Amid reports of the damage brain drain inflicts on the economy, Senators John Kerry, Democrat of Massachusetts, and Richard Lugar, Republican of Indiana, Wednesday introduced the Start-up Visa Act, which would open up the U.S. to immigrant entrepreneurs.
If passed, the bill would grant foreigners U.S. visas if they can secure at least $100,000 from a sponsoring angel investor or at least $250,000 from a qualified venture capital firm. After two years, if the immigrant entrepreneur can create five or more jobs (hiring his or her children or spouse is not included), attract an additional $1 million in investment, or produce $1 million in revenue, he or she can become a legal resident.
More than 100 heavyweight angel investors and venture capitalists are backing the act, including LinkedIn founder Reid Hoffman and Mobius Venture Capital's Brad Feld. In a letter of support, they complained that "it is often impossible" for immigrant entrepreneurs to get a visa to stay in the U.S. "Even in cases where the founders already have a visa of some sort, they typically can't use this visa to start a company. As a result, they often have to leave our country to start their company, resulting in a loss of innovative entrepreneurs and the correspondingly created jobs in the U.S." (For ways to support the visa, click here.)
The VCs' passion isn't surprising when you consider that 25 percent of America's venture-backed, publicly-traded businesses – among them Google, Yahoo!, eBay and Intel – have been founded or co-founded by immigrants, according to the National Venture Capital Association (which also supports the bill.) An NVCA report on the subject also concluded that foreign entrepreneurs are more likely to build companies that create high-tech, high paying jobs. Meanwhile, Richard Herman, a Cleveland immigration lawyer and the author of Immigrant, Inc.: Why Immigrant Entrepreneurs Are Driving the New Economy, claims nearly all of the net job creation in the past 20 years has come from companies less than five years old. "The Start-up Visa should be something to help turbo-charge American entrepreneurship and get our juices flowing again," he blogged.
Currently, there is a class of visa called EB-5 that's much harder to get: It requires immigrants to invest at least $1 million in the U.S. and employ 10 people. The H1B highly skilled immigrant visa is limited to 65,000, with an additional 20,000 for holders of advanced degrees – not much when you consider that U.S. universities pump out 1 science graduate for every five China does. But unlike H-1B visa holders, foreigners granted Start-up Visas wouldn't be taking existing jobs.
Though only 4 percent of bills become law, supporters are hoping the Start-up Visa's chances of making it onto the books are better because there already is a similar visa-reform initiative pending in the House of Representatives. That effort is thanks to Jared Polis, a first-term Democrat from Colorado -- and the founder of Proflowers.com and Bluemountain.com, both of which he sold in nine-figure deals. It's anybody's guess whether the fact that Polis's initiatives have been bundled into a controversial wider immigration reform bill, called the "Comprehensive Immigration Reform for America's Security and Prosperity Act of 2009," will help or hurt its chances of survival.
Jessica Vaughan, director of policy studies for the nonprofit Center for Immigration Studies think tank, told Polis's local paper The Daily Camera that "there is a much stronger case" for Start-up Visas than, say, for expanding guest worker programs or family-based immigration, both of which are included in the larger reform bill. She said of Polis's proposals: "There's a much more obvious benefit to the United States."
What do you think? Is a start-up visa a smart way of attracting entrepreneurial immigrants to the U.S.?