Though the U.S. does not currently offer temporary work visas for startup founders, regulations enacted under the auspices of Section 212(d)(5) of the Immigration and Nationality Act, 8. U.S.C. 212(d)(5) and known as the International Entrepreneur Parole Rule (“IEP Rule”), provide foreign entrepreneurs a pathway to entering and working in the United States. While H1-B visas allow U.S. employers to temporarily hire foreign workers in certain occupations, it does not apply to entrepreneurs who have an ownership stake in a company. Moreover, E-2 visas do not provide a viable alternative due to their limited applicability to citizens of countries with which the U.S. has certain treaties, and the requirement that the U.S. company involved be at least 50% owned by the foreign entrepreneur (or others who share his/her nationality). By contrast, the IEP Rule provides entrepreneurs an alternative route by applying for parole, or leave to enter, from the Department of Homeland Security (“DHS”) to allow individuals entry into the U.S. on a case-by-case basis where doing so “would provide a significant public benefit through substantial potential for rapid growth and job creation.”
While the IEP Rule does not provide visa status, it does give the applicant a right to enter the U.S. and stay for a certain period of time as authorized by DHS. Applicants under the IEP Rule must show that their parole will provide a significant public benefit because he or she is an entrepreneur of a startup with a strong potential for rapid growth and job creation. Parole may be granted for up to three entrepreneurs per start up, and applicants may be either employers or employees, as well as spouses and children of the foreign entrepreneur.
To satisfy the IEP Rule, the applicant must prove that (A) he/she owns at least a 10% interest in a startup company, that he/she plays a “central and active role” in the business and is “well-positioned to substantially assist” with its growth and success; (B) the startup was founded in the U.S. within 5 years of the application and has “substantial potential for rapid growth and job creation”; and (C) the entrepreneur provides a significant benefit to the U.S. based on his or her role in the business. This final criteria requires the applicant to show that the startup has received at least $250,000 in qualified investments in the 18 months preceding the parole application from one or more qualified investors; or (ii) grants of at least $100,000 from federal, state or local agencies involved in economic development, research and development and/or job creation in the 18 months preceding the application; or (iii) the startup partially meets either or both criteria and there exists compelling evidence of the startup’s substantial potential for rapid growth and job creation.
Once granted, the IEP Rule permits entrepreneurs 30-month period of entry, with one 30-month extension upon a showing of continued investment in and growth by the startup. Additionally, entrepreneurs admitted to the U.S. under this rule bear the risk that if they leave the U.S., they may not be able to reenter the country. Notwithstanding these limitations, the IEP Rule provides a viable option for entrepreneurs owning an interest in startups and encourages these foreign entrepreneurs to create and develop start up entities with high growth potential in the U.S. which can facilitate research and development, create jobs, and otherwise benefit the U.S. economy through innovation and increased business activity.
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This alert should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This alert is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your attorney concerning any particular situation and any specific legal question you may have. We are working diligently to remain well informed and up to date on information and advisements as they become available. As such, please reach out to us if you need help addressing any of the issues discussed in this alert, or any other issues or concerns you may have relating to your business. We are ready to help guide you through these challenging times.