Update: The Department of Homeland Security has officially enacted the rule, outlined below, which aims to ease the ability for immigrant entrepreneurs to startup in the U.S. It took effect one week before Barack Obama leaves office on Jan. 20.
Call it Christmas in August--at least for some founders. The White House today, just unveiled a new proposal aimed at encouraging high-potential immigrant entrepreneurs to start up in the U.S.
The proposal, dubbed the International Entrepreneur Rule, would be administered by the Department of Homeland Security and would affect only entrepreneurs who, among other criteria, have received funding from qualified U.S. investors or institutions. Still, the program could lead to an uptick in new business creation, which in the U.S., has been falling for years.
According to a statement released today:
"America must remain a beacon for entrepreneurs like Tom Szaky, who left his home in Hungary following the Chernobyl disaster, and ultimately moved to the United States to study at Princeton University. In his sophomore year, he started TerraCycle in his dorm room with the mission of recycling materials previously viewed as unrecyclable. Today, the 150-person New Jersey-based company collects trash in 24 countries and two thirds of public schools in America, and recycles over one million pounds of garbage per week that would otherwise be in a landfill."
To gain approval under the International Entrepreneur Rule, which could go into effect by the end of the year if approved, entrepreneurs would need to show that their startup was founded in the last three years, as well as maintain at least a 15 percent ownership stake in the company. They also need to show high-growth potential--evidenced by successfully raising at least $345,000 in funding from a qualified U.S. investor or attracting grants of at least $100,000 from federal, state, or local governments.
Other potential hurdles to qualify? Among others, the rule only allows for temporary residency--initially for a period up to two years, followed by a period of three years if rapid growth and job creation milestones are met. Plus, approval is only granted on a case-by-case basis. So for all of those founders who crave clear and consistent rules, they won't find them in this particular measure.
Still it's something. Existing visa options for entrepreneurs either require significant upfront outlays, sometimes as much as $1 million, or strict enforcement of rules requiring founders to eventually return to their home country.
Without comprehensive immigration reform, which President Barack Obama estimates could lead to an expansion of up to $250 billion in economic output, this effort marks the latest in a patchwork of initiatives proffered by the administration. There's Entrepreneur Pathways, an educational resource for helping entrepreneurs navigate the immigration system and various Entrepreneur in Residence programs, through which founders work with various federal agencies.
Whether or not the rule will successfully encourage entrepreneurship remains to be seen. It's also unclear if it will even get a green light. The DHS is accepting public comments on the measure, for a period of 45 days.