Last month, the Department of Homeland Security announced that it was withdrawing a 2018 proposal to remove the International Entrepreneur (IE) Parole program from DHS regulations, effectively confirming to the public that this program remains a viable path for foreign entrepreneurs to secure the ability to enter the United States to work for their start-up businesses. DHS stated that they perceive this program as a tool that can be used “to strengthen and grow our nation’s economy through increased capital spending, innovation, and job creation.”

The proposed regulation creating the International Entrepreneur Parole program was published in January 2017 at the tail-end of the Obama administration, and was scheduled to take effect in July 2017. Prior to the effective date, the proposed regulation was delayed by the Trump administration for an additional eight months. Although a federal court vacated the delay and required DHS/U.S. Citizenship and Immigration Services to accept applications for international entrepreneur parole consistent with the new regulations, it was reported that only thirty applications were received between 2017 and 2019, and that only one – yes, one! – application for international entrepreneur parole was actually approved during that time period.

In reversing course from prior attempts to eliminate the IE program, the Biden administration is seeking to revitalize the program once again, and given the current administration’s announced support for the program, it is expected that more applications will be both received and approved in the coming years. USCIS is planning future information sessions and other outreach activities in order to market this program to the international entrepreneur community and encourage interested individuals to apply.

The IE rule essentially authorizes the Department of Homeland Security to implement its discretionary authority to grant “parole” (a period of authorized stay in the US) on a case-by-case basis to qualifying individuals, in this case to foreign entrepreneurs who demonstrate that their stay in the United States would provide a significant public benefit through the potential for rapid business growth and job creation. Under the IE program, parole may be granted to up to three entrepreneurs per start-up entity, as well as their spouses and children. Entrepreneurs granted parole are eligible to work only for their start-up business. Their spouses may apply for employment authorization in the United States, but their children are not eligible for such authorization based on this parole.

To establish their eligibility for parole, entrepreneurs applying for the IE program benefit must demonstrate they:

• Possess a substantial ownership interest in a start-up entity created within the past five years in the United States that has substantial potential for rapid growth and job creation.
• Have a central and active role in the start-up entity such that they are well-positioned to substantially assist with the growth and success of the business.
• Will provide a significant public benefit to the United States based on their role as an entrepreneur of the start-up entity by showing that:
  • The start-up entity has received a significant investment of capital from certain qualified U.S. investors with established records of successful investments;
  • The start-up entity has received significant awards or grants for economic development, research and development, or job creation (or other types of grants or awards typically given to start-up entities) from federal, state, or local government entities that regularly provide such awards or grants to start-up entities; or
  • They partially meet either or both of the previous two requirements and provide additional reliable and compelling evidence of the start-up entity’s substantial potential for rapid growth and job creation.

Applications are filed with USCIS on Form I-941, and require government filing fees of $1,285. If approved, entrepreneurs may then visit a U.S. consulate abroad to obtain a boarding foil (travel documentation similar in practice to a U.S visa), which will permit them to travel to the United States and appear at a U.S. port of entry to be admitted pursuant to a grant of parole. Canadian nationals may simply present an approved I-941 at a U.S. port of entry without the requirement of obtaining separate travel documentation.

While the revived International Entrepreneur Parole program may be an attractive option to individuals interested in managing or working for a start-up company in the US, it is not the only option. Other more traditional options include the E-2 visa for “Treaty Investors” and the L-1 visa for “Intra-company Transferees.”

E-2 Treaty Investor Visa

The E-2 visa classification allows nationals/citizens of certain countries to gain admission to the United States based on having invested a “substantial amount of capital” in a business located in the U.S. The investment can be made either to start up a new business in the U.S., or to purchase an existing/operating business in the U.S. To qualify for E-2 classification, the treaty investor must:

• Be a national of a country with which the United States maintains a treaty of commerce and navigation;
• Have invested, or be actively in the process of investing, a substantial amount of capital in a bona fide enterprise in the United States; and
• Be seeking to enter the United States solely to develop and direct the investment enterprise. This is established by showing at least 50% ownership of the enterprise or possession of operational control through a managerial position or other corporate device.

While the E-2 can be an effective option for many, one of its main limitations is that it is limited to nationals/citizens of countries with which the U.S. has a qualifying “treaty of commerce and navigation.” Approximately 80 countries throughout the world have such qualifying treaties with the U.S., with China and India as glaring omission, meaning Chinese and Indian investors remain unable to qualify for E-2 visas at this time.

