StartupVisa Momentum

In the few weeks since I wrote the post The Founders Visa Movement there has been a ton of positive momentum, input, ideas, and support.  Thanks to the efforts of Dave McClure and Eric Ries, we shifted the name to the StartupVisa, figured out that the EB-5 visa was the most logical one to try to “modify”, and got a web site up about it.  In the mean time, I’ve now had extensive conversations with three of my congressmen, all of whom get it, including one who is deep in working on some draft legislation around it.  I’ve also gotten a CU Law JD/MBA student to work with us as an intern to help put some substance around the approach and proposal.  I’ve also been taken to task by some folks who think I’m naive, misguided, or simply are against increasing the number of legal immigrants into our country.

I have no idea how to address the entire immigration issue in the US.  However, I strongly believe that we should make it easy for people to start new entrepreneurial ventures in the US.  As a result, the EB-5 is an interesting visa to consider.  The simple version is that if a foreign national invests up to $1,000,000 in a US company that creates at least 10 jobs, the foreign national can apply for the visa.  This seems backwards to me.  Rather than grant the visa to an investor, let’s grant the visa to the entrepreneur.  If we change the EB-5 so that foreign nationals starting US companies that are backed by qualified US investors can apply for the visa it seems like we can preserve the general construct of the EB-5 while applying it to a more compelling recipient (the entrepreneur).

From the various conversations I’ve had, the biggest issue – not surprisingly – is figuring out ways to create an efficient and fair evaluation process for the visa that does an effective job of preventing people from gaming the system.  In thinking this through, it seems like there are two goals: (1) use as much existing SEC and IRS filings as possible as the basis (so as to not create new filings) and (b) create appropriate thresholds to make the definitions and parameters easy to test and validate.

Following are some items for discussion.  This are not a firm proposal, but rather my synthesis of a bunch of different conversations, including an attempt to synthesize the comment threads on the various blogs posts such as Fred Wilson’s that I’ve seen.  I encourage an open discussion of these – please tell me why these are constructs or thresholds that won’t work and feel free to suggest better ones.  I’m definitely still in “figuring this out mode” and the more input I get – both positive and negative (preferably constructive) is really helpful.

Proposal: An entrepreneur applying for a StartupVisa can be sponsored by a qualified VC or a qualified Super Angel who is investing at least $100,000 in an equity financing of at least $500,000. 

Definition of a Qualified VC: Whenever a VC raises a fund, they have to file a Form D indicating that they are a venture capital company and disclosing the amount of funding that has been committed to them.  For purposes of the StartupVisa, this form can be amended to include the disclosure that the VC firm is a US-entity comprised of US citizens. To eliminate the chance that anyone can set up a VC fund for this purpose, the VC fund needs to have a minimum amount of capital commitments (say – $5m). 

Definition of a Qualified Super Angel: For angels, let’s define a category called “Super Angel”.  A “Super Angel” is an accredited investor (as per the SEC accredited investor rules) and has to have made at least five angel investments in the preceding three years totaling at least $250,000.

Duration: The StartupVisa is valid for two years. 

Renewal: For the StartupVisa to be renewed, the company needs to either (a) create 5 new jobs every two years, (b) raise at least $1m every two years, or (c) generate at least $1m in revenue and be profitable. 

Ok – have at it.  What’s wrong with these parameters?  How can the system be gamed?  What am I missing?

  • http://Www.goetzeverything.blogspot.com Darren Goetz

    Brad, I think this idea makes a lot of sense. It’s great to see our non-government citizens stepping up and trying to make a difference. It is reassuring to see that grassroot ideas can get momentum in a large and slow government system. Let us know how we can all help with our local representation.

  • Mike T

    Brad,

    There are a few issues from what you've proposed.

    1. Defintion of a VC
    A. Why does a "capital commitment" qualify a fund? Setting up a shell structure, with "capital commitments" that may never be called, is still possible.

