In my last post about the Startup Visa, I was very critical of the Kerry–Lugar legislation. That’s because it required immigrant entrepreneurs to raise at least $250,000 in financing for their startups, of which $100,000 had to come from American VCs or Super Angels. Few startups raise this kind of seed money—even in Silicon Valley. I couldn’t foresee this bill generating more than a few dozen jobs.  Yet our political leaders would have claimed “Mission Accomplished”, and we would have lost a valuable opportunity to stem the brain drain.

I was delighted to receive an e-mail, last week, from Garrett Johnson, who works for Senator Richard Lugar (R-Ind.). Garrett said that the Senator had read my articles and asked his staff to consider my comments. After consulting with Bob Litan, of Kauffman Foundation; Brad Feld, of Foundry Group; Eric Ries, of the lean-startup movement; and other champions of the visa, Garrett had revised the legislation. He sent me a draft of the bill that was introduced today.  This new legislation is even better than I had hoped for. If it gets through both houses—and doesn’t have bureaucratic constraints—I expect it to unleash a flood of entrepreneurship.

The new legislation provides visas to the following groups under certain conditions:

  1. Entrepreneurs living outside the U.S.—if a U.S. investor agrees to financially sponsor their entrepreneurial venture with a minimum investment of $100,000. Two years later, the startup must have created five new American jobs and either have raised over $500,000 in financing or be generating more than $500,000 in yearly revenue.
  2. Workers on an H-1B visa, or graduates from U.S. universities in science, technology, engineering, mathematics, or computer science—if they have an annual income of at least $30,000 or assets of at least $60,000 and have had a U.S. investor commit investment of at least $20,000 in their venture. Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or be generating more than $100,000 in yearly revenue.
  3. Foreign entrepreneurs whose business has generated at least $100,000 in sales from the U.S.  Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or be generating more than $100,000 in yearly revenue.

The investor must be a qualified venture capitalist, a “super angel” (U.S. citizen who has made at least two equity investments of at least $50,000 every year for the previous three years), or a qualified government entity.

The really good news is that this enables foreign students and workers who are already in the U.S. to qualify for a visa. The requirements for them are very reasonable—they must show that they have enough in savings not to be a burden to American taxpayers, and get a qualified investor or a government entity such as the Small Business Administration to validate their ideas by making a modest investment.

Yes, there is a risk for holders of this visa that, if their venture fails or doesn’t go anywhere, they must start again or leave the U.S. But that’s entrepreneurship—there are no guarantees. This won’t appeal to everyone, and it is not meant to. The Startup Visa is for risk takers.

This version of the bill will, I expect, encourage tens of thousands of workers trapped in “immigration limbo”, and foreign students who would otherwise return home after graduation, to try their hands at entrepreneurship. Many of these people would not otherwise have considered entrepreneurship; they will now have the incentive to take the risk.

Even though the bill doesn’t allow visa holders to work for any company other than their own, I have no doubt that the anti-immigrants will rally against it. They always do, regardless of what is good for the country and of what is good for them. They fear competition and will make claims that these startups will, somehow, take their jobs away.

But the fact is that skilled immigrants create jobs; and recipients of the startup visa will not be allowed to stay in the U.S. permanently unless they do. Right now, these job creators have no choice but to take their ideas and savings home with them and become our competitors. This legislation allows them to create the jobs here.

A lot of hard work has gone into this bill, over the last two years, by tech notables Brad Feld, Eric Ries, Dave McClure, Manu Kumar, Shervin Pishevar, Fred Wilson, and Paul Kedrosky. This group is launching a campaign to gain the bill political support. It is using social-lobbying tools powered by Votizen to take tweets, Facebook posts, and SMS messages and hand-deliver them to Congress. The Startup Visa website details how you can get involved and help the bill to succeed. Now it is your turn to speak up and help us revitalize the economy.

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  • http://wayneharrel.zielix.com Wayne Harrel

    I damn need this bill, some VCs are willing to invest in my startups, but I need an EB5 which requires at least 500,000 as my personal investment.

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  • http://www.facebook.com/people/Сергей-Хващук/1353840786 Сергей Хващук

    Vivek, I’ll go under #3.
    I may live everywhere in the world why not in the US?

