By Lisa W. Liu
Immigrants comprise only 13 percent of the United States population, yet they represent more than 27 percent of all entrepreneurs in the country.
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Almost half of the Fortune 500 is comprised of immigrant founders or their children, but despite their contributions to our economy, the U.S. immigration system provides little to no work permit options for foreign entrepreneurs looking to build the next American unicorn. The statistics demonstrating the positive impact immigrant entrepreneurs have on the U.S. economy are overwhelming, so shouldn’t we have a better solution for attracting talented foreign entrepreneurs?
The International Entrepreneur Rule (IER), a program in which the Department of Homeland Security may grant authorized parole to foreign entrepreneurs who demonstrate promise of significant public benefit through their business venture, is a step in the right direction. Passed under the Obama administration and later suspended under Trump, President Biden resurrected IER in 2021 to provide foreign entrepreneurs a path forward in the U.S.
Visa vs. IER
Under IER parole, entrepreneurs are allowed entry into the country but are not provided immigration status nor considered “admitted” into the U.S. It can be revoked at any time, and there is no recourse for those who are denied. Once parole expires or is terminated, the entrepreneur is required to depart, unless otherwise eligible to remain. Parolees are allowed to apply for immigrant or non-immigrant classification at any time prior to expiration—but if approved, the entrepreneur must depart the U.S. and apply for a visa abroad, as they don’t have ability to adjust or change an immigration status.
What are the eligibility requirements?
IER allows an entrepreneur to enter and remain in the U.S. to develop a startup for up to 2.5 years and be eligible for re-parole for another 2.5 years. The following outlines criteria to qualify for IER parole:
- The startup was created or received qualified investment within five years prior to applying.
- The entrepreneur owns at least 10 percent of and maintains at least a 5 percent ownership interest.
- The entrepreneur plays an active role that is central to the business’ operations.
- The entrepreneur can prove “significant public benefit” by meeting one of the following:
- The startup received a minimum capital investment of $250,000 from one or more qualified investors within 18 months prior to application. A qualified investor is defined as a U.S. citizen or permanent resident who has invested at least $600,000 in startups with at least two of those startups having created five or more U.S. worker jobs or generated $500,000 in annual revenue with a 20 percent growth rate.
- The startup received domestic, federal, state, or local government funding totaling at least $100,000 in economic development, R&D or job creation awards or grants.
- If the startup received some, but not all, of the capital or funding required above, it must provide “compelling evidence” of substantial potential for rapid growth and job creation. Evidence examples might include entrepreneur acceptance into a reputable accelerator program, creating new technologies, or producing cutting-edge research.
The requirements around qualified investments are onerous. Qualified investors must provide documentation from prior ventures and are not likely keen to divulge such sensitive information. Additionally, investments from the applicant’s friends and family are not allowed.
How to best position for IER
Consult an immigration attorney early. One with experience handling E1 and E2 visas can determine if IER is a viable option and outline the necessary sources of corporate documentation and financials for application.
Apply to accelerators early. Because of the sizable funding obligations, a startup entrepreneur’s most realistic path to meeting the “significant public benefit” requirement might be acceptance into a competitive accelerator program.
Seek financing from all possible sources. If enough funds can be raised to go to market and generate significant revenue, the immigration attorney will be able to make a convincing argument that there is adequate compelling evidence to qualify for IER.
Lisa W. Liu is a senior partner at The Mitzel Group, where her legal practice focuses on business and immigration issues. As an entrepreneur and former investment banker, she skillfully leverages finance expertise in conjunction with the law to position clients for growth and successful exit.
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