The Trump administration recently announced it is delaying – and likely rescinding – the Obama-era International Entrepreneur Rule (the “Rule”). The Rule was slated to go into effect on July 17, 2017. It would have made it easier for foreign entrepreneurs to establish startup companies in the U.S. We blogged in detail on the final Rule when it was published in early 2017.

Now the Rule’s effective date has been delayed until March 14, 2018; however, implementation seems highly unlikely: the delay is to allow the Department of Homeland Security (DHS) an opportunity to obtain public comment on a proposal to rescind the Rule.

The Rule establishes criteria for granting “parole” (temporary permission to be in the U.S.) to certain foreign entrepreneurs to permit them to oversee and grow their stateside startups. To obtain parole, entrepreneurs would need to show that their startups have potential to grow rapidly, create jobs and provide a significant public benefit to the United States. Startups would be judged by, among other things, how much venture, angel or accelerator capital and/or government grants they’d received.

DHS decided to delay the IE Rule after President Trump signed an executive order on January 25, 2017 relating to border security and improving immigration enforcement. The order required DHS to ensure that parole is only granted on a case-by-case basis involving urgent humanitarian reasons or a significant public benefit. DHS is seeking public comment on the delay until August 10, 2017.

The move has drawn criticism from notable investors, business leaders and other stakeholders, including the National Venture Capital Association, a trade association for startup investors. Critics note the substantial contributions made by immigrants to the U.S. entrepreneurial ecosystem, especially in the tech sector. For example, 60% percent of the top 25 tech companies and 42% of Fortune 500 companies were founded by first- or second-generation Americans according to a 2013 report published by the venture-capital firm Kleiner Perkins Caufield and Byers. The IE Rule is not dead yet, but the prognosis is grim. The uncertainty alone seems likely to make the U.S. less competitive in the global market for ambitious and innovative minds.

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