  • Kanishka

    Vivek:

    I have a question on a comment you made in the article….”The really good news is that this enables foreign students and workers who are already in the U.S. to qualify for a visa. The requirements for them are very reasonable—they must show that they have enough in savings not to be a burden to American taxpayers, and get a qualified investor or a government entity such as the Small Business Administration to validate their ideas by making a modest investment.”

    Does this mean one would need to stay on an H1 AND run the start-up on the side, or does one get new ‘start-up visa’ status once venture funding is secured. Asking because its not easy (though not impossible) to do a day job and grow a business!

    Thanks.

    • http://www.wadhwa.com Vivek Wadhwa

      The legislation seems to be stalled as you can tell from my latest post. But the idea is that you can work full time on this and get a green card if you create jobs…

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  • Arvind

    Oh I came in so late for commentary on this. But kudos to your work and pursuit, Professor Wadhwa! This type of VISA means a lot to the section of entrepreneurs who want to focus on building global companies. And building such companies out of US will make US a stronger economy and bring in jobs for Americans too.

    How can anyone not see a difference between an entrepreneur & risk-averse crowd?

    Arvind

  • Crrl

    It is pretty amazing how little an average American knows about immigration and H-1B visas. I’ve had to explain at multiple occasions that to obtain a H1 Visa, the employer has to prove the credibility of the potential employee and must pay the minimum wage as prescribed by the Dept. of Labor. There seems to be a huge misconception about foreigners taking away jobs.

    I am an entrepreneur myself, stuck in the midst of visa-confusion. I ended up registering my company in Singapore and moved there for an year too.

    Thank you for an update on the Bill! I sincerely hope they work things out soon.

  • Aaron A

    Hi, I have an idea for a startup. First, I’m a big fan of the work you did for Obama–shutting down IT projects where the budget makes no sense. I’ve personally seen projects that are costing the US or state governments over tens of thousands–even hundreds of thousands–per data entry screen. Invariably, the vendor is deliberately using bad designs that are overly complex. Often, the vendor throwing workers on the project to merely bill hours when they are not needed.

    I tried to tweet the idea earlier…what do you think of a web spider that counts the number of web forms and controls on a web application, compares against the budget spent so far, and uses COCOMO to flag projects for manual review? This would allow government administrators to compare thousands of projects vs. the budget spent–automatically. Thanks–Aaron aa@email212.com

  • Rajiv

    Guys,

    Has this visa taken effect? Or they are still going to pass this?

  • James Reid

    Exalt05 this is for you:

    Companies, Followed by the Name and Country of Origin of Foreign-Born Founder:

    Google – Sergey Brin, Google’s co-founder was born in Moscow.
    Yahoo! – Jerry Yang 楊致遠 (Taiwanese American), is the co-founder, former CEO and “Chief Yahoo” of Yahoo! Inc
    YouTube – Steven Chen, originally from Taiwan, and Jawed Karim, born in Germany were two of the three founders of Youtube
    PayPal – Max Levchin (co-founder of PayPal) came to the U.S. from Ukraine at 16. Elon Musk came from South Africa
    Warner Brothers – founded by the Polish-Russian-Jewish immigrants Wonskolaser brothers
    Vizio – William Wang, found of Vizio, was born and raised in Taiwan (coming to the states at around age 12)
    Wang Laboratories – founded by An Wang who came to the US from China in 1945. http://en.wikipedia.org/wiki/Wan
    Carnegie Steel – founded by Andrew Carnegie who came to the US from Scotland in 1848 at age 13. http://en.wikipedia.org/wiki/Car
    Anheuser-Busch – founded by Eberhard Anheuser who came to the US from German in 1842
    Chevrolet – founded by Louis Chevrolet who came to the US from Switzerland by way of France in 1906. http://en.wikipedia.org/wiki/Che
    Steinway & Sons Pianos – founded by Heinrich Englehard Steinweg who came to the US from Germany in 1851. http://en.wikipedia.org/wiki/Ste
    Levi Strauss & Co – founded by Levi Strauss who came to the US from Germany in 1853.
    Goldman Sachs – founded by Marcus Goldman who came to the US from Germany in 1848. http://en.wikipedia.org/wiki/Gol
    Paramount Pictures – founded by Jewish-Hungarian Adolph Zuckor
    NBC/RCA/RKO – created and headed by Belorussian-Jewish David Sarnoff
    Goldwyn Pictures- founded by Polish-Russian-Jewish Shmuel Gelbfisz/Samuel Goldwyn
    Metro Pictures Corp.- co-founded by Ukrainian-Jewish born Louis B. Mayer
    Sun Microsystems – Was founded by two (out of three founders) immigrants Vinod Khosla (Born in India) & Andy Bechtolsheim (Born in Germany).
    LinkExchange – Tony Hsieh also a Taiwanese American, is the co-founder of LInkExchange (sold to Microsoft for $265mln).
    Zappos – Tony Hsieh also joined Zappos as CEO.
    AltaVista – Louis Monier, of AltaVista- and now (and arguably more important) Qwiki-fame, is from France.
    SpaceX – also by Elon Musk of South Africa.
    Tesla Motors – also by Elon Musk of South Africa

