The Economic Impact of a Startup Visa

With the immigration reform on the national agenda in Washington, the idea of an entrepreneur’s or startup visa that grants high-skilled immigrants the right to stay if they start job-generating businesses is finally gaining traction.

The need for action is indisputable. High-skilled immigrants have been the lifeblood of entrepreneurial companies that have transformed entire industries and created tremendous wealth and valuable jobs during the process. Think, for example, of Google’s Russian-born co-founder Sergey Brin, or Andrew S. Grove of Hungary, who helped found Intel. There are many strong pieces of evidence in favor of more highly-educated immigrants and the key question is now how to structure the visa to get what is most important – the need to attract highly-educated and entrepreneurial job creators, and support businesses with growth.

According to the most recent Startup Act 3.0, a bipartisan bill recently introduced into the U.S. Senate, the new Startup Visa would make available a fixed pot of 75,000 visas for individuals who start companies. Initial eligibility would be restricted to individuals who already are in the United States on either H-1B visas or F-1 student visas. Once the Startup Visa is issued, further requirements are imposed in the first year. During that time, the entrepreneur must register a business, employ at least two full-time, non-family employees, and invest or raise an investment of at least $100,000. If, after one year, those requirements are met, the entrepreneur gets three additional years on the visa. During that three-year period, the entrepreneur must employ at least five full-time, non-family employees. The original two employees count toward these five, which means the business essentially must hire one person per year after the first year of operation. At the end of three years, the entrepreneur may apply to have the conditional status removed.

According to the Kauffman Foundation Report, “Give Me Your Entrepreneurs, Your Innovators: Estimating the Employment Impact of a Startup Visa,” this startup visa option has the potential to add, conservatively, between 500,000 and 1.6 million new jobs over the next 10 years.

It is time that U.S. moves away from policies that discourage high-skilled immigrant’s contributions to the economy. The number H-1B visas for skilled workers are currently capped at 65,000 and has been plagued with backlogs resulting from this quota. The process for permanent visas has in turn become convoluted, costly and discouraging. As a result, high-skilled immigrants are looking for opportunities elsewhere in an increasingly competitive global labor market, taking their innovative ideas with them. Adding a new visa category, the startup visa, would ensure that the system is a magnet for both talented human capital and money.

Conclusion

We welcome the Senate bill and welcome the additional options for entrepreneurs who seek to start a business in the United States. Please feel free to subscribe to our free weekly newsletter to obtain developments on this and related topics. If our office can be of any help, please feel free to contact us.