    B. Why have you chosen $5 million as the bar? For example, the YCombinator model has done extraordinarly well in funding a number of startups, and even with a $2m commitment from Sequoia, might still not be qualified under your definition.

    C. What happens if a group decides to form a "fund" with no intention of actually making investments, but uses the StartupVisa exemption to sell to sponsorships to foreign immigrants?

    2. Defintion of a Super Angel

    A. How do you verify that the "Super Angel" has actually made $250k worth of investments to qualify under the sponsorship program? Why is the level at $250k?

    B. Who will certify the inclusion of particular "Super Angels" into the StartupVisa program? What will be the overriding organizational body to ensure there is no gaming?

    C. What happens if a "Super Angel" makes 1 commitment of $250k to a friend's "company" (knowing that he'll just be given the money right back) in order to start sponsoring particular individuals?

    3. Duration

    A. What happens if the Founder is fired/replaced prior to 2 years? Does he automatically get deported within 2 weeks?

    B. How do you prevent quid-pro-quo sponsorships, where VCs agree to sponsor founders if they get a larger equity stake? It practically becomes indentured servitude depending on how willing the Founder is to remain in the country.

    4. Renewal

    A. If the Founder is no longer in the lead executive role, as is often the case with "professional management", why is he credited/entitled to extending his visa? Will his visa be indefinitely extended per the other qualifications?

    B. What constitutes one of the 5 "jobs" that a founder may qualify under? Interns? Janitors? Part-time programmers? How long do those jobs have to be in existence for? Can those jobs be short-term commitments of limited duration to allow the founder to extend his visa?

    C. How many startups generate $1 million AND are profitable? What do you mean by profitable? Is it cash-flow positive? EBITA profitable? Positive net income? Revenue greater than total investment? From this standard, even Facebook might not qualify, since it has not yet turned "profitable" in paying back all of its outstanding debt and capital commitments to date.

    I'm sure there are a lot of other issues, as you haven't presented more details, but these are just a few I've immediately seen at 1130pm.

    • http://intensedebate.com/people/bfeld Brad Feld

      Dynamite – thanks for the extensive issues lists. I'll try to address a few of them.

      1A. Yes, but I'm pretty sure this would be a fradulent filing of Form D. I believe you have to list your investors. Conceivably you could require an additional level of disclosure and or representation that there are real capital commitments.

      1B. YC would qualify as a "Super Angel" in my definition.

      1C. Same issue as 1A. I need to think harder about how to tighten this up.

      2A. Legal representation and/or documentation supporting the $250k of investments. I picked $250k as a threshold that felt like enough to be from a serious / credible angel investor.

      2B. I don't know. Conceivably the SEC could do this via a Form D like registration.

      2C. The investments would have to be in other companies prior to the Visa application.

      3A. No – the visa would last for two years regardless. This helps mitigate one of the consistent issues – that being that "investors having too much power by wielding the threat of the loss of the visa."

      3B. While I think this is a risk (and I'll think more about how to eliminate it), I don't think a credible VC or Super Angel will play this game. I acknowledge that there will always be bad actors in any system, but I think this one is unlikely.

      4A. Yes – the Founder just needs to be actively involved in the company. There is no requirement that they be an executive of the company.

      4B. Full time employees. I imagine you can make the argument that the jobs should have to be in existence more than a certain period of time (e.g at least three month).

      4C. Many startups generate $1m and are profitable. My first startup did this. Profitable should be defined as Net Income Positive based on GAAP accounting. Facebook would qualify under the jobs created threshold (this is an OR clause).

      Again – thanks – I know these answers aren't complete or comprehensive, but these are the kinds of issues I need to work harder on.

  • bwb

    Have you researched how many lawsuits the EB5 visa generated? There were dozens, and eventually the visa was put on hold by the USCIS because of the issues. It's tough to see how EB5 could be changed without being gamed like it was originally.

    Also, how do you plan to get the USCIS to issue regulations on any new law? We are still waiting for USCIS to issue regulations on AC21, which was passed in 2000. Their implementation record is abysmal.

