The Biden administration has published new information aimed at boosting an immigration policy for entrepreneurs that officials acknowledge would benefit from greater clarity and transparency. The International Entrepreneur Rule went into effect in the final days of the Obama administration, but Trump officials “sought to remove IER and block implementation before the program launched, thereby costing the United States jobs and innovation,” according to the National Venture Capital Association, which successfully sued the Trump administration over the rule.
New Data Illustrate The Challenges Facing A New Program
According to new data obtained by the National Foundation for American Policy, the International Entrepreneur Rule has suffered from its novelty, breeding uncertainty among potential applicants—and possibly adjudicators. Since FY 2021, USCIS has received only 94 applications. The agency has approved 26 cases and denied 28. There have been 19 withdrawals, and the remaining 21 cases await a response from an applicant following an agency Request for Evidence. There is no backlog.
Unlike a category such as H-1B visas, which has a long history and, prior to the Trump administration, a stable regulatory environment, it is not possible to evaluate a new program’s denial rate to determine whether U.S. Citizenship and Immigration Services has properly adjudicated cases. It would require reviewing denied cases to know if they met the International Entrepreneur Rule criteria or if individuals misinterpreted the thresholds needed to gain approval under a new program.
Under the rule, the Department of Homeland Security (USCIS is an agency within DHS), on a case-by-case basis, may grant parole to foreign entrepreneurs “who demonstrate that their stay in the United States would provide a significant public benefit through their business venture.” Entrepreneurs would receive employment authorization (to work at their startup). A spouse is also eligible to be employed in the United States.
The updated information on the USCIS website explains: “Startup entities must demonstrate substantial potential for rapid growth and job creation by showing at least $264,147 in qualified investments from qualifying investors, at least $105,659 in qualified government awards or grants, or alternative evidence.”
When submitting the initial application, an individual can be in the U.S. or abroad but must have at least a 10% ownership stake. USCIS lists qualifying investors, such as venture capital firms, but a “qualified investor” cannot be the individual or an immediate relative or an organization in which the individual or immediate relatives have an ownership interest.
One Entrepreneur’s Experience
Jason Susser, a partner with Siskind Susser, gained approval for a client under the International Entrepreneur Rule, but the process took a long time, and the client returned to Canada and now runs the business there. “She was a graduate student and built a nice company,” said Susser. “It took so long to get approved, and Canada has some major tax credits for startup R&D [research and development] salaries that she told me she probably will not use the parole under the International Entrepreneur Rule after waiting two years and will remain in Canada.”
The case history for Susser’s client:
- February 28, 2022: Entrepreneur Parole case filed for client with USCIS.
- November 10, 2022: Request for Evidence received from USCIS.
- December 2, 2023: Received notice for client to appear for biometrics.
- March 13, 2024: Client is approved for Entrepreneur Parole.
Susser said his client raised over $1 million after completing her MBA at Stanford. Nine months passed after submitting the application before receiving a Request for Evidence from USCIS. “The first red flag was that the RFE came from the Immigrant Investor Program office, which are the officers who deal with EB-5 application and that program is notoriously slow,” said Susser. “Then the RFE did not ask about the client but instead entirely focused on whether the U.S. investor is a ‘qualified investor.’ Even there, the big hang-up with the investor was not whether he had invested, but instead whether his investments in other companies had led to the required growth.”
“They were asking for documents of the U.S. investor’s other portfolio companies, which were unrelated to the case” said Susser. “Even though the investors we were working with were very supportive, they couldn’t go to companies they have invested in and ask for their employees’ I-9s, taxes and other private information to give to another company for an immigration case.”
The case was eventually approved but more than two years passed from the initial application to USCIS approval.
New USCIS Information Guidance And Direction For Entrepreneurs And Attorneys
On July 12, 2024, USCIS released new information on its website to provide greater detail on which startups and investments will qualify and the evidence adjudicators seek. (See here and here.) The information is more extensive than the earlier explanations on the USCIS website.
The website now provides more detailed answers, with questions that include:
What types of evidence can an entrepreneur submit to demonstrate that an investor in their startup entity meets the definition of a “qualified investor”?
What if my startup entity does not reach the monetary thresholds for “qualified investment” or “qualified government award or grant”?
How can I demonstrate that the investor has an established record of successful investments in other startup entities?
If I have evidence that I meet all the eligibility requirements for an entrepreneur and a startup entity described above, should I submit any additional supporting evidence?
Susser recommends that USCIS create a reliable processing time and not ask for evidence from non-parties, such as the businesses to which an investor provided capital. He also supports providing guidance on the evidence to submit upfront, which USCIS has now provided in greater detail in the new information posted on its website.
He thinks if the officers apply it, the expanded direction from USCIS will help. “I appreciate the procedural guidance they created here. Any expanded guidance like this is a step in the right direction to getting more of these entrepreneurs parole,” said Susser.
USCIS updated the policy manual for adjudicators on March 10, 2023.
A Viable Path For International Students?
A National Foundation for American Policy study found 55% of America’s startup companies valued at $1 billion or more had at least one immigrant founder. Approximately one-quarter of the billion-dollar companies in the U.S. had an immigrant founder who came to America as an international student.
Susser and USCIS officials agree that an International Entrepreneur Rule that works well could allow international students with ideas for startups to remain in the United States, including those who failed to gain H-1B status in the annual lottery. With an extension, an entrepreneur could stay in parole status for up to five years, after which they can attempt to use an immigration category to gain permanent residence. A successful business could allow individuals to qualify in the employment-based first preference (extraordinary ability) or second preference, with the possibility to self-petition with a “national interest” waiver.
“The Biden administration and USCIS have been intent on making sure that all available pathways are available to the best and brightest from around the world,” said a USCIS official. “That includes entrepreneurs.”
