Massachusetts Senator John Kerry and Indiana Senator Richard Lugar introduced the Startup Visa Act in February 2010. In short, the act seeks to extend temporary work visas to foreign-born entrepreneurs who get a U.S. Angel or venture capitalist to invest at least $250,000 in their company. In order to gain full citizenship, the entrepreneur must meet at least one of the following three requirements within two years of starting their business:
- Create five new U.S. jobs;
- raise over $1 million in venture capital; or
- generate sales of over $1 million.
- Those who think the bill will spur U.S. tech innovation;
- those who think the bill is flawed; and
- those who think the bill won't do enough to help the U.S. economy.
In order to gain a better understanding of the bill -- and provide you with some additonal information -- I spoke with Co-Founder and former President of MK Global and current Axcient CEO Justin Moore. He's now an angel investor and advisor, but throughout his career Moore has raised over $20 million for startup businesses in Silicon Valley. He's been a strong supporter of the Visa Startup Act from the day it was introduced. Here's why:
As Moore sees it, there's no downside to a bill that would leverage EB-5 visas to grow the U.S. technology market. To be clear, the Act would not raise the number of visas the U.S. hands out. It would create a new category for foreign entrepreneurs call EB-6, which would draw from the EB-5 visa category created by the Immigration Act of 1990 for foreign investors. U.S. Angel investing is growing and development platforms have made starting a business less expensive. Silicon Valley in particular offers more than financial support.
"You can develop good connections and there's a lot of enthusiasm here among entrepreneurs," said Moore when explaining why, even with a weakened economy, the United States is still more attractive to foreign entrepreneurs than India or China -- the other major competitors in the market.
There have been two main criticisms of the Visa Stamp Act throughout the debate. One is that it gives the investor too much power over the entrepreneur. To begin with, says Moore, investors always have the power. "If you don't think so, you're delusional," he said. But more importantly, Moore noted that entrepreneurs and investors are fundamentally aligned, particularly at the beginning of the process. They both want to see the company succeed.
The other main criticism is that the requirements are unreasonable and the stakes are too high. Will foreign entrepreneurs really be willing to risk their time and money knowing that, if they don't succeed, they face deportation?
Moore doesn't see the requirements as unreasonable, especially considering that the entrepreneurs have two years to meet only one of three goals. And the stakes are high, but that shouldn't stop any true entrepreneur. "One of the great traits of entrepreneurs is that they are irrationally optimistic and believe they will succeed despite the fact that the odds are against them," Moore said. "True entrepreneurs will believe they can achieve the requirements for a visa extension and won't be turned off by that hurdle."
No matter which side of the debate you're on, everyone can agree on this: Compared to China and India, the U.S. does not have the greatest natural resources or the most people. Thriving on innovation looks to be the only way to stay competitive.