Another limitation on the E-2, as compared to the International Entrepreneur program, is that the E-2 requires the visa applicant – if seeking the visa as the actual investor instead of as an employee of the investment enterprise – to demonstrate that the investor himself/herself invested a “substantial amount of capital” in the business enterprise. The IE program, on the other hand, offers more flexibility, allowing for situations where the “significant investment of capital” has been made by successful U.S. investors (for example via venture capital or outside investors) or even through government grant programs or economic development grant programs. As long as the Entrepreneur has a “substantial ownership interest” and a “central and active role” in the start-up enterprise, IE parole could be granted, whereas the E-2 visa requirements are more rigid.

L-1 Intracompany Transferee Visa

The L-1 visa – and more specifically, the L-1A sub-category – enables a U.S. employer to transfer an executive or manager from one of its affiliated foreign offices to one of its offices in the United States. Pertinent to the topic of investment-based options for start-ups, this classification also enables a foreign company that does not yet have an affiliated U.S. office or corporate entity to send an executive or manager to the United States with the purpose of establishing a “new office” in the U.S.

To qualify for L-1 classification in this category, the employer/entity in the U.S. must:

• Have a qualifying corporate relationship with a foreign company, as either a parent/subsidiary, branch office, or affiliate; and
• Currently be, or will be, doing business as an employer in the United States and in at least one other country directly or through a qualifying organization for the duration of the beneficiary’s stay in the United States as an L-1. “Doing business” means the regular, systematic, and continuous provision of goods and/or services by a qualifying organization and does not include the mere presence of an agent or office of the qualifying organization in the United States and abroad.

On the flip-side, the employee/individual seeking L-1A classification must also:

• Have been working for the qualifying organization/related corporate entity abroad for one continuous year within the three years immediately preceding his or her admission to the United States; and
• Be seeking to enter the United States to provide service in an executive or managerial capacity for the new or existing U.S. entity.

Recognizing that the L-1 visa may in certain circumstances be a path to investing in a start-up entity in the U.S., there are a few additional requirements for foreign employers seeking to send an employee to the United States as an executive or manager to establish a new office. In those cases, the employer must also show, in addition to the requirements above, that:

• The employer has secured sufficient physical premises to house the new office;
• The employee has been employed as an executive or manager for one continuous year in the three years preceding the filing of the petition; and
• The intended U.S. office will support an executive or managerial position within one year of the approval of the petition.

“New office” L-1 petitions can be approved for up to 1 year (as compared to traditional L-1 petitions which can be approved for up to 3 years initially), and during that 1 year, in order to qualify for additional extensions, the employee must be able to show that the U.S. enterprise is operating, expanding, and, ideally, hiring additional employees.

Unlike the E-2 visa, L-1 visas are not country-specific and are open to citizens/nationals of any country as long as the elements above are satisfied. Further, the L-1 visa does not necessarily require any actual financial “investment” be made in the U.S. enterprise (beyond securing a physical premises for a “new office” L-1 petition) in order to qualify. However, the limiting factor with the L-1 visa is that there must be a business/employer/corporate entity outside of the U.S. for whom the visa applicant has worked for at least one continuous year within the last three years. Neither the E-2 nor the International Entrepreneur Parole program require this prior employment abroad, or even the existence of a related business abroad at all. However, with sufficient advance planning, the L-1 can be a potential vehicle for foreign investors and entrepreneurs to pursue if they are able to lay the groundwork by completing one year of qualifying employment abroad prior to submitting a petition for L-1 visa classification.

Other Lesser-Used Alternatives for Investors/Entrepreneurs

While H-1B, O-1, TN, and other employment-based nonimmigrant visa options are some of the most frequently used classifications overall for work purposes, they are more rarely used in this context and while they may potentially be viable options in the right circumstances, they each would present their own challenges for entrepreneurs and investors. Most notably, all three of these visa classifications prohibit “self-employment” and instead require that there be an employer-employee relationship between the petitioning U.S. entity and the employee seeking the visa/status. Additional corporate planning would have to be done to ensure that an employment relationship is maintained, particularly where the individual foreign national has an ownership interest in the business.

These categories also have unique limiting factors as well: for example, H-1Bs are limited in number each year and in extremely high demand, can only be used for “specialty occupations” (generally, positions that require at least a bachelor’s degree in a particular field(s)), and require the employee to be paid the prevailing wage for the position based on job category and geographic location; O-1s must show that the beneficiary possesses “extraordinary ability” in the sciences, arts, education, business, or athletics, meaning a level of expertise indicating that he/she is one of the small percentage who have arisen to the very top of the field, which can be a high hurdle to overcome; and TNs are limited both by nationality (available only to Canadian and Mexican citizens), and by occupation (available only for a subset of specific professional occupations that are listed in the NAFTA/USMCA treaty between the U.S., Canada, and Mexico).