The SKILLS Visa Act- Entrepreneur Visa – House (of cards?)
By, Tahmina Watson
The SKILLS Visa Act that was reported out of House Committee recently, includes provisions for a Startup visa that is called “Entrepreneur Visa”. Here are my chart, summary and thoughts on the provisions:
Called EB-8 visa, the bill will create a two tiered entrepreneur visa – one for people with venture capital funding and the second for Treaty investors, specifically E2 visa holders. 10,000 visas will be reserved for this category.
Venture Capital-Backed Entrepreneurs: The visa will allow an initial conditional green card, which will have to be removed after two years to receive a permanent green card. The conditional green card will be given only to people who have secured $500,000 (that is half a million dollars) from a venture capital firm or $100,000 from an Angel investor into a new business.
Two years later, the entrepreneur must prove that he/she created 5 full-time jobs and raised either $1,000,000 (one million) in additional funding or in revenue, upon proof of which the conditions will be removed and the entrepreneur will receive a permanent green card.
Treaty investor: A treaty investor will receive a permanent green card if he/she can show the following: (1) They have been in valid E2 status for at least 10 years and (2) that they have employed 5 full time employees continuously for 10 years.
Analysis: While it should be recognized that the bill attempts to address a lack of a visa for entrepreneurs, the provisions will not accomplish the intended goal of allowing entrepreneurs to obtain a visa. The problems:
1. $500,000 from a VC is a very high amount to qualify.
2. Practically speaking, a person living outside the US will likely not have the opportunity to meet or convince an investor to obtain funding for a visa. Investors will want to meet the entrepreneur in person. It is difficult to obtain a B1/B2 visa for a lot of people outside the US. There will likely be language barriers.
3. Without being in the US, the person will not be able to set a ‘new commercial enterprise’ or business to accept the funding. The practical obstacles will prevent people from applying from outside the US.
4. The people that might be able to apply (if they are very lucky) are those who are in the US already on another type of visa. I imagine a student who has a great idea might be able to secure some funding. In essence, only a small pool of people might be able to qualify.
5. Anyone running a business will know how difficult it is to run a business successfully. I do not think it is an unfair requirement to ensure the entrepreneur creates 5 full-time jobs. My concern lies in the timing of it. The provision clearly says that “during the 2 year period from which the visa was issued” – meaning from the moment the visa was issued – the entrepreneur must have employed 5 full-time employees and continue to do so for 2 years. In my humble opinion, it takes a while for any business, especially a tech start-up, to get to a stage where they can employ people. The more practical term would be to show five full-time employees at the time of removing the conditions. Even then, 5 full-time employees can be a high number for many small business owners.
6. Additional funding/revenue of $1,000,000: It is going to be impossible for the majority of people to meet this requirement. A VC or Angel investor who has already invested in the company will of course be vested in the success of the company. But success can take time to observe and nurture. Without making an assessment of the ongoing business needs, it will be unlikely that an investor will invest an additional $1,000,000. Equally, the revenue requirement of $1,000,000 is far too high for most people to meet. I would challenge the law makers to speak to the Facebook or Google founders and ask them how long it took to generate $1,000,000. Most businesses will not meet this requirement. So, it is imperative that this requirement is lowered.
7. The requirements for E2 visa holders is extremely stringent. 10 years is far too long a timeframe to be eligible to apply for a green card. The Senate bill proposes 2 years to be on a non-immigrant visa status to apply for a green card. This House bill provisions for venture capital backed conditional green cards is for 2 years. Then why set such a high limit? E2 visa holders want to be in the US and would have already proven themselves worthy of being a permanent resident within a relatively short time.
8. The same arguments for employing full time employees also apply to E2 visa holders too. To require a new business to employ 5 full-time people from the start is setting a high bar. Some businesses may be able to do so, but not the majority. In addition, to show continuous employment of 5 full-time employees for 10 years is onerous and it is unlikely many E2 visa holders will be able to meet these requirements.
9. In my opinion, these provisions are too stringent and will not be useable if passed. The new visa will give the appearance of a startup visa but the reality will be that almost no one will be able to apply. This defeats the purpose of the visa. I recommend the following amendments:
For venture-capital backed funding
(i) Allow self-funding or funding from family.
(ii) Reduce all eligibility amounts to $100,000.
(iii) Demonstrate 3 full-time jobs created by the time conditions must be removed.
For Treaty investors:
(iv) Reduce the time to 2 years to be consistent with the venture capital backed provisions.
(v) Reduce the job creation requirement to 3 full time employees during the 2 years preceding the application for permanent residency.
When (and note I do not say ‘if’- because I am optimistic!) the time comes for Conference to negotiate the Senate and House versions of the provisions, I would suggest that the Senate bill provisions are accepted. The Senate bill has a fair and reasonable foundation (which still needs a little tweaking) and on the whole will do what it sets out to do – allow entrepreneurs to start companies in the US and create jobs. By virtue of the way it is drafted, the Senate bill automatically will allow a path to permanent residency for E2 visa holders, so a separate, distinct and burdensome provision as laid out in the House bill is unnecessary. In addition, it must be noted the Senate bill nicely gives preference to STEM degree holders to in this situation. The House bill has separate provisions for STEM degree holders that will also be difficult to utilize (that’s a different article!).
Therefore, I vote for the Senate bill to be adopted for these provisions and urge Congress to pass immigration reform that will provide a fair and reasonable visa for immigrant entrepreneurs to obtain and thereby provide the opportunity to boost the American economy.
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