Proposed International Entrepreneur Rule Gives Startup Founders Temporary Stay in U.S.

by Perkins Coie
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The U.S. Citizenship and Immigration Services (USCIS) and Department of Homeland Security (DHS) last week proposed a new rule that will allow certain immigrant startup founders to receive “parole” or temporary permission to live and work in the United States.  The proposed rule is scheduled for publication in the Federal Register on August 31, 2016 and will then be subject to a 45-day comment period.  It is anticipated that the Final Rule will go into effect shortly before President Obama leaves office in January 2017.

Under the proposed rule, USCIS could grant parole to entrepreneurs who have at least a 15 percent ownership stake in a startup that can establish it has “substantial potential” for fast growth and creating jobs.  The foreign entrepreneur will also need to play an active and central role in the enterprise.  Up to three entrepreneurs per startup could qualify.  The entity would need to have been established in the three years prior to application. 

To show that the startup has “substantial potential” for quick growth and creating jobs, the applicant will need to document that the enterprise has “received investment capital totaling $345,000 or more from established U.S. investors,  such as venture capital firms, angel investors, or start-up accelerators, with a history of substantial investment in successful start-up entities.”  Alternatively, the requirement can be satisfied if the entity has received at least $100,000 in certain kinds of government funding. 

Successful applicants will receive an initial period of stay of two years, with the potential to extend for another three years under certain circumstances, including provision of a “significant public benefit,” as shown by an increase in investment, money or jobs.

While this is not a new visa category (which would require Congressional action), the proposed rule would create a new viable option tailored to the needs of startup founders.  USCIS estimates that about 3,000 entrepreneurs may be eligible for parole each year.

On the same day DHS issued its proposed regulation, the White House published a blog post on Medium.com, citing the proposed rule as one of the reforms of the president’s executive actions on immigration released in 2014.  It noted that DHS is also planning to publish guidance clarifying when entrepreneurs can “self-petition” for green cards.

In issuing the proposed rule, DHS stated that it “believes that this proposal will encourage foreign entrepreneurs to create and develop start-up entities with high growth potential in the United States, which are expected to facilitate research and development in the country, create jobs for U.S. workers, and otherwise benefit the U.S. economy through increased business activity, innovation and dynamism.”

Perkins Coie will monitor comments and activity around this proposed rule and will continue to provide updates.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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