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Startup America: the promise of a more welcoming immigration climate for entrepreneurs
February 28, 2012
Immigration Law Alert
Author(s): Courtney H. New

Another focus on job creation: Established by President Obama one year ago, “Startup America” aims to reduce barriers and accelerate growth for America’s job-creating entrepreneurs. Since 25% of high-tech startups in the U.S. were founded by immigrants, the Department of Homeland Security has announced several administrative reforms designed to attract and retain highly skilled immigrants.

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While there has been much controversy about immigration reform of late, there is one reality that seems to be driving consensus: most new jobs are created by start-ups and small businesses. In recent years, a full 25% of high-tech startups in the United States were founded by immigrants, leading to more than 200,000 new American jobs.

A year ago, President Obama established the “Startup America” initiative to reduce barriers and accelerate growth for America’s job-creating entrepreneurs. The Department of Homeland Security (“DHS”) has responded by promoting the use of existing immigrant and non-immigrant classifications by entrepreneurs and by undertaking several administrative reforms. Given the deadlocks in Congress, the administration believes this to be a faster route to its goals.

In August 2011, DHS made clear that entrepreneurs can in fact qualify for the employment-based second preference (EB-2) immigrant visa (i.e., “green card”) category. This includes eligibility for National Interest Waivers, if the entrepreneur who holds an advanced degree can demonstrate that his or her business endeavors will be in the interest of the United States. “Waiver” means that no labor certification would be required. This eligibility must be based on exceptional ability in the sciences, arts, or business, and the entrepreneur’s activities must substantially benefit the national economy, cultural or educational interests, or the welfare of the United States. DHS also clarified that a foreign national who is the sole owner of the sponsoring company can qualify for an H-1B non-immigrant visa if he or she can establish a valid employer-employee relationship.

As part of the initiative, in January 2012 DHS announced additional administrative reforms designed to attract and retain highly skilled immigrants. Over the coming months DHS will:

  • Expand eligibility for the 17-month extension of optional practical training (“OPT”) for F-1 international students to include those with a prior degree in Science, Technology, Engineering, or Mathematics (“STEM”), instead of limiting the basis for eligibility to the most recent degree. (Many students with STEM degrees go on to pursue MBAs or other non-STEM advanced degrees that arguably make their potential to contribute to developments in STEM fields even greater.)
  • Provide work authorization for certain spouses of H-1B visa holders. (The inability of spouses of H-1B visa holders to be employed and the reality that it can take several years to obtain employment authorization through an immigrant visa process can result in the departure of talented foreign nationals from the United States.)
  • Allow outstanding professors and researchers to present a broader scope of evidence of academic achievement beyond the categories of evidence specifically articulated in the regulations. (This change would bring the evidentiary standards in this category in line with those of other exceptional ability immigrant visa categories by allowing DHS to consider other “comparable evidence”.)
  • Harmonize rules to allow E-3 visa holders from Australia and H-1B1 visa holders from Singapore and Chile to continue working with their current employer for up to 240 days while their petitions for extension of status are pending, as is currently allowed for visa holders in other employment-based non-immigrant categories. (This extension would help prevent gaps in employment eligibility that can result from lengthy processing times.)

And most recently, on February 22, 2012, DHS launched its “Entrepreneurs in Residence” initiative in Silicon Valley. Over the next several months, this program will bring together high-level representatives from the entrepreneurial community, academia, and the federal government to discuss how to maximize the potential of current immigration laws to attract foreign entrepreneurial talent. They will work collaboratively to ensure that immigration pathways for foreign entrepreneurs are clear and consistent, and better reflect today’s business realities.

While there is undoubtedly cause for optimism, denial rates in several categories remain at historic highs, so it remains to be seen whether these initiatives will translate into real opportunities for entrepreneurs.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.