Welcome to our VC Policy Pulse series, where we speak with a VC or founder on a policy issue that is having a major impact on the venture and startup ecosystem. Today, we’re speaking with Scott Raney, Managing Director at Redpoint, and Sophie Alcorn, Founding Attorney of Alcorn Immigration Law, about a Startup Visa category for immigrant entrepreneurs who want to come to the U.S. to create a new company.
NVCA has long supported the creation of a Startup Visa that offers a separate visa category for immigrant entrepreneurs who create a new business, are backed by venture capitalists or other investors, and create American jobs. A Startup Visa is a common-sense way to grow the American economy through new company formation by immigrant entrepreneurs. Far from taking the job of an American, an immigrant entrepreneur can only qualify for the Startup Visa when he or she has created jobs for Americans and has been backed by investors with a track record of success.
While the U.S. has failed to pass a Startup Visa into law, more than 20 other countries—including Canada, the U.K., France, Spain, Japan, Hong Kong, Australia, and Singapore—have put into place a Startup Visa or a similar structure. This puts the U.S. at a competitive disadvantage in the competition for global entrepreneurial talent.
On July 26, Representative Zoe Lofgren (D-CA) introduced the Let Immigrants Kickstart Employment (LIKE) Act of 2021. NVCA strongly supports the LIKE Act. Rep. Lofgren’s bill creates both a nonimmigrant and immigrant Startup Visa, as well as a mechanism for startups to recruit key foreign-born employees. NVCA has enthusiastically endorsed Lofgren’s bill and is working to build support.
Scott Raney – Managing Director at Redpoint Ventures
Why are immigrant entrepreneurs important to America’s startup ecosystem?
The numbers speak for themselves. Immigrant entrepreneurs have been an essential part of the American startup ecosystem based on the number of company formations, jobs created, and value created. Quite simply, America’s economy wouldn’t be what it is without the incredible talent, perseverance, and leadership demonstrated by those that have opted to come to the United States to pursue their dreams. Americans are the clear beneficiaries of this arrangement. While we are incredibly fortunate immigrant entrepreneurs decide to build their companies here, we need to remember this hasn’t happened by chance. It has happened because historically this country has made many wise decisions to attract and support the best and brightest – the kinds of people capable of building remarkable things – from around the world.
What are some of the challenges immigrant entrepreneurs have when trying to build a new company in the U.S.?
Increasingly we are making it harder for immigrant entrepreneurs to start and build their companies. Many of these would-be founders are working at established companies on an H-1b visa. They have the talent and desire to start a company, build a team, and create something of value. Unfortunately, they are reluctant or unable to leave their current job because their visa is tied to their current employer. So much potential is locked up in a system that should be encouraging entrepreneurship rather than constraining it. For those that figure this part out, they face restrictions hiring key employees who themselves require visas. Often these companies require special skills and talents, and unfortunately, there is a scarcity of American-born professionals that can fill these roles. Rather than making it easier for entrepreneurs to build their teams, current immigration policies constrain the talent pipeline. Put simply, a key limit on innovation in our economy is the availability of talent, and we should be doing everything we can to address this limitation.
Do you believe a startup visa would make the U.S. more competitive in growing our innovation economy?
For decades, the United States benefited from a system that fostered innovation. A vital part of this system was policies that encouraged people from every country to come here and make their dreams come true. Frankly, based on changing approaches to immigration, the United States hasn’t been as competitive as it was in the past for some time now. Entrepreneurs around the world increasingly recognize that shift. In a post-Covid world, where technology enables distributed teams, we see a dramatic change in approach to domiciling companies. We can no longer assume the best and brightest will build their companies here. If we continue to make it difficult for them to acquire a visa or difficult for them to recruit portions of their team from other countries, entrepreneurs and the jobs they create will go elsewhere. We are seeing this trend accelerating and, if we don’t do something about it, our innovation economy will suffer.
Sophie Alcorn – Founding Partner at Alcorn Immigration Law
What are the challenges that foreign-born entrepreneurs face when they want to come to the U.S. to build and grow a business?
Even tremendously skilled international tech founders struggle to come to the U.S. and start their startups here. There are so many barriers, paperwork, and headaches, they can’t get in and many give up. So, what I do as a certified specialist immigration attorney is use my legal expertise to be their sherpa and shepherd them through every hill and valley. But the tools we have are inadequate for early-stage founders bootstrapping a startup. The current set of visas and green cards we have to work with reward people who are already famous and at the top of careers; or people who are already affluent; or people coming to be employees but not CEOs. And these existing processes can take months or often years. By that time, a competitor could have already scaled and cornered the market.
Sophie, as an immigration lawyer, how would a Startup Visa change how you advise foreign-born entrepreneurs?
We are so close! A Startup visa would open up an amazing door for international founders. It would be a real, multi-year way for a founder to stay in the U.S. and build a company. They could be the CEO, they can own equity. Affluence and fame won’t be barriers. They could obtain multiple-entry visas and travel in and out of the United States freely to conduct business on behalf of the country. All of these things are not currently available to top international founders, and our country is suffering as a result, as founders are going to other, more supportive countries, to found their startups.
If a Startup Visa were enacted, how would VCs be able to support immigrant entrepreneurs seeking a Startup Visa?
Immigration shouldn’t be the thing standing in the way of a great company. With the Startup Visa, VCs would finally be able to have peace of mind that by investing at least $250k in a company that’s less than 5 years old, they can reasonably guarantee that the founder would be able to secure a legal pathway to living and working in the U.S. in a relatively easy manner. VCs will further be able to support this process for the founders of their portfolio companies by providing proof of their US citizenship or permanent residence. Due diligence regarding founder immigration will become a lot easier too, as founders won’t feel the need to hide their immigration status or beat around the bush when it comes to these discussions. Plus, multiple international founders from the same company will be able to live and work legally in the U.S. More peace of mind for everybody!