    • http://intensedebate.com/people/bfeld Brad Feld

      I have not researched the EB5 lawsuit issue – that is something we'll have our CU LAW student do. I also have no idea how to get the USCIS to issue regulations on any new law – I'm learning a lot about the immigration reform dynamics from my conversations with our congressman and expect that they'll have to lead the charge – all I'm trying to do is shape an appropriate proposal at this point and get grassroots / populist support for it.

  • http://startupvisa.com Dave McClure

    hey brad, kudos for getting the ball rolling on this & for the proposal above.

    i think the proposed idea is on target, altho i echo a few of the concerns about 1) size of capital rqmts, and 2) potential abuse, however i think both can be managed.

    re: #1, i agree with the commenter above that $500K is probably a higher amount than needed. not sure if you're just trying to stay in line with previous EB-5 levels (which allowed for $500K rather than $1M in economically-targeted areas), but otherwise i'd say we should aim for a lower amount that matches with a smaller seed investment, perhaps only $50-100K, or at least lower it to $250K. the models for these would be either a) a YC or TechStars style investment in the first case, or b) a $100k-$250K investment on $500K-$1M pre-money deal, or a similar convertible note.

    i think the lower capital rqmt would still be high enough to prevent abuse with small amounts, and hopefully matches better with small deal size that doesn't require a big seed or small series A to make happen.

    also, the super-angel experience rqmts aren't unreasonable, but they might be a little strict. perhaps if it could be modified to show *at least one* investor meets the VC or Super-angel rqmt, then it's reasonable to have other angels participate with less experience… however i know when i made my initial investments (including Mint.com), i hadn't put that much capital to work yet. (guess you could argue i was clueless, but that's probably still true today as well ;)

    on the gaming issue, i'm less aware of the potential methods & scenarios for abuse, but this is likely where we'll have to do the most thinking to prevent things from going haywire. probably more research required there.

    thanks again for moving the ball forward on this… i really think it's important work, and you & paul both deserve credit for turning it into a movement!

    – dave mcclure

    on the abu

    • Lou Paglia

      Dave: agreed. the gaming angle must be looked at in how this can be abused. the big issue we face is the visa issue is tied to many other primary issues like anti-terror. the definition and adherence to legitimate VCs, the venture itself (what criteria there) and as you brought up regarding "capital commitment" and proof therein are absolutely critical. It seems this would be fraught with shell companies that are getting "entrepreneurs" in country.

      • http://intensedebate.com/people/bfeld Brad Feld

        Intellectually, I've got to believe there is a way to filter out most (if not almost all) of the shell companies. Serious jail time for anyone that abuses this would be a potential deterrent, although I guess you have to be careful about the other side of this issue (e.g. abuse of power).

    • http://intensedebate.com/people/bfeld Brad Feld

      Regarding the minimum investment size – I'd agree that $250k seems like a large enough number. I'll start using that one.

      Regarding the super angel – only ONE super angel (or VC) needs to be in the deal – they would be the sponsor. So – in Mint – even though you might not have been qualified as a super angel at that time under these requirements (although you have always been a super angel to me) I'd bet that at least one of the other investors in the round you participated in was either a Super Angel or a qualified VC.

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  • okgo

    Why are we so concerned about gaming? Seriously. If we create tons of new jobs, new wealth, and new economic productivity, then why do the gamers matter? "Yes, we might be able to have the next Google and create hundreds of thousands of jobs both directly and indirectly, but it's not worth it if people use it to sneak in!" How crazy is that?

    Yes, you need rules and enforcement, and blah, blah, blah. But on balance it seems like a red herring.

    • http://twitter.com/scyphers @scyphers

      I suspect that Fred is concerned about gaming because he's aware of the political realities of the situation (and changing Visa policy is absolutely political). The kinds of people involved are exceedingly risk adverse (full disclosure: I used to contract with DoS on the US-VISIT program); one of their greatest fears is that they will open a hole in the border that lets the next 9-11 people enter the country, bad things happen and their name appears in the Washington Post. Actually, the name in the Washington Post applies across the board.

