The tech industry took a blow this week as the Trump Administration shelved a highly anticipated rule that would have allowed entrepreneurs from abroad to start their companies in the U.S. without having to provide substantial capital from their own pockets. Instead, they would be allowed to work on their startups in the U.S. for a limited period if they could prove they had a certain amount in investment capital from other sources.
As you may know, the EB-5 visa is available to foreign investors who bring a required amount in investment capital in order to create at least 10 qualifying positions. That's a pretty high bar for a young techie with a great idea.
The so-called "international entrepreneur rule," loosely referred to as the "start-up visa," would allow a qualifying person to come to the U.S. for 30 months in order to work on founding a business. An additional 30-month period could be gained under certain circumstances.
To qualify, the entrepreneur would need to show they had obtained at least $250,000 in venture or investment capital, or at least $100,000 in funds from a government grant. Under the Obama Administration, the Homeland Security Department had estimated the annual interest in the program to be around 3,000 qualifying entrepreneurs.
The trouble is, early in the Trump Administration the president signed an executive order limiting Homeland Authority's use of its "parole authority," which is its power to grant parole to certain immigrants and refrain from enforcing immigration law on them. Trump has limited that power to situations, determined on a case-by-case basis, in which individuals demonstrate "urgent humanitarian reasons or significant public benefit."
According to the New York Times, the international entrepreneur rule relies on DHS's parole authority and would have used it to bring in startup founders who otherwise would not have qualified for immigration to the U.S.
This week, the Trump Administration announced that the "start-up visa" program will be put on hold until March of next year. In the meantime, public comment will be invited, but the intention is to scuttle the rule altogether.
Tech sector expresses its disapproval right away
"Big mistake," Tweeted a well-known investor in the tech sector. "Immigrant entrepreneurs are job makers, not job takers."
In a statement, the head of the National Venture Capital Association lamented, "Today's announcement is extremely disappointing and represents a fundamental misunderstanding of the critical role immigrant entrepreneurs play in growing the next generation of American companies."
He went on to say that other nations are trying hard to bring in international talent, "the Trump administration is signaling its intent to do the exact opposite."
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