NY Times: “In Blow to Tech Industry, Trump Shelves Start-Up Immigrant Rule”

by Joseph McKeown

The Trump administration announced yesterday that it would delay, and likely eliminate, a federal rule announced by former President Obama that would have let foreign entrepreneurs come to the United States to start companies. The decision, which will be officially published by the federal government today, was quickly criticized by key business and technology leaders. “Today’s announcement is extremely disappointing and represents a fundamental misunderstanding of the critical role immigrant entrepreneurs play in growing the next generation of American companies,” Bobby Franklin, the president and chief executive of the National Venture Capital Association, a trade association for start-up investors, says in a statement. He notes that while other countries are doing whatever they can to attract entrepreneurs, “the Trump administration is signaling its intent to do the exact opposite.”

The policy, known as the International Entrepreneur Rule, was supposed to go into effect next week, and was created to allow foreign entrepreneurs who have received significant financial backing for their business ventures to come temporarily to the US to grow their companies. (We previously discussed the International Entrepreneur Rule as well as other visa options for entrepreneurs.) Silicon Valley leaders were excited about the rule, since they’ve long wanted a “start-up visa” (or something similar) for entrepreneurs.

When originally announcing the rule last year, former USCIS Director León Rodríguez said: “America’s economy has long benefited from the contributions of immigrant entrepreneurs, from Main Street to Silicon Valley. This proposed rule, when finalized, will help our economy grow by expanding immigration options for foreign entrepreneurs who meet certain criteria for creating jobs, attracting investment and generating revenue in the US.” Under the Obama administration, the Department of Homeland Security (DHS) estimated that nearly 3,000 entrepreneurs would be eligible to apply under the rule annually. Eligible entrepreneurs would have been required to demonstrate substantial ownership in the startup, significant capital, as well as potential for the company’s rapid growth and job creation. Entrepreneurs would have been granted a stay of up to thirty months, with the possibility to extend the period an additional thirty months if they meet certain criteria.

Now, under the Trump administration, the DHS will delay the start date of the rule until March 14 of next year, while seeking public comments on a plan to rescind the rule. The DHS states that they are delaying the rule because of President Trump’s executive order signed in late January to seek improvements to border security and immigration enforcement. This order required that the DHS secretary ensure that "parole authority”—which the DHS can use to temporarily permit individuals into the country without being formally admitted with a visa stamp and which the International Entrepreneur Rule depended on—be used only on a case-by-case basis and “when an individual demonstrates urgent humanitarian reasons or a significant public benefit derived from such parole.” While many business and tech leaders are disappointed, Ira Mehlman, a spokesman for the Federation for American Immigration Reform, a nonprofit advocacy group, believes it was the right decision. “We are pleased that the administration is rescinding this,” he tells the San Francisco Chronicle. “We need to fix the underlying immigration policies so we don’t need to create all of these add-on programs to compensate for the failures of the oversized immigration policy we are already have."

While many admit the rule was not perfect, they say it was the best possible under the circumstances. León Rodriguez says the rule was a “last resort” for the Obama administration since Congress couldn’t pass any legislation on a startup-friendly visa. “We have a structure for business and employment-based immigration that is full of gaps,” he tells the San Francisco Chronicle. “We have very imperfect pathways for individuals to come and contribute to our economy.” House Minority Leader Nancy Pelosi tells the Chronicle: “What we really need is a comprehensive immigration bill, that's where we should be dealing with these decisions.”

Steve Case, an investor and former CEO of AOL, attended a White House meeting in June on the importance of encouraging foreign entrepreneurship in the US and says that Trump economic adviser Gary Cohn and other officials at the time seemed supportive of “what could be done to win a global battle for talent,” he tells the San Francisco Chronicle. He is disappointed by news of the delay and impending cancellation. “Big mistake,” he writes on Twitter. “Immigrant entrepreneurs are job makers, not job takers.” Gary Shapiro, chief executive of the Consumer Technology Association, a trade group representing the consumer technology industry, says the rule delay and cancellation will hinder American innovation and job creation. “The 44 immigrant-founded billion-dollar start-ups now in the US have created an average of 760 American jobs per company,” he tells the New York Times. “Without these immigrant entrepreneurs, it is unlikely America would stand as the beacon of innovation that it is today.”