Fixing the Startup Visa Problem

The problem should be simple to solve. The U.S. doesn’t have enough workers skilled in math and science. The obvious answer is to hire the talent from abroad. But this obvious solution has hit the black hole of American visa policy.

The current visa setup for immigrants to the U.S. is a confusing, expensive and long-drawn out nightmare. Tech startups in Silicon Valley are all too familiar with the muddled mess as they try to hire workers to fill essential positions.

Read on to get the history of immigrants in Silicon Valley tech startups and how the immigration visa situation is stifling innovation. Creative workarounds are helping, though many companies are pushing for a new visa, just for entrepreneurs.

Immigrants and Silicon Valley: a Potent Mix 

Entrepreneurially minded immigrants have a long history in helping Silicon Valley grab technology and run with it. By the turn of the millennium, more than half of its tech force was foreign born. Founders born in other countries created more than half of the new Silicon Valley startups between 1995 and 2005.

Founders born in other countries created more than half of the new Silicon Valley startups between 1995 and 2005. tweet

In 2012, tech and engineering companies across the U.S. founded by immigrants infused the economy with $63 billion in sales and employed over 500,000 people.

Big names include Mike Krieger from Brazil, who founded Instagram and Steve Chen from Taiwan, who started YouTube. Even Google, the icon of Silicon Valley, was started by Sergey Brin from Russia.

In the country as a whole, businesses founded by immigrants pay workers more than $126 billion each year. These businesses injected over $775 billion into the economy in 2010 alone. One in every ten Americans works for a company started by an immigrant.

One in every ten Americans works for a company started by an immigrant. tweet

But those numbers are declining. In Silicon Valley, the rate of startups founded by people from other countries dropped by 16% over the last seven years. Many blame the visa situation.

Hurting the Economy

U.S. companies can’t fill all the vacant jobs that need skills in math and science with the people available. They need to import the workers or outsource the jobs. Since the visa morass can take months to navigate and can require significant amounts of money, outsourcing is often the faster and easier alternative.

That means money leaves the country, hurting consumers and the economy. It also hurts workers. When jobs are outsourced, it reduces the need in U.S. companies for supervisors and ancillary workers.

The current visa policy is especially hard on small startups. They don’t have the deep pockets to wait nine months or longer for a new hire to show up. That is often the length of time it takes to navigate the immigration labyrinth.

Crippling Innovation

But it’s just not the economy that is taking a hit. Here’s a look at three ways it hampers creativity and innovation in the U.S.

Culture of innovation. Inventive people from around the world bring new perspectives to technology solutions and ultimately to the marketplace. Mark Suster on Bothsid.es has expressed concern about monoculturism in Silicon Valley and its long-term effect on entrepreneurship and technology solutions. Immigrants bring new perspectives and ideas to the creative mix.

Fewer innovators. Unable to wait for a visa, entrepreneurs decide to keep their innovative energy in their home countries. For example, Kunal Bahl, educated at Wharton, couldn’t get a work visa to stay in the U.S. So he started Snapdeal in India, a retail giant that is now worth about $5 billion.

Deadens the creative spirit. Waiting does bad things to an entrepreneur’s spirit. With so many roadblocks, he can simply give up on his good idea. When an innovator quits before making his dream a reality, it reduces the critical mass of creativity in the country.

When an innovator quits before making his dream a reality, it reduces the critical mass of creativity in the country. tweet

The Current Visa Situation

The most common visa for tech workers and would-be founders is the H1-B visa. But for every H1-B visa available in 2015, there were 3.5 people applying. Those that do make it in still have a long wait.

According to TechCrunch, the process starts with labor certification, LC, moves on to the immigration petition, I-140, and then adjustment of status, AoS. The entire process is fraught.

For example, the LC is skill specific, making it hard if the worker wears many hats. A simple switch from engineering to product management would not be allowed, according to the terms of the visa. It is also location specific so a worker can’t switch companies. And if he gets laid off, he must leave the country.

