New Portal Welcomes Entrepreneurs To The USA: But Will This Change The Culture Of "No" At USCIS
by Cyrus D. Mehta
Consistent with its earlier
policy of welcoming entrepreneurs, the USCIS launched a new portal called Entrepreneur Pathways providing
resources on how foreign entrepreneurs can use existing visas to launch their
innovative startups in the US. The
portal is quite good, and it is hoped that USCIS officials retreat from their
culture of “No” and process cases in the spirit of this new guidance.
At the outset, we
clearly need Congress to create a Startup
Visa rather than entrepreneurs using existing visas that were not designed
for them, but those legislative proposals are still floundering. One version of
a Startup Visa would require the entrepreneur to invest a minimum of $100,000
in order to get a two year green card. To keep the green card past two years,
the founder would need to create five jobs and either raises at least $500,000
in additional funding or $500,000 in revenues. Even if Congress enacted a Startup
Visa, these requirements could be rather burdensome for a nimble entrepreneur
who could still launch a successful business without an initial $100,000
investment.
There are enough
opportunities under our existing immigration law for entrepreneurs who may not
need to make such a high investment in their startup. The existing visa system
if interpreted broadly, together with the Startup Visa, would provide a
welcoming environment for job creating foreign entrepreneurs in the US. The new
portal shows the way on how entrepreneurs can use the existing immigration
system to set up ventures in the US and possibly even flourish. While these
ideas have been used by creative immigration attorneys on behalf of their
clients from time immemorial, it is good to know that the portal validates
them, largely based on the input that the USCIS received from real
entrepreneurs through its Entrepreneur
in Residence initiative. Most important, the EIR has endeavored to train
USCIS officers about the unique aspects of a startup business. It is hoped that
USCIS officers, after receiving such training, will change their mindset and be
willing to distinguishing a legitimate startup from a fraudulent artifice.
For instance, startups
may not yet be generating a revenue stream as they are developing new
technologies that may lead to products and services later on. Many have
received financing through venture capital, angel investors or through “Series
A and B” rounds of shares. Startups may also operate in more informal spaces,
such as the residences of the founders (with regular meetings at Starbucks)
instead of a commercial premise. Some are also operating in “stealth mode” so
as not to attract the attention of competitors and may not display the usual
bells and whistles such as a website or other marketing material. Startups may
also not have payroll records since founders may be compensated in stock
options. Still, such startups are legitimate companies that should be able to
support H-1B, L, O or other visa statuses.
The portal suggests
that if a foreign student has a “Facebook” type of idea, he or she can start a
business while in F-1 Optional Practical Training provided
the business is directly related to the student’s major area of study.
After completing F-1 OPT, this student can potentially switch to H-1B visa
status (provided there are H-1B visa numbers at that time). Regarding the startup
owner being able to sponsor himself or herself on an H-1B, the USCIS is
surprisingly receptive, but still obsessed with the Neufeld
Memo that there must be a valid employer-employee relationship and that the
entity has a right to control the employment. Still, the USCIS suggests that a
startup may be able to demonstrate
this if the ownership and control of the company are different. This can be
shown through a board of directors, preferred shareholders, investors, or other
factors that the organization has the right to control the terms and conditions
of the beneficiary’s employment (such as the right to hire, fire, pay,
supervise or otherwise control the terms and conditions of employment). Some of
the suggested evidence could include a term sheet, capitalization table, stock
purchase agreement, investor rights agreement, voting agreement or organization
documents and operating agreements.
Even with intra-company
transferee L-1 visas for executives and managers, the portal
recognizes that an entrepreneur may establish a “new office” L-1 (which
could be a subsidiary, parent, affiliate or branch of the foreign company) with
a validity period of one year, which allows a ramp up period where the entrepreneur
can be involved in “hands on” tasks instead of function as an executive or
manager. After the one year ramp up, the organization must be able to support
the entrepreneur in a true managerial or executive capacity. The portal also
refreshingly suggests that entrepreneurs who can demonstrate extraordinary
ability in their field of endeavor can
take advantage of the O-1 visa, and can set up a company who can sponsor
them. Interestingly, there is no mention of the control test for the O-1 visa
like for the H-1B visa. Finally, the portal also provides guidance for
nationals of certain countries that have a treaty with the US, which facilitates
the E-2 investor visa.
All this looks good on
paper (rather online!), and it remains to be seen whether USCIS officers will
faithfully interpret this guidance. Even if an H-1B founder of a company
successfully establishes that the entity can control her employment through a
board of directors or through preferred shareholders, the USCIS could likely
challenge whether a position in a startup, where the beneficiary may be wearing
many hats, can support a specialized position. The H-1B visa law requires the
petitioner to demonstrate that a bachelor’s degree in a specialized field is
the minimum qualification for entry into that occupation. Also, positions in innovative
startups may not necessarily fit under the occupations listed in the Department of Labor’s Occupational Outlook
Handbook but may yet require at least a bachelor’s degree. It is hoped that
USCIS examiners are trained to be receptive to other evidence to demonstrate
that the position requires a bachelor’s degree. Furthermore, an MBA degree
should be considered a specialized degree in itself since many MBA
programs at top business schools focus on entrepreneurship and other fields,
such as technology or web analytics, which equip one to be a successful
entrepreneur.
In the end, the success
of the Entrepreneur in Residence initiative largely depends on whether the
USCIS has been able to alter the mindset of its officials who are in the habit
of saying “No.”
This post originally appeared on The Insightful Immigration Blog on November 30, 2012.
About The Author
Cyrus D.Mehta, a graduate of Cambridge University and Columbia Law School, is the Managing Member of Cyrus D. Mehta & Associates, PLLC in New York City. He is the current Chair of AILA's Ethics Committee and former Chair of AILA's Pro Bono Committee. He is also the former Chair of the Board of Trustees of the American Immigration Council (2004-06) and Chair of the Committee on Immigration and Nationality Law (2000-03) of the New York City Bar Association. He is a frequent speaker and writer on various immigration-related issues, including on administrative remedies and ethics, and is also an adjunct associate professor of Law at Brooklyn Law School, where he teaches a course entitled "Immigration and Work." Mr. Mehta received the AILA 2011 Michael Maggio Memorial Award for his outstanding efforts in providing pro bono representation in the immigration field.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.
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