(Updated Jan. 18 to reflect the correct date the rule takes effect).
The Department of Homeland Security has officially published a provision to make it easier for immigrant entrepreneurs to build startups in the U.S. The rule, proposed by President Barack Obama last summer, will take effect July 17.
The rule was proposed as a workaround for foreign entrepreneurs after Congress failed to pass meaningful immigration reform. There isn’t a great avenue for business leaders from other countries to build companies in the U.S. because visas, like the H1B, only apply to skilled employees, not startup founders.
GeekWire reported on the so-called “International Entrepreneur Rule” when it was first proposed in August, and followed up with reactions from immigrant business leaders and experts on the subject.
The initial rule outlined a “parole” period that foreign entrepreneurs could apply for, granting two years in the U.S. to grow a startup. To qualify, the founder had to prove that the startup met certain requirements and demonstrated the potential for “significant public benefit.” After the initial parole period, the founder could apply to extend his or her stay in the U.S. for an additional three years, if the startup met additional benchmarks.
Over the past five months, DHS has been collecting public feedback on the proposal to inform the final rule. That comment period led to a few key changes to the final rule, enacted today.
Instead of a two-year period followed by a three-year period, the rule now says entrepreneurs can apply for an initial parole of 2.5 years, followed by an extended period of 2.5 additional years.
The proposed rule said startups needed to have investments of at least $345,000 from qualified U.S. investors to apply for parole. DHS has reduced that minimum required investment to $250,000. The official rule also gives entrepreneurs more time to land funding — 18 months instead of one year.
The final rule also reduces the ownership stake the founder needs to have to qualify. Instead of 15 percent, entrepreneurs need to own only 10 percent of the startup to qualify for the initial parole period. To re-apply for an additional 2.5 years, founders just need 5 percent ownership.
In the proposed rule, a startup had to generate at least 10 jobs during the initial 2.5-year parole period to qualify for an extension. That number has been reduced to five jobs in the final rule.
Generally speaking, the final rule loosens up on a number of benchmarks necessary to qualify for the parole, responding to criticism that the proposed requirements were too restrictive. It allows for startups to use “alternative criteria” to demonstrate they’ll benefit the U.S. economy. The final rule also has more relaxed requirements for qualified investments, qualified investors and startup entities.
Explore the full International Entrepreneur Rule below.
International Entrepreneur Parole by GeekWire on Scribd