Once over here, many immigrants get locked into the system that delays processing of Green Card petitions, which are employment-based. This has actually tied some workers to specific companies for more than a decade, while they wait it out.

The system currently in place can be unfair, baffling, expensive and energy-draining.

Visa Alphabet Soup

According to Jon Velie, an immigration law specialist, other visa options are equally cumbersome. For example, if the entrepreneur has $100,000, he can invest it in a company. Very few have that kind of money, but it is one way to get an E-2 treaty investor visa.

Other options include an L-1 visa, which lets specialized employees and managers to be transferred to their company’s U.S. office. There are several conditions that have to be met though before the employee gets this visa.

If an entrepreneur has $500,000 to $1,000,000, he can get a Green Card or EB-5 investor permanent residency visa if he invests it in specific ways in the U.S. Again, there are numerous conditions, and very few immigrants have access to that kind of money.

The alphabet soup of visa options continues with a TN, H-1B1, E-3, J-1 and H-3. The rules for each are long, confusing and require the efforts of a lawyer well versed in the field to figure out.

Pivot to Canada

Other countries have noted the U.S. visa nightmare. Canada especially is interested in grabbing tech-savvy workers and founders. The Canadian minister in charge of citizenship, immigration and multiculturalism had billboards put up in Silicon Valley. In bold lettering, the signs along freeways in the area announced “H-B1 Problems? Pivot to Canada.”

The minister called the U.S. system “pretty dysfunctional.” He hoped to spread the word that Canada is “open for newcomers.” If immigrants meet the qualifications, they can get a Canadian Green Card as soon as they enter the country.

Unshackled: An Innovative Work Around

One company has come up with a workaround to the current visa situation. Unshackled is an angel fund that applies an innovative approach while working within current visa policy. It is helping  immigrants with entrepreneurial drive to start businesses in the U.S.

The founders know the immigrant culture firsthand. Nitin Pachisia is an immigrant himself. His partner Manan Mehta is the son of immigrants. As Pachisia points out,  “Many of these highly skilled immigrants come with entrepreneurial dreams and skills, but they are dependent on an employer sponsoring their visa.” Unshackled steps in to act as the sponsoring company. It hires entrepreneurs as workers, giving them what they need to stay afloat. They get a paycheck, work visas and health insurance as they establish their startups.

Unshackled has attracted people from all over the world, including China, Africa, Latin America, India and Europe, including students from top colleges and lead engineers with major firms.

Fixing the Visa Situation

Unshackled is making it possible for a number of talented tech workers to get into the country. But most immigrants are still on the outside, trying to figure out a way in.

According to immigration lawyer Jon Velie, ideally the government “should remove the arbitrary cap on H-1B visas and let the market decide how many professional employees U.S. companies need.”  He points out that hiring immigrants for tech startups doesn’t mean wages for other American workers will drop, simply because the immigrant talent will be paid at the prevailing wage.

The government “should remove the arbitrary cap on H-1B visas and let the market decide how many professional employees U.S. companies need.” tweet

Other improvements could be made to a number of visas. For example, E-2 visa regulations could be applied to all countries with whom the U.S. has good relations. For the EB-5, Velie feels it would be fairer to lower the money needed to $250,000.

Many founders of tech startups in Silicon Valley are favoring an entirely new type of visa. They are on the firing line, trying to fill critical positions while navigating bewildering visa regulations. They feel a visa designed expressly for entrepreneurs and startup founders would provide an effective and quick solution to the current visa dilemma.  As Nitin said, “This type of visa would allow immigrants to pursue their dreams, and at the same time create jobs and wealth in the U.S.”

“(The Startup Visa) would allow immigrants to pursue their dreams, and at the same time create jobs and wealth in the U.S.” tweet

A can-do attitude underpins the American dream. It is a country built by immigrants. A visa that recognizes that fact can help create an environment that encourages them to start businesses in the United States.

It would give immigrant founders a more level playing field with U.S.-born founders. A robust economy and an influx of businesses that can become global leaders would be the result.