      In any case, any proposal has to be viewed a low(er) risk option to succeed politically.

      • http://intensedebate.com/people/bfeld Brad Feld

        Correct – I'm personally not that concerned about the issue of gaming the system, but (a) every politician / government official I've talked to brings this up in the conversation and (b) a lot of the immediate resistance to this is around gaming.

        • okgo

          Fair enough, but no system you devise will ever alleviate concerns about gaming. It's 'whack a mole' — and as proof just look at the rest of the comments on this thread. Every time you propose a solution there will be another corner case you'll need to explain away.

          So if you want to talk politics, then let's talk politics: Change the debate to, "It makes no sense to have India/China/Russia reap the benefits of all these new jobs and wealth while we are stuck behind pointless red tape." Now, the 'no-gamers' are on the defensive instead of you being on the defensive.

          As long as the question is "How do you prevent gaming?" you will lose. Because you can't, plain and simple. Moreover, reducing the scope of gaming doesn't get you any points either — it just reinforces the original accusation (note the absence of any discussion of cost-benefit below.)

          So on the next official, simply say that we'll put reasonable safeguards in place, but that this is about creating jobs plain and simple. We can't afford to have the next great technology industries be started in France because we were worried about red-tape. Just try it.

  • http://www.emotionai.com Ian Wilson

    Perhaps this has been mentioned elsewhere but I have not seen it yet and that is the issue of where the money is coming from. The proposal here is that US based VC funds and Super Angels are the investors which would lead those against the idea to say "those funds could have gone to a US citizen to start a business in the US".

    This is the same situation as a H1B it seems, the Investor would have to prove that they could not invest those funds in entrepreneurs that are US citizens. Bearing in mind the average VC receives hundreds (?) of proposals per year from US businesses and rarely (guessing, no data) invests in foreign businesses that would be tough.

    The current investor visa brings both jobs *and* capital into the country but this revised version would bring in no capital (it is already there) and theoretically displace "potential" US founders in order to create jobs, which in theory the Us founders could have done anyway.

    On other points the two year period would be a "show stopper" for me, I would not consider moving a business (and families) to the US if in 2 years I could be told I have 2 weeks to leave the country. It has to be a longer period or permanent.

    Looking at the system in Canada it is a world apart, it starts with their attitude, "please would you consider moving your business to Canada?" then follows up with doing everything they can (from my limited experience) to entice businesses to move like having booths at trade shows. Canada is currently using huge tax breaks to suck in the worlds game development companies, these are jobs that are not going to, and sometimes coming from the US. Contrast that with the discussion here that has entrepreneurs having to walk over broken glass and beg to start a business in the US, that can only last as long as a strong dollar (next week looks scary on that front).

    To add a data point to the debate, I started my business last year and I am just hiring now 4 new team members in the UK, where I don't have visa issues. If the US visa system was simple and fast, and I was treated with respect, without question I would have set up my business in Silicon Valley and would now be hiring 4 US citizens.

    • http://intensedebate.com/people/bfeld Brad Feld

      I agree that other systems, like Canada's, are much better. While I'd love a radical overhaul, I've decided to try to bite off something that I feel I (and the others I'm collaborating with) have a shot at influencing.

      I don't buy the "this just displaced US jobs" argument. Startups are complex things – founders are unique and VC and angel investors are drawn to a variety of things. It's not a zero sum game – this is a huge amount of opportunity for anyone that wants to participate.

      • http://intensedebate.com/people/IanWilson IanWilson

        I do support the idea, but here I am playing political "devils advocate" and I think my points are valid and would / will be raised by opponents and will need a water tight counter point.

        I agree with jasonj below that the visa could be more successful if reframed as a "jobs creator visa", which is the central point I think. Remove the focus from those words that scare a chunk of the voting public "foreigner" and "immigrant".

  • http://kirkwylie.blogspot.com/ Kirk Wylie

    Hi, Brad,

    So let's assume a $500k total capital commitment, all provided by one Super Angel.