    • Azmat

      By this list one would give preferential treatment to Jewish immigrants.  Seems rather strange that we would spend so much time on this topic, how many startups were done by people born right here? Most of them. Lets fund these FIRST, then figure out what if anything needs to be done with the visa crowd. 

  • Exalt05

    Startup Visa Bill Reintroduced: Could Boost U.S. Entrepreneurship.

    This article is compleltly racist and this man is a Hater. His article is compleltly against U.S. Citizens and pro Foreigners.

    As if the U.S. does not have the skilled workers needed.

    Bill Gates testified to that in front of congress and stated we dont have the talent. Then Professors from all over the U.S. said that was Bullshit, and they Graduate tens of thousands of kids with these exact skill sets. Then gates opened the largest Call Center in the World in India and was allowed to in return for his $100 Million Dollar donation.

    I guess we dont have Americans that are skilled enough to work low pay low skill Call Center Jobs, BULLSHIT.

    They stated the only problem is Gates is cheap and wants to pay less and H-1B’s are almost always paid less than Americans and Sprint is the perfect example of that.

    I am sick of hearing this pro Foreigner crap and any excuse for them to come her and stay.

    Invest in U.S. people to start a business.
    The U.S. has led the world in new ideas and inventions and the rest of the world watched in Aw.

    This guy’s article is trash and nothing more than pro Foreigner hate speech

    • http://www.wadhwa.com Vivek Wadhwa

      The reason I have left this message here is that it exemplifies the ignorance of the anti-immigrant groups.

      “Even though the bill doesn’t allow visa holders to work for any company other than their own, I have no doubt that the anti-immigrants will rally against it. They always do, regardless of what is good for the country and of what is good for them. They fear competition and will make claims that these startups will, somehow, take their jobs away.”

      • Jonathan Zewkarborg

        Unless, there is a stipulation that clear states that immigrants who come on this startup visa are not eligible to transfer their visa status to any other immigration path including marrying a citizen to gain permanent residency.

        People are worried that immigrants can come on this visa and apply for other visas or pursue other immigration paths, which is happening now and abused heavily by H1-B visa holders.

        Any thoughts?

      • Aaron A

        I suspect that many entrepreneurs who start a business with only 20K will fail and won’t want to return home. I’m not saying they should have to, but the bill acts as if returning home will be easy or that an immigrant entrepreneur will accept that fate.

        Secondly, why the focus on IT? If an entrepreneur wishes to start a retail or manufacturing business, should we turn them down? It seems a little like the USSR for the government to be asking itself–what does the economy need? It seems exactly like the USSR when the answer we come up with is “math–and chess players.” If Jack Kraft wishes to come to the US and start a little cheese company, I don’t think is visa should be denied.

        Finally, what do you think of a program to automatically audit government IT projects? As in a webspider that is pointed at a web application and provided with the admin password that generates an estimated cost to compare against the amount actually spent?

        COCOMO provides a method to estimate cost from the number of forms and inputs. There isn’t a program out there that takes COCOMO and uses it to generate an amount that an existing application should cost. But I know for a fact there’s plenty of government-sponsored IT projects that are ten times over what could be considered a reasonable estimate for cost; flagging them (and then submitting them to a list of different vendors for a rebid) could save a lot of money.

