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A New "Visa" for Foreign Entrepreneurs Working for Start-Ups

One of the biggest challenges for U.S. immigration lawyers has been securing visas for skilled foreign entrepreneurs to work for start-ups. Because some U.S. investors have conditioned their investments in some start-ups on the company’s ability to employ certain foreign talent, the lack of any viable visa for certain entrepreneurs can doom some projects. Often, the H-1B visa has been the only option for these entrepreneurs, but “winning” the H-1B lottery has become increasingly difficult and requires considerable advance planning. The L-1 visa is usually of little help for most start-ups, and the E-2 visa is dependent on a specific treaty between the foreign entrepreneur’s country and the U.S., and further requires that nationals from the treaty company own at least 50% of the startup, which eliminates any start-up where U.S. investors are the majority.

The Department of Homeland Security (DHS) has proposed a new rule that would allow foreign entrepreneurs with only 15% ownership stake in the start-up to work for the start-up for up to five years, provided they can show that the start-up has potential for rapid business growth and job creation. These entrepreneurs would not actually be given a visa — since any new visa category would have to be created by Congress — but instead would be granted “parole” into the country. Under current law, DHS has discretionary authority to grant “parole” on a case-by-case basis for “urgent humanitarian reasons or significant public benefit.” Typically, “parole” has been granted to aliens who enter the country to participate in legal proceedings or to aliens with serious medical conditions who might ordinarily be detained. The Obama administration, however, has taken the position that there could be a “significant public benefit” in allowing a foreign entrepreneur to be paroled into the country to work for a start-up, if that start-up provides a significant public benefit by creating jobs.

This is a creative solution to a longstanding problem, but there are some limitations to the program. First, persons who are allowed to work in the United States under this rule will not be able to change their status from within the United States as someone with a visa might. Additionally, a person’s parole into the country will be largely dependent on the discretion of who happens to be in charge at DHS at the time. Another administration could take a very different view of this rule. However, for the time being, parole status may be the best option available to certain entrepreneurs until Congress creates a visa that includes start-ups involving foreign entrepreneurs. Based on Congress’s past history in reaching a bipartisan consensus on immigration reform, I wouldn’t hold my breath.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.