In late May, the Department of Homeland Security announced its plans to rescind the International Entrepreneur Rule, an Obama-era provision that allowed foreign-born entrepreneurs to stay in the United States for up to five years to expand their businesses, granted they could prove their companies’ potential for rapid business growth and job creation. The announcement came as no surprise, given the Trump administration’s rollback of other executive orders issued during Obama’s presidency, and earlier hints the administration would cancel the rule. But it dealt a particular punch to those who saw the rule as a gateway toward a long-held goal: a start-up visa, which would create a pathway to legal immigration for foreign-born entrepreneurs, thus drawing the best founders to the United States and improving its competitiveness at a time when other countries are launching more and more lucrative start-ups.
Immigrants are nearly twice as likely as American-born citizens to start businesses in the United States, according to the Kauffman Foundation, a nonprofit that promotes entrepreneurship. Fifty-one percent of all U.S. start-up companies valued at $1 billion—the so-called unicorns—have at least one immigrant founder, according to the National Foundation for American Policy, a nonpartisan public-policy research organization. But historically, there hasn’t been an immigrant-visa category tailored for entrepreneurs. Mike Krieger, the Brazilian-born co-founder of Instagram, came to Stanford University on a student visa before transitioning to a skilled-worker visa. The Google co-founder, Sergey Brin, was a child when his family immigrated to the United States from the Soviet Union as refugees. Elon Musk, the founder of SpaceX and co-founder of Tesla, first immigrated from South Africa to Canada in order to eventually immigrate to the United States.
During the Obama administration, lawmakers began pushing for a start-up visa and seemed to be gaining some traction. In August 2016, the Obama White House announced the Department of Homeland Security would propose the International Entrepreneur Rule. Hillary Clinton advocated for a start-up visa as part of her platform. Now, the death of the International Entrepreneur Rule—and, relatedly, the stalling of the start-up visa—have foreign-born entrepreneurs in the United States grappling with whether to stick it out or just leave. Silicon Valley, too, is coming to terms with losing the competitive advantage it took for granted for so long. For some, it’s the latest evidence that Donald Trump, who became president on a promise to revive the American dream, is, in fact, chipping away at it.
In the early 2000s, a person I'll call Gyan (who requested that his real name not be used in order to protect his immigration status in the United States) considered his options. He could stay in his home country, in Asia, and pay to attend a top university, as most people do. Or he could go to the United States, where, he thought, he could create a path toward a better future. The decision was clear, and he came to the United States. Gyan applied to Stanford University, which offered him an excellent financial-aid package. He accepted immediately.
During Gyan’s senior year, an entrepreneurship class motivated him and two other students to start a company. Their product, a productivity tool, never took off, but the experience gave him the entrepreneurship bug. Gyan’s student visa allowed him to stay for a year after graduating to pursue practical training. So, he started working for various start-ups, practiced writing code in his downtime, and met fellow ambitious techies at cafes around Silicon Valley: Red Rock Coffee in Mountain View, Starbucks on Stanford Avenue.
Not being a U.S. citizen, Gyan stayed in the country by securing an employee-sponsored H-1B visa through a job as a software engineer. “Ultimately I think I was just really aching to make things happen, to build things,” he told me. He started to tinker with new product ideas after work.
Around that time, Silicon Valley investors and entrepreneurs started lobbying for a start-up visa. In 2010, Senators John Kerry and Richard Lugar introduced the bipartisan Startup Visa Act, the first legislation of its kind to propose a visa category for international entrepreneurs. Recognizing the catch-22 of company founders being unable to sponsor themselves for visas, the act would allow a foreign-born entrepreneur to receive a two-year visa, and then be eligible for a green card, after proving job creation and acquiring $1 million in investment capital or revenue. The proposal was beloved within the tech community. But the bill, and subsequent iterations of it—including the popular Startup Act, which includes a start-up visa as part of other provisions aimed at helping the start-up industry—didn’t gain enough traction in Washington, D.C. “Nobody was committed to championing it,” said Craig Montuori, a partner at Venture Politics, a public-affairs consulting firm based in Silicon Valley, who lobbied for the start-up visa. Most people didn’t consider it a crisis; other foreign-born start-up founders had made it work, hadn’t they?
