WASHINGTON, DC – The National Venture Capital Association (NVCA) today provided comments to the Department of Homeland Security (DHS) on the proposed International Entrepreneur Rule, which would allow foreign-born entrepreneurs who meet certain criteria to remain in the U.S. to grow their businesses.
“NVCA has long been a vocal advocate for immigration reform with a specific emphasis on the creation of a new visa category for foreign-born founders who come to the U.S. to start and grow innovative companies,” said Bobby Franklin, President and CEO of NVCA. “As legislative action in Congress has stalled, we have supported President Obama’s efforts to take incremental steps through executive order and have appreciated working closely with the administration to make sure we get it right. Despite the inherent limitations of an executive order, we do believe the International Entrepreneur Rule will create avenues for foreign entrepreneurs to build great companies in the U.S. and is a solid first step toward our ultimate goal of creating a Startup Visa.”
In its comment letter to DHS, NVCA offered compelling data about immigrant entrepreneurship, key areas of the rule that should be sustained in a final version, and several suggestions to improve the rule to reflect the reality of the entrepreneurial ecosystem:
Longer initial parole period – DHS should establish an initial parole period of three years, with possible re-parole of two years, rather than the proposed initial time period of two years, with a possible extension of three years. By establishing a more generous time period on the front end, venture capitalists will have more confidence that paroled entrepreneurs will remain in the country during the critical initial period of a startup’s growth and not be as distracted with uncertain immigration status.
Serial entrepreneurs – DHS should account for the scenario when an entrepreneur qualifies for initial parole then begins another startup during the initial parole period. That individual ought to be able to remain in the country under parole and qualify for re-parole if his or her second startup meets the qualifications of parole and re-parole, respectively.
U.S. citizens or lawful permanent resident – When determining the citizenship or resident status of investors, DHS should examine whether a majority of the general partners of a venture capital firm (who make all investment decisions) are U.S. citizens or lawful permanent residents and not whether the limited partners of a venture capital fund (who do not make investment decisions) are U.S. citizens or lawful permanent residents.
Established record of success – DHS should adopt a flexible approach to determining what constitutes an established record of successful investments. For example, one could imagine a newly established venture capital firm that is composed of seasoned venture capitalists who were all successful in building startups at other VC firms. If that new firm invests in an entrepreneur who applies for parole, DHS should look at the totality of experience of the partners of the firm (or lead partner on the investment) and not merely the limited success of the new firm.
15% ownership stake – It is frequently the case that as a startup grows and goes through financings, increasing portions of the company are sold to venture and other investors. This dilution is not a sign that the important role of the founder is diminished. Therefore, NVCA encourages DHS to adopt a flexible approach to ownership thresholds to account for the possibility that a startup with multiple founders may not meet the threshold simply because it has been successful in raising capital.
Download a copy of NVCA’s comment letter here.