Parole for International Entrepreneurs

U.S. immigration for foreign entrepreneurs

U.S. immigration options for foreign entrepreneurs

On August 26, 2016, USCIS announced a new rule proposed that would allow certain foreign entrepreneurs of U.S. companies to be “paroled” into the United States in order to start or to scale their operations. “Parole” means that a foreign entrepreneur may enter the United States for a specified period of time and that he or she is entitled to apply for temporary employment authorization.

Proposed Rule

According to the USCIS, “the purpose of the proposed parole process is to provide qualified entrepreneurs of high-potential start-up entities in the United States with the improved ability to conduct research and development and expand the entities’ operations in the United States so that our nation’s economy may benefit from such development and expansion, including through increased capital expenditures, innovation and job creation.”  Under the proposed rule, the Department of Homeland Security (DHS) will have authority to parole foreign entrepreneurs of startup companies if their presence in the United States would provide a “significant public benefit through the substantial and demonstrated potential for rapid business growth and job creation.”  There would be a limit of three (3) entrepreneur parolees per qualifying U.S. startup entity.  Click to learn more details of the proposed International Entrepreneur Rule.

Criteria

For entrepreneurs to qualify for parole, USCIS outlined several criteria:

  • Substantial Ownership: The foreign entrepreneur must have a substantial ownership interest in the startup, with a minimum of at least 15%
  • Active Role: The foreign investor must have an active and central role to the operation of the startup
  • Recent Formation: The startup must have been formed in the United States within the past three years
  • Growth Potential: The startup has substantial and demonstrated potential for rapid business growth and job creation, as evidenced by the following:
    • Investors: It has received a significant investment of capital of at least $345,000 USD from qualified U.S. investors with established records of successful investments (such as angel investors, venture capitalists, etc.)
    • Awards: It has received significant awards or grants of at least $100,000 USD from federal, state or local government entities; or
    • Other Factors: Partially satisfying one or both of the aforementioned criteria in addition to other compelling evidence of the startup entity’s substantial potential for rapid growth and job creation (selected to accelerator programs, winners at Techcruch Disrupt etc.)

Duration

Entrepreneurs will initially be granted an initial stay of up to two (2) years to oversee and grow their startup entity in the United States. Upon expiration, the entrepreneurs can apply for an extension for an additional three (3) years provided that the same criteria is met, with the exception that the entrepreneur’s ownership can be reduced to 10%.  Otherwise, the business entity must continue to provide a significant public benefit as evidenced by substantial increases in capital investment, revenue or job creation.

Spouses and Children

Under the proposed rule, spouses and children under 21 can accompany the qualifying entrepreneur to the United States.  The spouse would be entitled to apply for employment authorization.

When it Becomes Law

As of now, the entrepreneur parole proposal is currently in the rule-making stage – this means that USCIS is not accepting any applications. The notice of proposed rulemaking in the Federal Register invites public comment for 45 days, after which USCIS will address the comments received. The proposed rule does not take effect until the date indicated in the final rule when a final rule is published in the Federal Register.

Expansion of Options Beyond Traditional Visas

If this rule becomes law, it would open up a whole new avenue for foreign entrepreneurs to enter the United States to operate their startup companies. As of now, the most common visas for foreign entrepreneurs are Post-Competition Optional Practical Training (OPT), H-1B visas for entrepreneurs, O-1 visas, L-1 intra-company transfer visas, E-1 treaty trader visas, and E-2 treaty investor visas.  However, the proposed parole for entrepreneurs could potentially fill the void for entrepreneurs who do not qualify for any of the aforementioned visas.

Example:  The E-2 treaty trader visa generally requires the entrepreneur to personally invest a substantial amount of money towards the startup of the business and to be a citizen of a treaty country.  Failure to meet either of these criteria generally means that foreign entrepreneurs cannot apply for this visa.

Example:  While F-1/OPT students may be able to start and oversee their own business, OPT usually is usually only granted for 1-3 years.  Once the OPT expires, they would need to transition to another visa category, such as a self-employed H-1B visa or an E-2 visa.  If the entrepreneur is not selected in the H-1B lottery, or if she does not qualify for an E-2 visa, then she may be forced to leave the United States.

What Can You Do to Prepare for Parole as a Foreign Entrepreneur?

Based on the language of the proposed rule, there are a few things that foreign entrepreneurs can start doing to qualify for parole when it becomes law.

  • Form a U.S. corporate entity:  Register to form a U.S. corporate entity such as an LLC, C-corp, or S-corp and make sure that you own at least 15% of the company.  If you are already the owner of a company that has been in existence for more than three years, you may not qualify for parole.  If this is the case, consider dissolving or opening a subsidiary entity and funneling investor funds to the newly-formed company.
  • Investor funding: If you already received outside funding, or are in the process of raising capital, be sure to document all investments thoroughly so that you can demonstrate the $345,000 investment requirement.  If you have not yet secured outside funding, start strategizing on how you can raise at least $345,000 USD in outside funding in order to meet the criteria for parole.
  • Awards and Grants:  Start applying for grants, scholarships and award prizes in the amount of at least $100,000 USD.
  • Other Evidence:  You should also start collecting other documentation to demonstrate your company’s potential for rapid growth or job creation.  This can include a detailed business plan/deck, corporate tax returns, payroll tax returns, articles about the company or its founders, awards, invitations to speak at events, etc.

Our Legal Services for Foreign Entrepreneurs

Starting a business in the United States is difficult – starting a U.S. business as a foreign entrepreneur is even more difficult.  Your citizenship, education, and the nature of the company all play crucial roles in determining what visa you are eligible for.  Maximilian Law Inc. has years of experience in navigating foreign entrepreneurs through the maze of visa options in order to ensure that you can remain in the U.S. on a long-term basis.  Please contact us if you are a foreign entrepreneur looking to start a U.S. business.