VW Blog

The Startup Visa – International Entrepreneur Rule

February 6, 2017   |   By Caroline R. Fabacher

On January 17, 2017, the Department of Homeland Security (“DHS”) published the International Entrepreneur Rule. Absent any amendment, appeal, or replacement by the new administration, the International Entrepreneur Rule will take effect on July 17, 2017.

Whom it concerns

Foreign entrepreneurs looking to build their company in the U.S. and American startups looking to bring a key foreign cofounder stateside. In order to be eligible for parole, the alien entrepreneur must:

  1. be actively engaged in operations;
  2. have the qualifications to perform operational duties; and
  3. have an ownership interest of at least 10% (or 5%, if applying for renewal of parole).

What to know

DHS may use its “parole authority” to grant a period of authorized stay (up to 30 months, which may be extended for an additional 30 months) to foreign entrepreneurs of eligible startups on a case-by-case basis. Eligible startups are U.S. entities that have a “significant public benefit” and “substantial potential for rapid growth and job creation.” These startups have received either a qualified investment or government award in the five years preceding the application for parole.

Government Award

A “government award” means Federal, State, or local government awards or grants totaling $100,000.

Qualified Investment

A “qualified investment” means a good faith investment of at least $250,000 from a qualified investor.

Qualified Investor

A “qualified investor” is an individual or entity that has, in the last five years, invested more than $600,000 in startups, of which at least two created a minimum of five full-time jobs or generated at least $500,000 in revenue with annualized growth of at least 20%.

Note that these rules go into effect on July 17, 2017 but may be amended or repealed by the new administration. Also, keep in mind that parole grants are discretionary and not guaranteed; DHS estimates that 2,940 entrepreneurs will be eligible under this rule each year. Up to three founders can apply from the same startup, and spouses and children will be allowed to get parole, though they will apply using Form I-131.

Why it matters

Assuming no amendment or repeal, the new rule will go into affect on July 17, with the objective of both providing parole to qualified foreign entrepreneurs of high-potential startups to improve their ability to conduct research and development and facilitating the expansion of these company operations for the benefit of the U.S. economy through innovation, job creation, and increased capital expenditures.

One of the quieter provisions folded into the rules is a requirement that the entrepreneur maintain a household income greater than 400% of the Federal poverty line. That means, if the HHS Poverty Guidelines’ income for a family of four is $24,300, then the entrepreneur will need to maintain a household income of $97,200. In some cases, especially for the earliest stage startups where founders are barely drawing a salary (if at all), this household income requirement may prove to be a significant barrier. However, keep in mind that household income also includes a spouse’s annual income.  

Read More:

Mo’ Founders Mo’ Problems – Another Vote for Well Drafted Partnership Agreements

Hiring Your First Employees

The 50-50 Equity Split(up)


Posted in Startups
Caroline R. Fabacher
Caroline is an associate at Vela Wood. She focuses her practice in the areas of entity formation, capital raises, corporate governance, and daily fantasy sports regulations. You can see Caroline's attorney profile HERE.