    Let's say that the number of entrepreneurs per startup isn't capped.

    Here's how I'd game the system:
    – Start a company with 20 founding entrepreneurs
    – Each of them stumps up $25k to a registered Super Angel, who then turns around and "invests" the $500k in my "company"
    – My "startup" then hires us out as a body shop.

    Not saying that were this to happen it would actually be BAD for the US; as my original blog post on the subject made clear, I'm actually in favor of wholescale US immigration reform. Just that it's an easy way to game the system.

    • http://intensedebate.com/people/KirkWylie KirkWylie

      Hi, Brad,

      I've made Yet Another Foray into the mess.

      Hope you guys can consider my criticism as at least constructive!

      Kirk

      • http://intensedebate.com/people/bfeld Brad Feld

        I read your post. I'm happy to ponder any and all criticism – it helps me better understand what people are thinking and what the issues are.

    • http://intensedebate.com/people/bfeld Brad Feld

      Yeah – the issue of the visa applicants paying an investor to invest in their company is clearly one of the gaming issues. One of the representations that needs to go into the application is an unambiguous statement that none of the money being invested comes from any of the applicants or their family members. This won't solve every edge case but it addresses the specific one above.

      • http://intensedebate.com/people/KirkWylie KirkWylie

        The worry with any type of representation like that is that it's going to be just like the "ultimate-source-of-funds" regulations that are part of current AML rules. They're toothless, and just cause more paperwork. If they weren't so easy to get around, there'd be no more money laundering. But they are, and they're just a PITA for everybody who has to comply with what everybody knows are toothless rules.

        What about a loan of the money from a non-family member (an issue I addressed in my follow-up post, linked above)? That's not from the applicant or a family member, but would satisfy the particular concerns above, and is the more likely case.

  • yel

    Such a scheme would need to define a "qualified venture fund". Such a fund would fill in some forms. It'll end up being regulated by the INS. And ultimately by lots of other bits of the federal government. Do you want *your* funds being micro-regulated by the federal govt?

    As a non-US tech entrepreneur, I'm fascinated by possibility of doing my next startup in the US. The way things are now, it ain't gonna happen. And a requirement that I must raise money from a qualified US VC before I can move to the US seems like a high, pointless barrier to me.

    What about bootstrappers? What about entrepreneurs who have enough money to bootstrap in the valley for a couple of years. Should they be welcome under this program?

    What happens when the board fires the VC? Does she/he have to immediately leave the US? Unscrupulous VC firms would love to have a hold like that over entrepreneurs.

    • http://intensedebate.com/people/bfeld Brad Feld

      The VC firms are already registering with the SEC. I assume anyone in the government can look at this disclosure already.

      This visa doesn't apply to bootstrappers, although many bootstrapped companies do raise a modest amount ($250k – $500k) of equity capital. That said, my first company only raised $10 so this simply wouldn't apply.

      Re: Firing the VC – I think you mean firing the Founder that has the visa. The visa would last for two years regardless of this situation.

  • George Reese

    Isn't this another form of using our wealth to steal the resources of other countries?

    The thing that is going to help developing nations leap frog into modern economies is entrepreneurship. Local investors investing in local companies. If the United States is pulling all of the entrepreneurial talent and mindset from the developing world, the developing world has no chance for development.

    • http://intensedebate.com/people/richard_st59861 Richard Stump

      many entrepreneurs want to come to the US to start their companies, especially in tech. No other nation in the world has the combination of capital, talent and legal/business framework necessary to succeed like the US does. I agree that entrepreneurship is the way up for most developing nations but in most cases this starts with small mom and pop operations not the high tech venture backed startup.

    • DaveJ

      Steal "resources"? Do you mean *human beings*? Are these people slaves? Are the "countries" more important than the individuals?

      What a twisted moral system that views as preferable the economic development of countries that are poor, likely because their governments are corrupt and/or authoritarian, over the freedom and desire to achieve of the individuals who happen to have been born there.

