The USA open to foreign start-ups with the International Entrepreneurship Rule

On August 26th of 2016, the Department of Homeland Security (DHS) proposed the International Entrepreneur Rule, in order to encourage and facilitate entrepreneurship within the United States, aiming to enhancing research and development in the country, create jobs for US workers and benefit the US economy trough increased business activity and innovation.

The proposed rule would add new provisions regarding the parole (i.e. a sort of temporary green card) on a case-by-case basis, with respect to entrepreneurs of start-up entities whose entry in the United States would provide a significant public benefit.

As a matter of fact, a significant percentage of employment generated by high tech manufacturers backed by US venture capital investment has come from immigrant founded companies: a study on the top 50 venture capital founded start up companies in US showed that 48% had at least one immigrant founder.

In order to qualify, the applicant has to demonstrate that his/her start up entity has substantial potential for rapid growth and job creation. The proposed rule stated that an entity is considered a start up if it was formed within the three years preceding the date of filing the application. Furthermore, the applicant is required to prove the substantial ownership interest in start up entity (15% at least), active and central role in its operations and future growth, as well as the receipt of significant capital financing from US investors with established records of successful investments (345.000$ or more), and/or awards or grants from certain Federal, State or local government entities (100.000 $ or more).

The initial parole would provide temporary stay up to 2 years, which may be extended to additional 3 years: which would be considered only if the start up entity continues to provide a significant public benefit, evidenced by substantial increases in capital investment (at least 500.000$), revenue (at least 500.000$) or job creation (at least 10 full time jobs for US workers during the time of parole).

DHS estimates that 2,940 entrepreneurs could be eligible for parole annually, each applicant facing a total filing cost of 1,480$, resulting in a total cost of 4,349,827 $ for the first full year the rule could take effect, and any subsequent year.