One of the most vexing gaps in U.S. immigration law is the lack of appropriate immigration options for foreign entrepreneurs. Many Silicon Valley tech giants were founded by foreign-born entrepreneurs, and concerns have been raised in both the startup community and immigration law community about how the U.S. can avoid losing the founders of the next Google, YouTube or Yahoo. Entrepreneurial-minded foreign students at U.S. universities, for example, are often faced with the difficult choice of seeking a work visa through employment at an existing U.S. business or going back overseas to pursue startup dreams.

In 2014, President Obama announced a series of executive actions on immigration, including expansion of immigration options for foreign entrepreneurs. The Department of Homeland Security (DHS) followed up on this promise in August 2016 by proposing a new administrative rule that would allow international entrepreneurs to gain parole (temporary permission to enter the U.S.) to start and grow their businesses. Named the International Entrepreneur Rule, it authorizes the U.S. Citizenship and Immigration Services (USCIS) to parole, on a case-by-case basis, eligible entrepreneurs of startup enterprises that may provide a significant public benefit through the potential for rapid growth and job creation.

Specifically, under the proposed rule, USCIS may grant parole to an international entrepreneur if:

  • The individual has a significant ownership interest in the startup (at least 15%) and an active and central role to its operations.
  • The startup was formed in the United States within the past three years.
  • The startup has substantial and demonstrated potential for rapid business growth and job creation, as evidenced by:
    • Receiving significant investment of capital (at least $345,000) from certain qualified U.S. investors with established records of successful investments;
    • Receiving significant awards or grants (at least $100,000) from certain federal, state or local government entities; or
    • Partially satisfying one or both of the above criteria, in addition to other reliable and compelling evidence of the startup entity’s substantial potential for rapid growth and job creation.

Under the proposed rule, an entrepreneur may be granted a temporary, initial stay of up to two years to oversee and grow their startup entity in the U.S. In addition, a subsequent request for re-parole (for up to three additional years) would be considered if the entrepreneur and the startup entity continue to provide a significant public benefit, as evidenced by substantial increases in capital investment, revenue or job creation.

The proposed rule grants parole to the international entrepreneur to enter the U.S. for a temporary period. He or she would not be conferred any temporary nonimmigrant status or lawful permanent resident status. Therefore, the entrepreneur must explore additional temporary or permanent U.S. immigration options to continue working in the US after his or her parole has ended.

DHS published the notice of proposed rulemaking in the Federal Register on Aug. 31, 2016, and took public comments until mid-October. There were 608 comments received, including input from tech groups advocating changes such as lowering the minimum investment and extending the number of years an entrepreneur can maintain this status. DHS will next address the comments received in relation to the proposed rule and will issue a final rule to take effect upon its publication in the Federal Register.

It remains to be seen whether the final rule will now be published before the inauguration of the new president and whether President-elect Trump will support or seek to halt this new regulation. Regardless of the outcome, the proposed rule demonstrates an awareness by DHS of the need to facilitate the business creation of foreign entrepreneurs in the United States. This may make some variety of entrepreneur visa more likely to play a role in eventual comprehensive immigration reform.

This law update was authored by Taft attorney Russell Menyhart, with contributions from Taft’s Jennifer Snead.