      Don't look now, but the U.S. has *always* been a destination for people who wanted to take the initiative to make a better life for themselves and escape oppression. If the governments of developing countries want to encourage local entrepreneurship, all they have to do is get out of the way and stop *stealing* from their people.

  • http://intensedebate.com/people/richard_st59861 Richard Stump

    I think it is going to be difficult to not have a "Super-Angel" exemption be gamed. It seems to me that it could be easy for someone or a group to either sell visas or perhaps fund other types of nefarious activity through this loophole. Unfortunately, I think some kind of registration would have to take place. I also am not sure how well the US government could oversee such a program since there are many examples of them being unable to oversee the programs they currently have in place.
    I support the concept of the startup Visa because it makes sense to go out and continue to make the US the place for innovation.

  • Marc

    I am myself an entrepreneur who came in the US, created a startup and sold it. I went through the immigration process, and I have to say that visas were not a problem at all.

    There is something called L1 visa. An L1 visa is granted to someone who has been employed by a foreign company for over 12 months and is coming to the US to create a subsidiary (a flip would qualify) of the foreign company. There are no quotas, and an L1 is easy to be granted if you qualify, of course.

    Do we seriously believe that VCs or angels will invest $500,000 in a foreign project with no legal structure (i.e. no company) and less than a year of development? Seriously?

    So an L1 visa is the way to go for all these guys. What are we trying to accomplish here again?

    • http://intensedebate.com/people/bfeld Brad Feld

      The L1 requires that the foreign entity be in business for over 12 months and that the person be an employee of the company. Many startup entrepreneurs, especially those that are in the US under student visas and want to start a company, can't qualify under an L1.

      I fund stuff all the time with $500k for projects that have been around less than a year.

      • Marc

        But then we are talking about a different problem, not only restricted to entrepreneurs: after studying in the US, a graduate is supposed to go back to his country. The problem is to convert a J1 into something else (H1 most likely). For entrepreneurs outside the US, we can certainly find cases where the entrepreneur will have to wait a few month to get his visa (but he can still visit the US if his company has established a subsidiary) but this is not a "massive" problem slowing down the US economy. Don't you think?

        I am more concerned with green cards (immigrant visas) and the backlog attached than for entrepreneurs' visas.

  • jasonj

    I respectfully submit that this proposal is still focused on the wrong processes and outcomes.

    If we hope to convince the government that its primary focus for this immigration push is job creation, then the logical conclusion is to focus on issuing a "Conditional Visa" with a single requisite: job creation.

    Create, say, 3 jobs for US citizens and you get to stay for a year.

    Advantages:
    1. Gaming things with simple, easily verifiable numbers is hard–either you created jobs or you didn't.

    2. Simplicity–minimal government oversight, minimal government filings, and few attorneys and accountants, which is important for startups on a shoestring budget hoping to stay focused on their business.

    Disadvantage

    1. This is an incomplete proposal dealing with only how to administer a program once the foreign nationals are already admitted.

    I have not addressed who is worthy to enter this program, because I don't know. How do you decide? Do you just open the borders and let "10,000 flowers blossom", knowing that each successful entrepreneur is creating American employment, and the unsuccessful ones are simply winnowed away? Or do you have to have VC sponsorship, or get nominated by "American Idol", or take an IQ test to get accepted into the program?

    Anecdotal evidence shows that generally, we are bad at predicting disruptive entrepreneurial successes (Dell, Google, etc.) Any filter that we put on the front end of this program will turn some of the biggest future successes away, so choose this initial filter carefully.

    One requirement. Less paperwork, less confusion, fewer rules.

    • http://bit.ly/19kduZ Greg

      Jason, I disagree with this approach. I think focusing on only the metric of job creation in the short term actually makes it easier to game because you just have to employ three people (or whatever number). The investment criterion ensures that an investor actually believes the startup will create significant economic value rather than being a me-too small business.

