: How do other countries handle immigrant entrepreneurs?
Watson: They are recognizing that immigration must be a part of the nation’s economic growth strategy. For example, Canada’s startup visa, which draws on the language of our 2010 Startup Act, allows foreign nationals with funding from an approved list of Canadian venture capital or angel investment firms to apply for immediate permanent residency. In 2013, hoping to lure entrepreneurs frustrated with the U.S. process, Canada placed billboards in Silicon Valley that said, ‘Pivot to Canada.’ Last year, New Zealand and Italy launched their own versions of the startup visa. The Netherlands followed suit, and similar programs exist in Germany, Singapore, and Korea. In addition, countries, including Chile and Brazil, are incentivizing qualified foreign entrepreneurs by offering grants.
Gardella: Given the difficulties, why do entrepreneurs still want to come to the United States?
Watson: We remain the world’s most desired location for launching a business—we’ve got top schools, a nurturing business climate, a relatively stable political system, good access to VCs, and a large consumer market. You can make it big here. But we can’t be complacent. Technology has become so accessible that more and more entrepreneurs can start companies anywhere.
Gardella: Isn’t there enough U.S.-born talent, especially considering successes like Facebook?
Watson: No, the U.S. is way behind in terms of producing people with STEM skills. In this country, most people graduate from college and work in fields like law and finance. While everyone has heard of Facebook, you don’t necessarily hear about the startups that are turned away. For example, Indian-born Wharton business school graduate Kunal Bahl was forced to leave the United States because of his immigration status. He did—and cofounded New Delhi-based Snapdeal, the Amazon.com of India, in 2010. It has 20 million users, 2,000 employees, and is on track to reach $1 billion in revenue.
Gardella: What’s the status of the U.S. startup visa act?
Watson: The most recent version was introduced in January, and has bipartisan support. But it has been hobbled repeatedly by political gridlock, and Congress is unlikely to act. Republicans are caught up in getting border security passed, focusing on illegal immigration, while legal immigration remains equally problematic.
Gardella: Are there any other solutions?
Watson: Absent Congressional action, we can work to tweak the current laws. In November 2014, Obama used his executive powers to address immigration shortcomings. While the centerpiece of his plan was to make it easier for those living in the country unlawfully, many provisions will apply to startup entrepreneurs. The changes, which are a good start but insufficient to address the problem, are not yet in effect and we await details. Another initiative is the Entrepreneur in Residence program, started by U.S. Citizenship and Immigration Services. The program pairs entrepreneurs and immigration officials to share ideas on how to better work within the current immigration framework. Officers are trained regarding the issues facing entrepreneurs so they can better adjudicate cases.