Back in the Bay Area, that’s what Gyan kept telling himself. In 2015, he built a prototype for another start-up, this time related to hospitality management. Gyan and his co-founder soon landed a meeting with a well-known incubator. The investors didn’t ask about his immigration status, but, to Gyan, it was the elephant in the room. When they ultimately didn’t invest, Gyan couldn’t stop thinking about how his immigration status might impact his success as an entrepreneur. He can’t remember the exact questions asked during the meeting, but they were along the lines of: Why haven’t you quit your job to work on this? Are you willing to quit your job? “They want to invest in someone who can work on this full-time,” Gyan said. But if Gyan quit his job, he’d lose his H-1B visa—his gateway to staying in the United States. He couldn’t.
Around October 2016, Gyan was reading the news when he came across an article about the International Entrepreneur Rule. The rule, inspired by the Startup Act, created a special immigration status for foreign-born start-up founders. When the rule was finalized, in January 2017, Gyan inspected the requirements: Have a young company, and own a substantial interest in it. Have either $250,000 or more from qualified U.S. investors with a history of successful investments, or $100,000 or more from government entities, or other compelling evidence of the start-up’s potential for growth and job creation.*
The IER would go into effect in July 2017. The DHS estimated about 2,940 entrepreneurs would be eligible for it each year, although one immigration attorney in Silicon Valley, Sophie Alcorn, told me she believes that’s a vast understatement, and that applications could have reached 10,000 or more given the excitement around it. The prospect of one day applying for the IER energized Gyan, and he was out the door again, networking with people and trying out new ideas. Every foreign kid with an entrepreneurial streak was eyeing the IER, he said.
But in July 2017, less than a week before the rule was set to start, the Trump administration delayed it and announced its intention to eventually rescind the rule. In December 2017, after some legal wrangling over the delay, U.S. Citizenship and Immigration Services (USCIS) announced in a press release it would begin accepting applications under the IER, and gave directions for how to apply—but added that it still planned to remove the rule. Finally, late last month, the DHS proposed to formally eliminate the IER, arguing it was too broad and didn’t protect U.S. workers and investors enough, and that other visa categories were available to foreign-born entrepreneurs.
Doug Rand, a former White House official who helped implement the IER during the Obama Administration and has since co-founded Boundless Immigration, which helps families navigate the U.S. immigration system, argues these other visa categories would be extraordinarily difficult to obtain for people from certain countries, or would require proof of current accomplishments rather than future promise. “For an administration that can’t stop talking about those that come in based on merit,” he said, “why would you torpedo a program that can benefit the super qualified?”
The rule had yet to make much of an impact. A spokesperson for USCIS said it has received about 12 applications for IER but hasn’t issued any final decisions. Brad Feld, an investor and an entrepreneur who advocates for a start-up visa, blamed the low numbers of applicants on the administration’s chilling actions. “Not surprisingly, the Trump White House stated relatively early on that they wanted to kill it. The second they did this, they made it unattractive to anyone, as the risk of it vanishing one day unexpectedly made it an extremely high-risk option,” he said. “It’s a self-fulfilling prophecy—if the current administration won’t support it, it’s not an attractive option.”
Along with IER’s folding, the Startup Act remains stuck—at least through this Congress. A bipartisan group of senators reintroduced the Startup Act last year, but the bill has gotten tied up in broader immigration politics. Neither party is willing to move on passing what they both want unless the Startup Act is bundled with either enhanced border security, for Republicans, or a pathway to legal residency, for Democrats, said John Dearie, the president of the Center for American Entrepreneurship. “Both insist on the ‘whole loaf’ rather than accepting half—and so nothing happens,” he added.
Meanwhile, since lawmakers in the U.S. first introduced the start-up visa eight years ago, other countries have followed their lead: Australia, Canada, Chile, France, Germany, Ireland, Israel, Italy, Japan, New Zealand, Portugal, Singapore, Spain, and the United Kingdom now all have versions of a start-up visa or other initiatives to bring in foreign workers.*
Silicon Valley may have written the script for how to build a start-up, but those practices are now global, said Natalie Novick, a sociologist and an ethnographer at the University of California at San Diego who studies start-up ecosystems around the world. Ten years ago, nearly 75 percent of the world’s venture-backed funding flowed into the United States; in 2017, the United States received 45 percent. Meanwhile, investment has grown enormously in Asia—especially in China, which now rivals the United States in VC funding and has three of the world’s five most valuable unicorns. India trails other countries in venture-capital flow, but when the United States denied Kunal Bahl, an Indian-born co-founder of the online retailer Snapdeal, an H-1B visa after he graduated from the University of Pennsylvania’s Wharton School, he returned to his home country and helped create more than 5,000 jobs with his new company.