      Actually, the more I think about it, the more I'm convinced the jobs filter doesn't work. Imagine the headline: "Three-immigrant 'startup' pizza joints taking American pizza jobs!" Easy political fodder. The venture investment criterion helps make sure that these startup visa holders are working on relatively unique, innovative ideas rather than something that any US citizen could be doing. The latter is the big political landmine in this situation.

      Also, you could argue that VCs, whatever their failings, are pretty good at identifying potential. Google is one example among many.

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  • Foreign Student Entp

    as a student i know so many peers in the boston startup community who are graduating soon, who will need to go back to their home country, even though in a year or two's time, they'll have a good shot at a sustainable, profitable company. they've grown to love this country as much as i have, the promise of opportunity, the environment of risk and innovation. and we'll probably all have to go home.

    when the founders visa movement kicked off, i was incredibly excited. i thought, wow, someone gets this. but with a year's runway left on his visa to get his 6-month startup into a summer incubator, or to get enough traction to get a seed angel round, i'm concerned w/ previous commentators that 500k is a high hurdle. i'm all for up-hill battles, but there is a significant population of us first-time entrepreneurs who may not be able to bring a lot of value quickly, but we want to dedicate ourselves for the rest of our lives to starting and growing companies.

    please help us.

    • http://intensedebate.com/people/bfeld Brad Feld

      Yeah – I recognize that the threshold is sub-optimal.  After some further discussion we are going to advocate for $250,000 (instead of $500,000).  Optimally it wouldn’t require any investment, but I can’t figure out how to make any progress with that.

  • http://www.lindsayrgwatt.com/blog Lindsay

    As a Canadian living in America I'm way too familiar with the visa issues that face potential founders. Good luck with pressing forward with the StartupVisa.

    The one piece that I think is missing from your proposals is about the industry the investment is taking place in.

    Here's the scenario that worries me with your above proposal: somebody uses the StartupVisa to charge people in foreign countries to create cash & carry or liquor stores in America. The "entrepreneur" is nominally in charge of the business, but the first hire is the "Super Qualified Angel's" real operator. The "entrepreneur" is essentially paying a kick-back to get in the country.

    I'm sure that the suburbs of Houston, Denver, St. Louis, Newark, etc. could be flooded with convenience/liquor stores that quickly get to $1M in revenue and earn a token profit of $1.

    I'm being cynical here, but the opponents of this movement are going to come up with something similar to this as a counterargument.

    I think you've got a very valid argument: in high tech industries it's sink-or-swim so within two years the company either has a business and creates high-paying American jobs or the entrepreneur goes home. However, there are a ton of other industries where you could imagine scenarios that meet your criteria for visa renewal but not the spirit under which the visa was initially granted.

    Note that the TN-1 Visa has tried to get around this issue by requiring that people applying for this visa have certain accreditation (e.g., have a bachelor's in engineering) and work in the field they trained in. You could imagine a similar situation here: accreditation for the entrepreneur (degrees and/or experience) and the industry they were going to work in.

    It's not as neat as the solution you're proposing, but I've learned that immigration is about pragmatism, not perfection.

    • http://intensedebate.com/people/bfeld Brad Feld

      The accreditation idea is an interesting one.  While there are plenty of founders that don’t have degrees (Bill Gates, Steve Jobs, and Mark Zuckerberg come to mind), it’s an interesting / potentially useful qualifier.

  • http://twitter.com/biggiesu @biggiesu

    Any reason not to just make this a modification of the H1B process? Instead of sponsoring employees, a VC would effectively act as an employer and just sponsor a founder who can create jobs. And I would argue there should be a greater quota for the Founder H1B than for the employee H1B (left a comment to this effect on Fred's blog as well).

    • http://intensedebate.com/people/bfeld Brad Feld

      This is another approach although one of the issues is that VCs don't hire the founders they merely invest in their companies. This is a nuance but one I've run into a few times when discussing this issue with politicians.

  • http://intensedebate.com/people/steve_bergs2127 Steve Bergstein

    Is this crowdsourced legislation happening here?