        Aaron aa@email212.com

        • chetan

          Perfect example. I always want to start manufacturing unit which is back bone of any economy. Manufacturing unit not only employ highly educated workforce but also provides lifeline to low skilled workers which reduces a wealth gap as well as provides economical sustainability to society as well as community

    • Vikram

      Every foreign direct investment in any country always promotes employment, whether its invested by one big entrepreneur or small investments by 1000 different entrepreneurs, Canada is inviting entrepreneurs and their dollar value has been considerably on the rise since. so why not be flexible when the economy needs it. Every individual that comes to the US regardless of Visa does create direct and indirect employment, For eg. any individual coming to the US spends money visiting 2 tourist spots in a year(las Vegas and New York) and travels back to his country and comes back, generating money for the airlines, Dines in restaurants which generates income for the restaurant to pay their servers and chefs, lives in a apartment complex which generates rental income to the property owner and helps employ more maintainence staff; buy groceries which helps the retail chains create more local employment; and the list is endless over creation of indirect employment and on top of it if that individual gets money along to invest, its both direct and indirect creation of employment, wealth and more taxes.

    • http://www.facebook.com/andresdechile Andrés Bucchi

      @ Exalt05

      You shouldn’t be so short sighted, IMO. http://en.wikipedia.org/wiki/International_economics

      Fortunately, people in charge of the US do realize that their place in the world economy today is to guide skilled foreign human capitals in developing services and products that will make the US a world class tech services provider, instead of just a consumer.
      People in the us should evolve. You have money and networks, we —I’m chilean— have skills and market.

      Have you ever thought what will happen when the world’s most attractive consumer is China? Do you think consumer goods’ instruction manuals will come first in english?
      This is not something to fear, though. It means that if the US builds, for instance, world class BI services (like box.net, wow!) the world will be their market.

      IMO, again.

      • Aaron A

        The United States cannot both do this and be the united states. If we are to compete with China on the price of skilled labor, then we must be exactly like China. That means, having hundreds of millions–even a billion–unskilled, uninsured, uneducated laborers to lower prices on everything else.

        What’s good for the goose is good for the gander. Programmers can’t be making the exact same salary as a truck driver. Which means we must let in foreign truck drivers to lower THEIR wages. And, we must allow in foreigners to do all the low wage and minimum-wage jobs in the US as well. And since insuring all of these people would be a net loss, we must eliminate medicare.

        We can be a third world country, we can have the same capital ratio as a third world country, and we can behave like a third world country. We just can’t do this, peicemeal, one profession at a time–at least not ethically.

        The US has to look over its own constitution and decide if it is following it. Are all people being treated the same? Do all (non-criminal) foreigners have an equal chance of getting in?

        Right now, the US looks to skilled labor as a source of tax revenue to support its social programs. This strategy has worked in the past, but skilled labor no longer commands the same wage premiums as before and it makes sense to look beyond STEM occupations when allowing new immigrants in.

        The US will compete with the other countries out there. It’s just that there will be some growing pains–and the pain should not (and will not) be felt by STEM occupations alone.

      • Azmat

        The problem is that our 1% are simply too greedy; they see the low-paid and pre-trained workers overseas, and then they sabotage US education to justify the shortages etc.  Very short-sighted. 

  • http://www.facebook.com/profile.php?id=4809942 Anu Nigam

    I think that a super angel should be carefully defined. I am part of an Angel Group, I hope if we invest >$50K (but it is not one person putting in $50K) that we still qualify. I hope Super Angels don’t remove the other Angels out there.

    • http://www.wadhwa.com Vivek Wadhwa

      I expect that this will be clearly defined by the time they are done

      • H1B dude

        Would SBA count as a qualified government entity? I was thinking of opening a franchise

        • Aaron A

          SBA SDB isn’t really entrepreneurship. It is very Indian though

        • Aaron A

          Sorry I didn’t read your post–you said “a franchise” I guess that’s not a goverment contracting business.

          SBA probably should count. Otherwise you can get $20,000 on two credit cards, give it to a friend, and have them invest in your business. Good luck! $20,000 isn’t very much money to start with…

  • James Reid

    Would the new visa still be a EB-6 visa? (New Zealand is not a part of the E visa treaty)

    • http://www.wadhwa.com Vivek Wadhwa

      No, the current version is based on the EB-5 investor visa

      • Vikram

        I am sure there are lot of H1b holders in the US that help create direct and indirect employment, on average every 5 H1b holders in the IT industry create 1 Project manager position, so that they can be managed and any bill that creates employment and generates more income and more Indirect and direct taxes should be promoted