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IMMIGRANT ENTREPRENEURS

Wait, Don't We Want This Guy?

Asaf Darash is exactly the type of entrepreneur we should be trying to recruit. Instead, the United States is kicking him out.
Regpack's employees will be left in limbo if their CEO, Asaf Darash (center, in black), must leave the country.
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Asaf Darash pours himself a glass of water and gestures over to a ream of papers neatly stacked under his computer monitor on his desk. The stack clearly makes him uneasy. We're sitting in his 10th-floor office in the Phelan Building, a San Francisco landmark built at the turn of the century by James D. Phelan, an American industrialist and senator, who also happened to be the son of an Irish immigrant. 

"I came to Silicon Valley to start this company," Darash says. "We love it here. The people and opportunities here--the ideas! It's mind-boggling."

He pauses, eyeing the stack of papers before continuing: "It's...oh, I don't know." 

Darash's enthusiasm fades into a weary sort of nostalgia. At the end of this month, he'll be forced to leave this country and return to Israel because Washington--specifically, U.S. Citizenship and Immigration Services--has denied his application for an H1-B visa. Despite the facts that his software company, Regpack, is growing fast, has hired 19 Americans, and has raised $1.5 million in financing, the stack of paper sitting on his desk is a daily visual reminder that, on some level, none of that matters to the United States government. 

Darash was born in Jerusalem (he holds citizenship in Israel) and grew up, in part, in Australia, where he learned to speak English fluently. He was always a standout student. He holds a Ph.D. in computer networks and computer language from Hebrew University in Jerusalem. In 2007, he was awarded a Fulbright scholarship, and he spent three years researching his thesis at the University of California, Berkeley. He and his wife ultimately decided to make their home in the Bay Area.

In 2010, upon finishing his doctoral thesis, Darash founded Regpack, a registration and data-gathering business whose core software was based on a theoretical framework he had built during his research at Berkeley. Essentially, Regpack's software assembles input data cheaper and more efficiently for small and medium-size businesses.

Two years since the company launched, the start-up is now hitting its first inflection point.

Regpack is adding about 30 new clients each week, and, at the pace it's growing, Darash predicts his staff will reach 100 people within a year. Or, could. There's just one huge hurdle Darash must overcome: his immigration status. Because of a simple paperwork error on his H1-B visa application, Darash must leave the country--and leave his company behind--by the end of October.

Washington: Consider this is your wake-up call. Immigration reform must happen now.

This is not just the fate of one man--or the fate of one company, with its scores of clients, its $1.5 million investment, and the 19 American employees. Darash's tale is more common than you might think.

In 2011, U.S. Citizenship and Immigration Services updated H1-B guidelines that would allow entrepreneurs and business owners on H1-B visas to work for their own company. However, the rule comes with a caveat: A company must be structured so the company's board could fire the founder, just like any other employee. Essentially, this would prevent unscrupulous immigrants from setting up illegitimate, or unprofitable, businesses as a means to justify their residencies. 

Darash did everything by the book: In January 2012, he hired a lawyer, incorporated the business, and allocated the necessary stock to himself and to his board so that his board could technically fire him. He was confident he'd be approved for his H1-B visa.

Darash and his lawyers submitted the paperwork for his H1-B visa on April 27. However, the official documents to allocate company stock and elect the board members were signed by the board on May 3--a discrepancy that immigration officials say disqualifies Darash. Their argument--if you can call it that--is that at the time Darash submitted his paperwork, he was simply the owner of the business with no board, and according to U.S. Immigration policy, that disqualifies his request for an H1-B visa. 

"Basically, I need to leave the country at the end of the month," Darash says. "No matter what. I need to leave the country at the end of the month, and this is coming at a stage exactly when the company is growing."

Darash says the company is beginning to market to new clients, so his presence in the business--to physically be in the San Francisco office--is crucial. Darash believes that working remotely will seriously compromise his ability to scale the business and hire new employees. 

"You can cause a company to collapse very quickly because of a bureaucratic error," he says. "They're not looking at a whole holistic situation and looking at who will be affected."

