The first installment in this series discussing the International Entrepreneur Parole (IEP) program identified the challenge and a potential solution for foreign entrepreneurs to legally enter the United States to develop a business concept and outlined the detailed program requirements. This part of the series will examine the specific documentary requirements necessary to satisfy those requirements.

Assembling Documents

The IEP program imposes significant documentary requirements. The governing regulations require assembling documents not only from the foreign entrepreneur applying for parole. Investors in the start-up company where the entrepreneur will play a central and active role also bear a significant burden to document their investment history in completely unrelated enterprises. The following discussion examines each of these requirements.

Entrepreneur

The IEP program requires foreign entrepreneurs to have a qualifying ownership interest of at least 10% in the start-up company and be able to demonstrate they will play a central and active role in the start-up. Ownership may be proved by assembling commonly available establishment documents such as articles and certificate of incorporation, organizational minutes in which share distribution is recorded, or the membership agreement of a limited liability company. The central role to be actively performed by the international entrepreneur may be described in a detailed job description. But these, alone, are insufficient documents to support a successful IEP application.

The regulations governing the documentary requirements for IEP represent a significant departure from those that apply to many categories of nonimmigrant worker visa categories. Regulations governing certain nonimmigrant classifications require only a detailed statement from an employer filing a petition explaining the factual basis of the beneficiary’s eligibility for the visa category. While such a detailed statement should be sufficient in most cases, U.S. Citizenship and Immigration Services (USCIS) has become ever more aggressive in its demands for additional documentary evidence to corroborate the petitioner’s statement. Even highly detailed, uncontroverted statements by petitioners routinely receive demands from USCIS for documents to corroborate such statements. The propriety of such demands is beyond the scope of this discussion. However, the demand for corroborating documents is entirely consistent with the regulations and policy promulgated to administer the IEP program.

Additional documents that may be presented to corroborate the central and active role to be performed by the entrepreneur may be drawn from a wide range of sources. These include:

• Letters from government agencies, business associations, and qualified investors.
• News articles about the start-up and the role of the entrepreneur may be provided.
• Documentation demonstrating participation in an established business accelerator, as well as evidence of prior start-up successes by the entrepreneur.
• Degrees or documents demonstrating key experience or knowledge of the entrepreneur, such as patents or other recognition for achievements.

These examples are neither mandatory nor exclusive. Any one or combination of these documents, as well as any other probative documentation, may be provided to corroborate the applicant’s statement describing the central and active role to be performed by the entrepreneur.

Start-Up Enterprise

Demonstrating that a company qualifies as a start-up enterprise for purposes of the IEP program is the least arduous requirement. Documentation common to most businesses should be readily available. Organizational documents used to demonstrate the entrepreneur’s minimum ownership participation such as articles and certificate of incorporation, organizational minutes in which share distribution is recorded, or the membership agreement of a limited liability company also can be produced for this purpose. These documents, along with tax and other financial records should conclusively demonstrate that the company was not established greater than five years before the IEP application is filed.

Qualified Investment, Award, or Grant

Private Investment Source

Documenting the investment enterprise has received private investment funds from a qualifying investor imposes a significant documentary burden. Foreign entrepreneurs applying for parole are required to prove the investor’s U.S. citizenship or resident status along with their investment history. For both elements, the applicant — who is not the investor — will be required to request documents from the investor that includes both personal and financial records.

Individual investors will need to be willing to provide proof of their U.S. citizenship, such as a birth certificate or passport identity page or, for permanent residents, a copy of their Permanent Resident Card (aka “green card”). Where investment funds are provided through a business entity, the company must be not only organized under a U.S. jurisdiction but also majority-owned and controlled by U.S. citizens or permanent residents. Organizational documents illustrating place of establishment and ownership of the company making the investment as well as the citizenship or resident status of its owners will be required.

Provided that the company is majority owned and controlled by U.S. citizens or residents, it is not necessary to document the provenance of the investment funds. It is not necessary to demonstrate that more than 50% of the capital is from a U.S. source. Applicants are required, however, to demonstrate that the funds are not derived from unlawful activity.

