Skip to main content
The Avenue

Obama’s Overshadowed Start-up Gambit

and

Overshadowed by the provisions for children and parents in President Obama’s executive order on immigration are new rules on another hot-button topic: foreign technology entrepreneurs.

Buried in a Department of Homeland Security (DHS) memo on “Policies Supporting U.S. High-Skilled Businesses and Workers,” the new directive recognizes the importance of these foreign entrepreneurs and expands ways for them to remain in the United States. Specifically, the memo orders DHS to grant parole status—on a case-by-case basis—to inventors, researchers, and entrepreneurs who have received “substantial” U.S. investor financing or otherwise hold the promise of innovation and job creation.

This move is important, and represents a significant step toward tapping more of the huge potential economic impact of foreign inventors who may otherwise start their businesses elsewhere. Foreign entrepreneurs’ impact on the U.S. economy is huge.  Nearly 40 percent of all Fortune 500 companies were founded by immigrants or their children. However, immigration to the United States for entrepreneurs remains a rocky road in many instances.

Surveys show that the share of Silicon Valley startups with foreign-born founders decreased from 52 percent to 44 percent between 1995 and 2012. Contributing to that slippage are multiple barriers to foreign entrepreneurs maintaining residency and gaining citizenship, ranging from the nation’s cap on H-1B visas for specialized workers, lack of a clear pathway from the foreign student F-1 visa to permanent residency or green card status, and long wait times.

Against this backdrop, last week’s announcements point to a new pro-entrepreneur approach not unlike that employed by numerous other nations. Significant discretion would be provided to DHS to allow applicants to temporarily pursue research and the development of promising new ideas and businesses in the United States, rather than abroad.

Yet, it’s difficult to know what to make of the new provision, given its many ambiguities. Few details are available about how the national interest waiver for green cards could be adjusted to promote “greater use for the benefit of the U.S. economy,” the case-by-case basis for granting this temporary status, and how to define the amount of U.S. investor financing necessary, or how to prove someone has a promising innovation.

And as with the whole package, uncertainty about the sustainability of the provisions could depress its usage. Investors, especially, will dislike the added layer of uncertainty of immigrant visa issues since they do not want to see their investments wasted if the CEO has to leave the country.

All of which points to a basic fact about Obama’s entire package: For these new provisions to have any lasting impact, Congress must endorse them. As it happens, there is already support in both parties for a new visa program for foreign founders of startups. In fact, such a program was incorporated in the Senate’s Comprehensive Immigration Reform Bill passed in 2013 and the Startup Act 3.0 introduced in the House last year. And so Congress should act: Along with completing the job on many other immigration provisions it should introduce and pass legislation that will enable America to reap the benefits of immigrant entrepreneurship. 

Authors

N

Neil G. Ruiz

Former Senior Policy Analyst and Associate Fellow - Metropolitan Policy Program

Get daily updates from Brookings