Last week, a study published by the Kauffman Foundation using census data from the past 50 years, revealed some eye-opening statistics about the number of immigrant-led companies in America. According to the study, authored by Vivek Wadhwa, an Indian-American entrepreneur and academic, who is currently vice president of academics and innovation at Singularity University, the proportion of immigrant-founded companies across the country has fallen nearly 4% in the past seven years. In Silicon Valley, the drop was even more precipitous--the percentage of immigrant-founded start-ups declined from 52.4% to 43.9%--a 16% change.

Recently, Wadhwa, who wrote The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent, was asked to explain the drop. 

"Well, the No. 1 reason is because we won't give the foreign people who are already here visas to start companies," he said. "My research has also documented that there were one million skilled immigrants waiting for green cards, for permanent resident visas. And we had predicted, if we don't fix the immigration system, they'd start leaving. Now, this is in 2007, when we had published that research. Well, guess what? They're leaving."

Dane Stangler, a director at the Kauffman Foundation, says that attempts by Congress to pass immigration reform--including the Start-up Visa Act--are essential for welcoming immigrant entrepreneurs. But there's more that can be done, now, he argues.

"There's evidence that there's just a presumption that [U.S. Immigration] is going to give higher scrutiny to start-ups," he says. "If there was some way, just some way, to remove that stigma against start-ups," entrepreneurs would have an easier time.

Darash's experience with U.S. Immigration may not necessarily be the result of a single policy or rule. But his impending deportation speaks to a greater issue of founder-visa reform. 

"The problem is that there is no good visa for founders," Darash says. "It's not a technical problem; it's that I have to structure my company in a certain way that doesn't make sense for the company. In the beginning of a start-up, the founder is the owner. And in the early stages, it's hard to prove that you can be fired."

Dr. Marcia Drew Hohn, director of the Public Education Institute at the Immigrant Learning Center, which is based in Malden, Massachusetts, sympathizes. She says Darash is not the only one who faces this kind of predicament--and that it often ends in a founder moving away from the United States permanently.

Hohn wrote a January 2012 report titled "Immigrant Entrepreneurs Creating Jobs and Strengthening the Economy," in which she argued that in order for immigrants to thrive as entrepreneurs, Washington must make some substantive changes to the different types of visas offered to immigrant founders.

"The fact that [Darash] couldn't just go in to correct it--that's a big problem," she says. "He's now set back. So streamlining the bureaucratic process is important, but it's not just that. We need more visa categories that real people fit into--more categories that are more open."

Darash's lawyer initially advised him that he could qualify for an "exceptional person" visa on the basis of his Ph.D. and professional background. But Darash chose to apply through his company, because he felt that was the ethical thing to do. In retrospect, had he taken his case for his visa situation outside of the company, he could have been granted approval. But by applying through his company, he has been denied.

When Darash's lawyer told him his application had been rejected, Darash's first reaction was to simply pick up the phone and call Immigration, a division of the United States Department of Homeland Security, to explain the error. But it wasn't that easy.

"You can't talk to anybody," he says. "I even asked my lawyer, 'Can you just talk to someone?' To tell them, to explain. [My lawyer] just laughed. He said, 'You can't talk to anyone in Immigration. What are you talking about? You can't e-mail them.'"

The outlook is not good. At the end of the month--barring any sort of intervention--Darash will be forced to leave the country and work remotely from his office in Israel. With him, he'll take his wife and two young children--a 19-month-old and an 8-year-old.

Darash's lawyers presented him with two options. He could file a motion to essentially re-review his application, or he could file an official appeal, which would take 13 to 18 months. Neither is a good option. A motion will likely be tossed out, and an appeal, well, is simply slow.

Darash is feverishly looking for someone to take over some of his day-to-day responsibilities in San Francisco. He also plans to relocate some of his engineers to Regpack's Israeli office, but he recognizes that's not a sustainable approach to the company's future of growth in the United States.

Amid the company's turmoil, the future is uncertain.

"By that time, a year and a half in start-up time is eternity," he says. "Regpack is not going to go away. We have real technology. The only question is where it will be."

IMAGE: Courtesy Company
Last updated: Oct 15, 2012




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