In practice, demonstrating the legitimate source of investment funds may make it necessary to trace them to their source, much like is currently required for immigrant investors under the EB-5 Immigrant Investor Program. There are troubling implications of such a documentary burden, however, for a temporary parole program. First, the effort of tracing funds to their source to obtain the benefit of permanent resident status as an immigrant investor under the EB-5 program may be justified, whereas completing the exercise for a third party — the foreign entrepreneur — to gain a temporary, 30-month parole may cause investors to hesitate. Second, the time taken by USCIS to evaluate the voluminous documentation required for EB-5 classification currently extends to years. A similar waiting period may be impractical for an entrepreneur seeking to capitalize a new business concept through the IEP program.

The most significant demand international entrepreneurs will need to make on their investors is proof they have a successful track record of investing. Investors must be able to satisfy the procrustean requirements of having made previous investments equal to or greater than $633,952.00 that included at least two start-ups each of which created at least five jobs or generated at least $528,293.00 in revenue with average annualized growth equal to or greater than 20%. To do so, qualifying investors must be willing to produce detailed financial records relating to completely unrelated companies. For example, bank records, equity agreements, capitalization records, audited financial statements, or similar documents will be needed. Employment creation can be documented by producing, inter alia, Forms I-9, payroll records, and tax records. These documentary requirements, coupled with the need to prove the funds do not derive from unlawful sources, create a documentary burden similar to that of the EB-5 immigrant investor category, albeit, with lower capital requirements.

Notably, the application an international entrepreneur must file with USCIS to obtain parole requires the applicant to swear under oath to the accuracy of documents and information submitted. A significant volume of the documents to be produced will come from others over whom the applicant has no control. It remains unclear what steps the applicant must take to verify accuracy of such third-party documentation.

Government Awards or Grants

In contrast to the documentary burden of demonstrating that investment funds from private individuals satisfy the requirements of the IEP program, documenting government awards or grants should be much simpler. Letters from the awarding or granting government may be produced to demonstrate both the source and the amount of the funds provided. Bank records of the start-up company may be provided to document receipt of the funds.

Documentation Alternatives

If the start-up company only partially satisfies either the individual or government funding requirements, it still may be possible for the entrepreneur to qualify for IEP. Where funding falls short of the regulatory minimum, the entrepreneur must produce alternative reliable and compelling evidence that the start-up has substantial potential for rapid growth and job creation. There is no specific, mandatory list of alternative documents. Instead, guidelines provided by USCIS recognize that the type of documentation may vary depending on the nature of the business. Examples of appropriate documentation includes evidence of the number of users of a product or customers for a service. Revenue generated or additional investment attracted also may demonstrate the start-up’s potential for growth.

Intangible factors also will be considered by USCIS as proof of the potential for rapid growth. Evidence of the social impact, national scope, or positive local effects may be sufficient to demonstrate growth potential.

These factors are intended to be illustrative rather than comprehensive. Other relevant and probative evidence may be considered to successfully argue that the significant potential for rapid growth may overcome a deficiency in the funding requirements for the start-up.

Certain funding sources will not be considered by USCIS when evaluating whether an applicant has proved sufficient qualifying investment funds have been received by the start-up. Neither non-monetary contributions nor foreign funds are recognized as contributing to the qualifying investment amount.

Significant Public Benefit

Parole of any kind must be based on either a humanitarian need or a significant public benefit. There is no definition in law or regulation to provide guidance for when circumstances justify parole as a significant public benefit. The IEP rules, however, describe circumstances in which the presence of an international entrepreneur in the United States with a central and active role in a start-up company with substantial potential for rapid growth and job creation may create such a benefit.

Many of the factors identified by USCIS policy that may be used to demonstrate an international entrepreneur will play a central and active role in a start-up also may support a finding that the individual’s presence in the United States will provide a significant public benefit. To satisfy this requirement, an IEP applicant may present records of additional investor or government funds from any source, support letters from government entities, business associations, news articles favorably covering the start-up or the entrepreneur’s role in it, participation in a reputable business accelerator, the entrepreneur’s educational degrees or patents, evidence of one or more prior roles by the applicant in successful start-ups, and any other probative material.

The final installment in this series will review the procedures for requesting IEP.