Immigration lawyers know that Los Angeles needs visas and immigration options for startups and foreign entrepreneurs. That’s because LA is home to some of the world’s hottest high tech and startup companies. In particular, Venice, Santa Monica, and Culver City, comprise the so-called Silicon Beach area on the Westside, which rivals Silicon Valley itself as California’s leading home to technology companies, videogame and social media companies, venture capital investors, and accelerators. For startup and high tech, LA offers a unique business ecosystem and immigration plays a crucial role.
A new option for foreign entrepreneurs was part of President Obama’s November 2014 executive action on immigration. The goal of this program is designed to bolster job creation and the U.S. economy by attracting and retaining immigrants who seek to start companies.
A new immigration option for startups is coming soon
The proposed International Entrepreneurs Parole program came one step closer to reality in August 2016 when U.S. Citizenship and Immigration Services (USCIS) formally announced the new rule.
What exactly is meant by “parole”?
Parole, in the immigration context, is similar to a visa. It is a form of temporary immigration status that is given to certain foreign entrepreneurs on a discretionary, case-by-case basis, which will permit them to live and work in the U.S.
When can you apply for the Entrepreneur Parole?
A notice of proposed rule (which is more than 150 pages!) will be published in the Federal Register and the public will have 45 days from the date of publication to comment. The Immigration Entrepreneurs Parole program will take effect on the date indicated in the final rule as shown in the Federal Register.
Application Procedures for the Immigrant Entrepreneur Parole
You’ll need to submit to USCIS an Application for Entrepreneur Parole (Form I-941), a $1,200 filing fee, and voluminous supporting evidence. USCIS will adjudicate the I-941 and that applicant will have no right to challenge the denial or appeal.
Requirements for Immigration Entrepreneurs Parole
Along with the Application for Entrepreneur Parole (Form I-941), you’ll need to submit to USCIS documentary evidence to show that:
- You have a significant ownership interest in the startup (at least 15 percent) and have an active and central role to its operations;
- The startup was formed in the U.S. within the last 3 years; and
- The startup has significance and demonstrated potential for quick business growth and job creation, as indicated by:
- Receiving investment of capital (at least $345,000) from certain U.S. investors that are qualified with established records of successful investments;
- Receiving awards or grants (at least $100,000) from certain federal, state or local government entities; or
- Partially fulfilling one or both of the above criteria as well as other reliable evidence that is compelling of the startup entity’s potential for job creation and rapid growth.
What immigration benefits come from Immigrant Entrepreneur Parole?
Foreign Entrepreneurs, for a period of up to two years under the suggested rule, can be given permission to live and work in the United States. During that time, they would be allowed to supervise and grow their startup entity in the United States. A subsequent request for a re-parole for up to three more years would be examined if the entrepreneur and the business entity provide a significant public benefit as proven by substantial increases in capital investment, revenue, and/or job creation.
Entrepreneur Parole has no pathway to a green card
Entrepreneur Parole is a temporary immigration status that offers no route to permanent residence (i.e., a green card). Imagine that you obtain a Entrepreneur Parole and use it to devote your energy and talents to building a successful startup company in the United States. At the end of (at most) 5 years of this immigration status, it is unclear what immigration options, if any, would be available. If you are interested in Entrepreneur Parole in Los Angeles, you should think carefully about what your next step in the immigration process would be after the maximum 5-year period expires.
Other Immigration Options for Startup Founders
The the new Entrepreneur Parole program is only one immigration option for startups. Here are some others, but, as you can see, each has limitations and drawbacks.
H-1B Visa: T To sponsor an H-1B visa, a startup would have to show documentation (e.g., business plan, revenue projections, leases, tax filings, etc.) to prove that the company has the ability to pay the prevailing wage, a fictional amount salary created by the Department of Labor. This extensive documentation might not exists for an early-stage company. The H-1B visa is intended for established employer-employee relationships, not for self-sponsorship so a startup founder would need to be able to show is that he or she doesn’t control his or her own employment. That typically means being able to prove that the potential H-1B visa recipient owns less than 50% of the company. Finally, even if all goes perfectly, H-1B visa applications are subject to the annual visa number cap, which effectively has created an H-1B lottery.
CPT (Curricular Practical Training): This allows a student to work, but it’s school-specific and needs to be completed under supervision of an advisor.
OPT (Occupational Professional Training): Generally, OPT allows a foreign national to work for 1 year in a professional field that relates to the major field of study they engaged in while he or she was a student in F-1 status. Though it can be started after completing 9 months of study while a student is in F-1 status, typically, people save their year of OPT time for post-graduation work training. One of the perks of OPT for entrepreneurs is that you can be self-employed. But since OPT is often parlayed into an employer-sponsored H-1B, those who instead use OPT for self-employment should ask themselves what immigration status they will have once OPT runs out.
STEM OPT: STEM OPT allows certain students in F-1 status who are getting science, technology, engineering, and mathematics (STEM) degrees to apply for a longer extension of their post-completion OPT than regular OPT. As of May 10, 2016, the extension period was lengthened to 24 months instead of the previous 17 months. This was the result of a new final rule published by the Department of Homeland Security. But entrepreneurs have to think carefully about this type of extension. Under the new rule, the most important things for entrepreneurs to consider are that you can’t be self-employed and there is now a requirement of an official training plan indicating what the student’s learning objectives are and how the employer will help the student achieve those objectives.
O-1 Visa: The O-1 visa is a nonimmigrant visa meant for people who have extraordinary ability in the sciences, arts, education, business, or athletics, or who have a well-documented record of extraordinary achievement in the entertainment industry and have received international or national recognition for their work. The trick with O-1 visas is that a person can’t self-petition for an O-1 visa, however a corporate entity can sponsor an O-1.
L-1 Visa: The L-1 visa is for internationally companies with a presence in the U.S. and abroad. The L-1A visa is for executives and managers, while the L-1B visa is for workers with specialized knowledge. For entrepreneurs, this becomes relevant when someone has started a company in another country, that company has stayed active abroad, and the foreign national seeks a visa to come to the U.S. to open up a new office in the U.S. When thinking about L-1 visas in this type of scenario, it’s important to be aware that while it’s possible to pursue new office L-1s for entrepreneurs, they tend to be scrutinized intensely by USCIS and often get Requests For Evidence (RFEs).
E Visas: An E-1 is for Treaty Traders and an E-2 is for Treaty Investors. With both, the person applying for the visa has to be a national of a country that the U.S. has a commerce and navigation treaty with. Generally, startup founders will probably more often be looking at E-2 visas. They’ll need to be able to show that they’ve invested or are in the process of investing a substantial amount of capital in a bona fide enterprise in the U.S. They also have to show that they want to enter the U.S. only to develop and direct the bona fide U.S. enterprise they’ve invested in, which usually is shown by proving that the applicant owns at least 50% of the enterprise. But the startup founder should be aware that an E visa is a nonimmigrant visa that doesn’t lead to a green card, so it’s important to think about his or her long-term goals.
Immigration Lawyer for LA’s startups
If you don’t have a green card but want to create a new business in Los Angeles, you need a lawyer who understands both immigration law and the challenges of a startup. Attorney Joshua Goldstein has considerable expertise representing life science, high technology and entrepreneurial businesses regarding their immigration and visa needs. Call our office today at (213) 262-2000 for more information about the Entrepreneur Parole or other immigration options.