International Entrepreneur Rule: Welcome, Achievers

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The Department of Homeland Security (DHS) recently proposed a much-needed immigration option for the equivalent of Little Lebowski Foreign Entrepreneurs: non-U.S. entrepreneurs of promise but without the necessary means for a – necessary means for an employment-based visa.
DHS creatively calls this new option for international entrepreneurs the “International Entrepreneur Rule.”  The International Entrepreneur Rule does not create a new type of visa for entrepreneurs.  Instead, this immigration option is made available to foreign entrepreneurs based on DHS’ parole authority.
Under Section 212(d)(5) of the Immigration and Nationality Act, the Secretary of DHS has the authority to allow certain individuals to enter the U.S., or “parole” into the U.S., when other immigration options are not available.  Parole may be granted to individuals for urgent humanitarian reasons, or if the parole would result in significant public benefits.
DHS has thus determined that certain foreign entrepreneurs of startups would be a significant public benefit to the U.S. if the startup has a potential for rapid growth and job creation.  To qualify for parole, foreign entrepreneurs must show:
  1. That the entrepreneur retains a 15% ownership interest in the startup, and an active role in the company’s operations;
  2. That the startup was formed in the United States within the past three years;
  3. That the startup has demonstrated potential for growth and job creation by:
    • Receiving at least $345,000 from “qualified U.S. investors” with established records of successful investments,
    • Receiving awards or grants totaling at least $100,000 from state or federal government entities, or
    • Otherwise demonstrating that the startup has potential for rapid growth and job creation.
That’s a lot to unpack, but a few issues stand out with the proposed rule, and have been brought to DHS’ attention.  First, the $345,000 investment threshold is probably prohibitively high for many quality startups.  Second, the proposed rule defines “qualified investor” so stringently that foreign entrepreneurs would likely not qualify if they funded the startup through personal investments, friends and family, and certain angel investors or venture capitalists.  Finally, the 15% minimum ownership interest may prevent otherwise qualified individuals from applying where they are working on a great idea as part of a team, and share ownership of the startup with three or four other entrepreneurs.
The International Entrepreneur rule must be finalized by DHS, hopefully by the end of 2016 and with positive changes.  This is a good first step towards a more permanent immigration option for international entrepreneurs who want to bring their great minds, skills, and work ethic to the United States.  And proud we are of all of them.

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