    • http://intensedebate.com/people/bfeld Brad Feld

      Hah! Maybe.

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  • Jay Meattle

    I agree with the points Dave brought up in his comment earlier.

    Also, "sponsoring" is a loaded word. Not sure what that means legally. How many individual investors will formally want to sponsor someone? Seems like a lot of baggage/liability? I think the "adequately funded" criterion should be simply something that an immigration officer checks off a checklist.

    If a VC wants to "sponsor" someone, they probably (not sure about this one) can already do so via the H1B. The founder would be an employee of the VC firm, get paid by the VC firm, and work on the startup that the VC firm has ownership in.

    I would also recommend building in some sort of hiring window vs. forcing people to have x US citizens as employees on day zero. Say x US employees within 12 months of the provisional visa being issued.

    • Jay Meattle

      btw, there are certain criterion that are used by the immigration folks to determine whether a company applying for an H1b for one of their employees is legitimate and functioning. Could likely use the same/similar checklist for this vs. a new set of revenue, employment, etc criterion.

  • http://www.vcorbust.com Glenn Matthews

    Rather than pick on the minor details of the post, I'll comment on the overall concept: my view is in support of the proposal – It's a topic very close to me.

    Late last year I moved to the US to expand my business. In all honesty, it has been a difficult path. Other than to invest $1,00,000 under the EB-5 visa there are few avenues for me to be on the ground to do the leg work in the US. Luckily I have an engineering degree behind me, allowing me to gain an E3 visa (visa for Australian professionals). For my purpose the visa was crippling in that I needed to work as a part time engineer leaving only my spare time for work on expanding our business. It was a sacrifice I had to make for the better of the company. The red tape did slow progress for our company, delaying our launch in the US by 12 months.

    I understand the current limitations on immigration are in place to prevent abuse of the system. However for companies like mine, the system is a deterrent. Despite that, the US government should be thankful for my persistence; our company has already injected $200,000 into the US economy and will invest another $1,000,000 in the foreseeable future. All of this would not have been possible without my move to the US.

    I don't see any harm in the creation of a visa that allows individuals to travel to the US for an extended period on the purpose of creating business. If, and this is a very big IF, the individual in receipt of the visa is a responsible person they won't earn an income in the US (outside of gaining capital for their venture), they will only bring external funds into the country (to pay for living expenses). Unfortunately, for each rule created a new possibility for cheating the system arises. Therefore, expanding on an existing visa, and making a VC responsible for the applicant may be a step in the right direction.

    A thought to end on: how do individuals travel to meet the VC. Most VC's I have dealt with will only invest after a face to face meeting. Alien's from countries like Australia, New Zealand, UK and most of Western Europe can travel on a 90 day visa waiver program, however for the rest of the world travel to the US, particularly on repeat visits, is a difficult process. Should the visa proposed within this discussion allow for travel to the US for the interviewing process?

    • http://intensedebate.com/people/bfeld Brad Feld

      Good additional background.  Re: visa’s for travelling – that’s a good idea.  I don’t know how to solve for that but I’ll add it to the list of things to figure out as it is a valid point.

  • http://twitter.com/vidli @vidli

    Great conversation here…Let the Boobies speaketh..

    Foreign Student Entp and Yel Visa – you are a Hobbits (aka real entrepreneurs) We support you.

    @biggiesu – you are an "evil man" – that's a terrible idea to give VCs all the leverage.

    Lindsay – you an orc – if you were a real entrepreneur you'd know the TN-1 Visa is for "contractors" and doesn't last long enough to build a prosperous company.

    What all this Lord of the Rings talk? – Check out Lord of Visa to a see where you fit into this movement- http://blog.vidli.com/startup-visa/

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    As part of my recent open letter to the President on innovation 642-654 exam, one of the topics that I wrote 000-206 exam about was that of creating a special JN0-201 exam type of visa to allow foreign-born entrepreneurs to start companies in the U.S. JN0-350 exam

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