As immigration reform remains at a standstill, and the Trump administration eyes even more restrictionist immigration policies, many in Silicon Valley are worried the United States is losing its competitive advantage—just what they were hoping to guard against with a start-up visa. In May, the Stanford Graduate School of Business’s career center hosted a “Working in Canada” event—organized largely because of student panic about jobs and visas, said Maria Pasos-Nuñez, the business school’s associate director for international-student career development. In addition to canceling the IER, the Trump administration has unveiled a new draft policy that may make it easier to force international students to leave if they’ve violated the terms of their visa. It also recently declared it wants to reform the popular practical-training program that gives foreign students a year or more to stay in the United States and work after college. Participation in the program grew by 400 percent among graduates with STEM degrees from 2008 to 2016, according to the Pew Research Center; it’s widely considered a pipeline that helps international students to eventually become U.S.-based entrepreneurs. While some people speculate the administration may eliminate the program altogether, Carissa Cutrell, a public-affairs officer for ICE, said the exact reforms to the program are still under discussion.
As students grow anxious about their ability to work in the U.S., employers now seem hesitant to hire international students due to the fear of losing them after hiring, Pasos-Nuñez said. The graduate school is increasingly sourcing jobs outside of the United States for its students. The immigration problems have “led to an escalation of challenges and frustration for highly skilled international students looking to launch their career or start-up ventures in the United States,” she said.
Veronica Zhou, a 35-year-old Chinese native who immigrated to Canada and became a citizen there before enrolling at Stanford, helped organize the Working in Canada event. Zhou has it a little easier than some of her peers if she wants to stay in the United States, thanks to a visa available to Canadian citizens through a provision of the North American Free Trade Agreement. But she’s already networked in China, France, Israel, and Peru; while she once idealized life in Silicon Valley, she’s now not sure she wants to stay. Zhou has found that hiring people for new ventures in the United States is becoming more difficult—especially when it comes to international talent, she said, because many foreign-born workers in the United States prefer the stability of securing a visa through an established corporation to joining a start-up. And fewer international students are coming to study in the United States in the first place. “Everyone on campus will have to face the decision of whether we stay here or leave,” Zhou told me. “That’s what we think about and worry about every day.”
When Gyan heard the news that the IER collapsed, he felt disappointed—though not entirely surprised. He tried to put things in perspective. Families are being separated and sent back across the border. I have nothing to complain about, he told himself. He repeats the upbeat mantras the industry is famous for: As an aspiring entrepreneur, if you get let down and upset, maybe you shouldn’t be in the field. You have to be resilient.
Now 31, Gyan has studied and worked in the United States for 13 years. He is still committed to starting a business, though he’s currently too preoccupied with interviewing for a new job to try to execute any of his ideas. He doesn’t want to waste away as a forever employee in the United States. But his H-1B visa is expiring soon, and he’s reached the maximum number of years he can be on the visa. So along with finding a new job that, he hopes, will sponsor a green card that will allow him to stay in the country as a legal permanent resident, he’s consulting his friends in the business community about the next best visa option.
Private U.S. initiatives focused on international entrepreneurs have emerged, including residency programs at universities and a venture-capital firm aimed at immigrant-founded start-ups. Gyan could also move to another country to be an entrepreneur if need be. He lists the other options off the top of his head: Canada, Germany, Chile. “There are so many people in this country who invested in my future,” Gyan said. “Universities teach these kids from abroad, they inspire them, they invest in them. But then, at this point, there is another group of people who want to shut them down.”
* This article originally misstated that the amount required from qualified U.S. investors was $245,000. It was $250,000. We regret the error.
* This article originally mischaracterized the nature of Chile's visa program. We regret the error.
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