The International Entrepreneur Rule – At Long Last

It only took four years, eight months, and ten days, but the International Entrepreneur Rule (IER) is now set to unleash new entrepreneurial energy in the United States.

A deeper look: Support from NVCA and others across the startup ecosystem helped establish the IER.

It only took four years, eight months, and ten days, but the International Entrepreneur Rule (IER) is now set to unleash new entrepreneurial energy in the United States. It is said that good things come to those who wait. But waiting is not enough in policy advocacy: IER is here today due to a sustained campaign of support from NVCA and others across the startup ecosystem.

A Brief History

The Department of Homeland Security (DHS) proposed the International Entrepreneur Rule in August 2016 once comprehensive immigration reform was out of reach. NVCA strongly supported the draft rule and recommended key changes. We were pleased to see the Obama Administration finalize IER just three days before President Trump took office.

Given President Trump’s immigration rhetoric, we knew we had a fight ahead. I got a call on one of the final days of the Obama Administration. It was from Doug Rand, one of the main architects of IER who served in the Obama Administration. Knowing Trump was unlikely to support IER, Doug said: “If you want the International Entrepreneur Rule, you’re going to have to fight for it.” So, we did. We received a tremendous amount of help from Doug along the way and without his grit and encouragement we might not have this outcome.

NVCA got to work and lobbied the Trump Administration. We prevailed upon the Trump Administration to embrace IER as a way to spread entrepreneurship in the United States, including pockets of the country that have felt left behind. Frustratingly, the previous administration sent strong signals that it would end the rule. When the Trump Administration pushed the effective date of IER, we knew that was the first step in killing the rule.

We were faced with a choice: accept that the Trump Administration would slowly end IER or step up to the plate and take on the administration. We took our shot and sued DHS in federal court, asserting the delay in effective date of IER violated administrative law and harmed entrepreneurs. As NVCA CEO Bobby Franklin wrote at the time:

[I]mmigrant entrepreneurs are the past, present, and future of our industry and of the U.S. economy[.] With this lawsuit, we once again stand with those immigrant entrepreneurs to provide new opportunities for them to build the next generation of great companies here in the U.S.

Huge credit goes to our board at the time, which understood the risks involved in suing the administration and fully supported NVCA’s actions.

NVCA won the lawsuit, which caused DHS to (reluctantly, and under court order) implement IER. Our legal efforts were underpinned by the savvy and passionate Paul Hughes of McDermott, Will, & Emery who represented NVCA and our entrepreneur co-plaintiffs.

Due to NVCA’s lawsuit, IER remained in force, but it was not seen as a viable option because the Trump Administration had repeatedly tried to end the program. After all, who would want to use the program if the adjudicator had demonstrated hostility to the very idea?

But the fun did not stop there. The Trump Administration had acted unlawfully in delaying IER, but rather than back down it then proposed a new rule to remove IER. We argued against the move in formal comments and rallied the startup ecosystem to submit additional comments. Ultimately, the public record in this proceeding was significantly lop-sided in favor of those who saw IER for what it was: a job creation tool that our county needed.

And then…nothing happened. The Trump Administration never finalized its proposed rule to end IER before leaving office, perhaps because of the overwhelming comments of support for IER. This left a crucial opening.

What Just Happened?

Upon taking office, the Biden Administration had an opening to withdraw the previous administration’s order to end IER. Removing the Trump Administration’s rule would lift the cloud of uncertainty off IER so immigrant entrepreneurs could confidently use IER to build companies in the United States.

Once President Biden was elected, NVCA raised IER with the incoming administration to ensure it understood that implementation of IER was possible and the economic impact it could deliver. We first raised IER in meetings with Biden Transition Team officials; encouraged President Biden to take action on IER in his first 100 days; met with DHS political appointees; and then led a coalition of 16 industry associations in a letter on IER.

Then, on Monday, we received the news we have long waited for: the Biden Administration withdrew the Trump Administration’s proposed rescission rule and thereby put IER on firm legal footing.

What economic jolt can we look forward to?

Now firmly in place, the International Entrepreneur Rule will unlock the creation of new startups and American jobs that will help our economy recover from the pandemic. Using DHS’s calculation that 2,940 entrepreneurs would utilize IER each year, New American Economy found that IER could create between 135,240 to 429,714 jobs over ten years. The bottom of the range assumes the entrepreneur does the bare minimum and creates 5 jobs over 2 1/2 years; the middle range uses U.S. Census Bureau data to assume creation of 7.85 jobs; and the upper range assumes a strong emphasis on STEM jobs.

I believe the upper range is a realistic calculation because IER is focused on companies with “rapid business” growth, which is geared towards venture-backed founders. And venture capital is overwhelmingly weighted toward STEM fields. In fact, New American Economy analyzed DHS’s own estimates of who would use IER and found that approximately 85 percent of companies would be technology or STEM-related firms.

Source: New American Economy

Who are these entrepreneurs? Time will tell, but the foreign-born entrepreneurs who have used IER are a good indication of what is to come. Remember, once the Trump Administration was forced by a federal court to implement IER, some entrepreneurs were able to apply for IER and at least a few were granted IER status.

We recently wrote about one of those entrepreneurs, Yiannis Yiakoumis. Yiannis is the co-founder of Selfie Networks, which builds technology to improve network security. Yiannis’s company is backed by Lightspeed Venture Partners and other VC firms. It is a dream come true for us that perhaps the first person to successfully use IER is backed by one of our members. If Yiannis is the poster child for IER, then we are about to witness incredible entrepreneurial gains in America.

Looking Ahead

It has been an incredible journey to advocate for the International Entrepreneur Rule. I am personally looking forward to tracking the economic and innovation impact IER has on our country. But work remains: ultimately, the goal of NVCA is to create a Startup Visa, or a dedicated visa category for foreign-born entrepreneurs. We believe a Startup Visa would be an improvement over IER and we are pushing for it on Capitol Hill. Stay tuned for more soon.

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Jeff Farrah served as General Counsel at NVCA, where he advocates before Congress, the White House, and agencies for pro-entrepreneurship policies and leads in-house legal matters for the association. He loves working at the intersection of venture, public policy, and the law. Jeff served as Treasurer of VenturePAC, the political action committee of NVCA.