Making A Case For StartUp VISA

Making A Case For Startup VISA, Jerome Gentolia: Venturestab

The Startup VISA by alextorrenegra via Flickr

Meet Brian Wong, founder of Kiip, a mobile game advertising platform. With $300,000 already raised from investors, you would think Wong is all set to pitch his idea to big mobile game developers. As much as Wong would like to think it was that easy, he has one obstacle in his path – the US VISA process. Immigrants with temporary VISA are on shaky ground. Even if they manage to start a successful start-up company in the US, a permanent work VISA is not guaranteed. And Mr. Wong, a Canadian, has only a temporary US VISA.

It’s already hard enough to raise funds and this is an added risk,” – Brian Wong

It’s not just one story

Brian Wong is not alone. A lot of immigrant entrepreneurs who plan to start a business in the country faces a similar problem.

Consider students from another country who comes here for higher education. A bright mind, they graduate and dream up a plan for an innovative venture. Since they love the country (or because their target audience is here) they would rather start the venture here than take their ideas back to their country. They get stuck with the visa problem like thousands of others. Poof! The country loses yet another bright mind.

“The U.S. is no longer the only land of opportunity. Highly skilled foreign-born workers are leaving the country in drones” – Vivek Wadhwa on “Our Real Problem Is The Brain Drain” – New York Times

This happens with students, employees (a work visa becomes invalid when you quit to start your own business), researchers, visitors who spot opportunities and interns.

Shouldn’t they wait like others?

“For those who studied elsewhere, but who nonetheless want to bring their job-creating ideas here, American policies treat them—the job-creating, trouble-making innovators that they are—as a cross between deadbeats and queue-jumpers. Why can’t they wait in line like everyone else to get a visa in five years or so? What’s their hurry?” – Paul Kedrosky and Brad Feld on “Start-Up Visas Can Jump-Start The Economy” – The Wall Street Journal

That’s a valid question. Why shouldn’t these to-be-entrepreneurs wait in line like thousands of others who want a visa? Their idea isn’t going anywhere, you would say. But it is.

There are two problems with that argument. First, is that most innovative ideas cannot wait. Competitive advantage is all about timing and being first. Also, the best time to implement an innovative idea might pass, making it useless. What if someone had come up with a business solution to the economic crisis a couple of years back? Would s/he wait until the crisis is almost over just to get a visa? Maybe the crisis is not the best example, but you get the general idea.

Second, how do you expect these entrepreneurs to survive while they await the visas? Where are they going to get the money to pay their lawyers’ fees for the immigration process? Forget the lawyers, what about their daily expenses?

There’s also the argument about human drive. These eager young innovators, fresh out of college, are not going to spend time working for someone else while they await for their visas. They want to implement their ideas immediately and build the business NOW, and if we don’t allow it, they will take it somewhere else.

Brad Feld, an experienced Venture Capitalist and co-founder of TechStars, explains further:

“…they don’t have time to wait… and they don’t have twenty five to fifty thousand dollars to spend on lawyers to go through the VISA process…”

Brad Feld talks about his own experiences with startups by immigrants, and the difficulty he faced in getting them visas to create their businesses.

What is the country losing?

This is not a simple case of losing a few ideas from immigrants. If you think little ideas don’t make much of a difference, think again:

“After all, Google, Pfizer, Intel, Yahoo, DuPont, eBay and Procter & Gamble are all former start-ups founded by immigrants. Where would this country be today without their world-changing innovations?” – Paul Kedrosky and Brad Feld on “Start-Up Visas Can Jump-Start The Economy” – The Wall Street Journal

Some of the biggest companies, not just in the US but in the world, today have been created by or with the help of immigrants. These are the kind of innovation the country is losing because of its tough visa policies.

“…and foreign entrepreneurs have long played an outsized role in the U.S. start-up sector, especially in the tech industry. Immigrants are nearly 30% more likely to start a business than nonimmigrants, the Small Business Administration says. University of California researchers estimate about a third of Silicon Valley technology firms were started by Indian or Chinese entrepreneurs, while a joint study with Duke University found at least one immigrant founder in over a quarter of all engineering and technology firms launched in the U.S. since the mid 1990s, together generating nearly 450,000 jobs by 2005. Google Inc., Intel Corp., Yahoo Inc. and eBay Inc. all had at least one immigrant founder.” – Angus Loten on “New Pitch For Start-up Visas” – The Wall Street Journal

Innovative ideas are one thing. These startups are creating close to half a million jobs every year! If you were to decline businesses founded by immigrants, millions of people would be unemployed, living off tax-payers money.

These foreign startups add to the US treasury through taxes. After all, these are businesses in the US, and hence need to pay taxes to the US government. Not to mention all the foreign investments they might bring in, monetary or otherwise.

“Immigrants have not only founded big, well-known companies. Foreign-born residents made up just 12.5% of the U.S. population in 2008. But nearly 40% of technology company founders and 52% of founders of companies in Silicon Valley.” – Paul Kedrosky and Brad Feld on “Start-Up Visas Can Jump-Start The Economy” – The Wall Street Journal

Is there a solution?

Losing innovative ideas, jobs and revenue is definitely not a good sign for the economy, especially at a time when the country is still recovering from the recent crisis. One might point to the H-1B Visa granted to workers. But there’s your keyword – workers. Entrepreneurs don’t fall under the ‘workers’ category.

Thankfully, a solution is in sight. Supported by both the Republicans and Democrats, the StartUp Visa Act of 2010 introduced in February by Senators John Kerry (D., Mass.) and Richard Lugar (R., Ind.) aims to change things for the better. The gist of the act is:

The StartUp Visa Act of 2010 will allow an immigrant entrepreneur to receive a two year visa if he or she can show that a qualified U.S. investor is willing to dedicate a significant sum – a minimum of $250,000 – to the immigrant’s startup venture.”

If, by the end of two years, the entrepreneur has generated a minimum of five jobs, s/he will get a permanent Green Card.

The concept in itself is not unique. Canada is already offering visas to startups. In Chile, 17 startups created by founders from 14 countries have assembled to push Start-Up Chile, a program akin to the Act just mentioned.

The StartUp Visa Act is strongly supported by Venture Capitalists. In fact, the StartUp Founder Visa Movement by Paul Graham and Brad Feld is actually what got the ball rolling for the StartUp Visa Act.

Great…so now we have conmen getting an easy entry in the US

The proposal came with some specific requirements. Remember the $250,000 an entrepreneur has to raise to get a StartUp Visa? There’s a catch – at least $100,000 has to be via Venture Capital or Angel Backing. Not everyone can get that amount of money from these sources. These are credible sources that invest only in credible companies. So there won’t be anyone jumping queue for visa falsely claiming s/he has collected $250,000 for a startup.

Even if the entrepreneurs do manage to get such capital with false assurances or stolen ideas, which is unlikely to happen, there’s the two year trial period within which these entrepreneurs have to create five jobs. If there’s no company, there are no jobs, the entrepreneur gets kicked out for good.

There’s always the possibility of the startup failing. In fact most startups fail. But that’s no reason to discredit the entrepreneurs. Even the best ideas sometimes fail for lack of proper implementation and execution. As long as they are creating jobs and raising money, they can keep trying.

There might be a few problems with the StartUp Visa Act, as pointed out by Pascal-Emmanuel Gorby of But these are minor problems compared to the ones we are currently facing – loss of great ideas, loss of hundreds of thousands of jobs and loss of billions of dollars in revenue. All of this can be solved by one simple Act.

Once the StartUp Visa Act is formally passed, people like Brian Wong can breathe easily and concentrate on implementing their idea instead of getting a Visa.


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