Delay of International Entrepreneur Rule visa leads to lawsuit

- ADVERTISEMENT -

Many entrepreneurs and start-ups, along with the National Venture Capital Association, have filed a lawsuit against President Donald Trump for delaying the International Entrepreneur Rule, which was intended to help foreign founders live in the U.S. while growing their companies and had been set to go into effect on July 17.

“Immigrant entrepreneurs play a vital role in strengthening the U.S. economy, creating new jobs for Americans and pushing the boundaries of innovation. Rather than throw up roadblocks that prevent them from bringing their talent and ingenuity to our shores, we should welcome them with open arms,” Bobby Franklin, president and CEO of NVCA, said in a statement.

A CNBC report states that according to the Federal Register or the congressional public record, applicants for the visa would have to show that granting them legal status in the United States would “provide a significant public benefit” because “he or she is the entrepreneur of a new start-up entity in the United States that has significant potential for rapid growth and job creation.”

The rule would also require applicants to show investments of at least $250,000 from established U.S. investors.

According to a San Francisco Chronicle report; the rule was approved by the Department of Homeland Security in January, almost towards the end of Barack Obama’s presidency and was to take into affect a week before the very end of his presidency however, the Trump administration decided to delay it with the intent to repeal it altogether.

The group argues that the administration’s decision to delay the rule was unlawful under the Administrative Procedure Act, which, the association contends, would have required a lengthy notice and comment period from the public before the administration could make any changes and is looking to reinstate the rule, and ultimately permit foreigners who meet its requirements to start applying for temporary work status in the U.S.

The venture capital association said that the delay of the rule and the lack of a “startup visa” has impacted investors’ ability to work with some foreign founders and that the rule would have led to new U.S. job, approximately 3,000 according to the Department of Homeland Security.

Out of the many affected, most are Indians and the San Francisco Chronicle report continues to tell their story.

Nishant Srivastava and Vikram Tiwari, founders of Omni Labs, a marketing intelligence software company headquartered in San Francisco, applied for the L-1 and H-1B work visas but did not succeed and instead had to move to Canada, where they were able to secure a work permit.

Since Tiwari and Srivastava were planning to apply for admission to the U.S. under the International Entrepreneur Rule and were not permitted, on their note the lawsuit claims that the company has had to endure extra expenses, such as setting up a Vancouver office.

“Simply put, Nishant and Vikram’s inability to obtain lawful status or parole has been a significant hindrance to Omni’s operations and growth, and thereby makes it more difficult to acquire U.S. investment in the future,” the lawsuit reads.

The point of the rule was to give foreign entrepreneurs who do not qualify for existing visa programs a chance to stay in the U.S. and grow their businesses and the visas that currently exist, the H-1B and L-1 programs are more suited for companies hiring employees or transferring executives from abroad, however they are also under scrutiny by the Trump administration.

Brothers Atma and Anand Krishna, citizens of the United Kingdom and co-founders of business-payment startup Lotus Pay, were also victims of the delay.

Their company went through Mountain View startup accelerator Y Combinator last summer and neither brother has been able to get a visa to stay in the U.S. as they were also hoping to apply to stay under the International Entrepreneur Rule, like others.

Given the delay in the rule, the brothers have primarily built their business in India and put off expanding in the U.S., according to the complaint.

“It is impossible to overstate the benefits that immigrant entrepreneurs and companies have provided to the American economy and the nation as a whole, and the concomitant importance of ensuring that immigrant entrepreneurs can come to the United States to continue to grow their businesses,” the complaint reads.

A 2013 study from the NVCA showed that immigrant entrepreneurs are playing an increasingly significant role in entrepreneurship; in fact, one-third of U.S. venture-backed companies that went public between 2006 and 2012 had at least one immigrant founder whereas before 2006, that number was 20 percent and before 1980, it was only 7 percent.

The rate at which immigrants are becoming new entrepreneurs, which is 0.52 percent, is now double that of native-born Americans (0.26 percent), according to the 2017 Startup Activity National Report from the Kauffman Foundation.

“The United States economy as a whole thrives because this country has long been regarded as the world’s leading incubator of new, innovative companies,” Melissa Crow, litigation director of the American Immigration Council, said in a statement.

“The International Entrepreneur Rule is essential to ensuring that America remains at the forefront of emerging enterprise. Our lawsuit is intended to get this important initiative back on track,” she added.