(Not) Born in the U.S.A.
by Greg Avery Oct 06 2009
Foreign-born entrepreneurs hope for visa reform in order to keep their businesses’ bright ideas Stateside.
Brad Feld, managing director at Foundry Group, a Boulder-based venture capital firm, supports founder’s visas.
Image: Kathleen Lavine | Denver Business Journal
Tech entrepreneurs nationwide support an effort by freshman Democratic U.S. Representative Jared Polis of Boulder, Colorado, to make it easier for foreign founders of investor-backed startups to win visas and stay in the United States.
It’s seen as a way to keep technology that is started in the United States by foreign-born entrepreneurs from going overseas.
Polis will introduce legislation next year that he hopes will stop the trend of immigrants starting companies in the United States that attract investors, but then the companies close or move abroad because the founder can’t legally stay here.
“I think Colorado is well-positioned to attract a lot of these companies,” Polis said. “Hopefully some of them will be able to stay here and raise capital and create new jobs.”
The United States has visas designed for foreigners investing in U.S. businesses, for foreign workers at U.S. companies, and for workers at established foreign companies transferred to this country. But there’s no visa for a foreign-born entrepreneur who has investor backing to start a U.S. company.
Polis, a serial dotcom entrepreneur prior to getting into politics, said he’s heard of real estate developers and medical-device inventors in the Denver metro area whose projects have suffered because the founder lacks the proper visa.
The problems particularly affect Internet-based startups, where a single founder or two can prove a concept and get commitments from outside investors that would let them start creating jobs.
Polis’ plan would reform the EB-5 visa, which is meant for investors who put at least $1 million into a U.S. company ($500,000 if the company is in designated areas with high unemployment). About 80 percent of EB-5s go unclaimed under the current rules geared for foreign investors, Polis said.
He proposes making some of those visas available to foreign-born entrepreneurs whose companies would produce at least five jobs and have attracted $1 million worth of investment. To prevent visa fraud, the investors would have to be venture capital firms or individuals with at least $10 million invested in other businesses.
Brad Feld, managing director at Foundry Group, a Boulder-based venture capital firm, is a leading national voice on tech blogs trying rally support for founder’s visas.
For 25 years, Feld has helped start hundreds of companies as a technology entrepreneur and investor. Several, including some started by students at U.S. colleges, wanted to locate in the United States, but instead formed overseas due to a lack of visa options for the founders, he said.
“We essentially have this phenomenal culture for startup companies, then we don’t let them stay here and the jobs go somewhere else,” Feld said. “I think it’s a tragic situation for the economy.”
He encouraged the launch of StartupVisa.com on September 1, a website advocating the visa reform and seeking $50 donations. The website tallied nearly 1,400 messages—98 percent supporting founder’s visas—sent to members of Congress in the first six days of the campaign.
Feld is a co-founder of TechStars, a 3-year-old startup incubator in Boulder and Boston that recruits founders to a three-month business-building boot camp.
Two of this year’s companies finished TechStars in Boulder with healthy investor interest, but they struggled to keep their companies in the United States.
Kevin Mann, a British founder of Take Publishing, has been building a company that hopes to become the digital sales platform for the biggest comic publishers.
He wants Take Publishing to be in the United States because that’s where comic-book publishers are, and the country’s $700 million comic-book consumer market is the world’s largest.
His exposure to Boulder this summer convinced him Take Publishing should start there.
“Nowhere in the U.K. has the same degree of excitement and cooperation about starting a business,” Mann said.
Mann attended TechStars under a 90-day visa waiver. He flew back to England the day after the boot camp ended. Since then, he’s flown back and forth from England to San Francisco, Seattle, and elsewhere to meet potential investors.
Take Publishing could secure at least $1 million from VC or angel investors—if it was U.S.-based.
“But they’re not willing to deal with a non-U.S. company,” he said.
Mann’s arrived at a potential solution. Take Publishing recruited business-development veteran Micah Baldwin, a U.S. citizen, to be CEO. Mann also gave Baldwin an equity stake in the business. The move allows the company to be U.S.-based and strike deals with investors wanting to deal with a U.S. founder.
Take Publishing will sponsor Mann’s application for an H1-B visa—designed for skilled workers in specialized jobs for which there are no U.S candidates—that would let him return to the United States for three years as a temporary employee of his own company.
Take Publishing expects to hire as many as 15 workers as partnerships with comic-book publishers solidify, Mann said.
There’s potential for competition from at least one other U.S. startup building a similar business, he said, so Take Publishing will start growing as soon as it gets funded. But that growth might not be in the United States if Mann’s H1-B visa is denied or gets bogged down for months, he said.
“It would mean we’ll grow our jobs in the U.K., where I am,” Mann said.
With something like a founder’s visa, he’d choose to grow in the United States, where his market and investors are, and he knows other British entrepreneurs would move their companies here if they could.
Polis approached Stephen Yale-Loehr, Cornell Law School professor and EB-5 visa expert, for advice about visa reform even before settling in as a freshman Representative in January.
Yale-Loehr recommended Polis make founder’s visas a pilot program that would expire if it didn’t work. That would make the reform palatable to potential critics, especially given intensity of debate likely to swirl around immigration reform next year.
The buzz about founder’s visas comes at a time when, for the first time in years, a recessionary economy has left some H1-B visas available for founders who can make their situation fit the requirements. But the H1-B availability is likely temporary, Yale-Loehr said.
“As the economy returns, it will become harder again for these immigrants to keep their bright ideas in this country,” Yale-Loehr said.