A startup company created by Oliver Yiu, a Northwestern University Kellogg School of Management student set to graduate in June, sounds like the American dream.
As an online dermatology practice it is innovative, and as a business that can easily morph into other areas, it has potential for job creation. But the company, mySkin Indonesia, was set up in Yiu’s native Indonesia because the pathway for foreign entrepreneurs in America was not available at the time, despite a 2016 executive order to create one.
Had the International Entrepreneur Rule (IER), an Obama administration executive order, been implemented as scheduled in mid-2017, Yiu may have set up his company in the United States, a country he visited often as a child.
The rule, designed to allow more entrepreneurs to immigrate to the U.S. to launch their businesses, was signed by Obama near the end of his second term, but shelved by the Trump administration.
President Joe Biden already has reversed several immigration-related moves made under Trump, and business groups and advocates like Chicago attorney Fiona McEntee are calling for the International Entrepreneur Rule to be restored.
“I feel like it’s such a great opportunity for the U.S.,” McEntee said.
McEntee, an immigrant herself, who is managing immigration attorney at the McEntee Law Group in Jefferson Park and is the chair of the American Immigration Lawyers Association’s Media and Advocacy Committee, said she has about a dozen clients who could benefit from the rule.
“I see what my clients can accomplish if given the opportunity. A lot of times it’s foreign students, people who are here and have this great idea, and there’s no mechanism for them to do it. It can be very, very difficult.”
To qualify, an entrepreneur must have an ownership stake of at least 10% in their company, as well as garner at least $250,000 from a qualified investor or at least $100,000 via a qualified government award or grant. Although it is commonly referred to as the start-up visa, it is not a visa. Rather, it’s a parole period that starts at 2 1/2 years.
If the business meets certain requirements — creating at least five jobs and reaching $500,000 in annual revenue — that parole can be extended. The advantage for foreign-born entrepreneurs to set up in the U.S. is access to both a huge market and the best talent, including many fellow immigrants.
The Obama administration estimated 2,490 people would apply to the IER program annually. But because it wasn’t implemented, many entrepreneurs like Yiu did not consider it when forming companies.
The result, according to proponents of the IER, is a loss for the U.S., a point McEntee and the National Venture Capital Association stress.
“There’s no doubt that the U.S. has lost out to other countries,” said Jeff Farrah, general counsel for the NVCA.
“A lot of other countries have realized the economic benefits that come from new company formation and they have developed an ecosystem in their own countries. So now, if you’re a foreign-born entrepreneur, you no longer have to come to the United States in the way you once needed to,” Farrah said.
The Trump administration stalled the implementation of the IER and ultimately issued a rule to remove it — something the NVCA stopped by suing in 2018. The group wrote a letter to then-President-elect Biden in December, urging him to take action and joined a coalition of business and immigration groups in a letter recently sent to new Department of Homeland Security Secretary Alejandro Mayorkas.
The Trump administration argued the IER “represents an overly broad interpretation of parole authority, lacks sufficient protections for U.S. workers and investors and is not the appropriate vehicle for attracting and retaining international entrepreneurs.”
McEntee called that line of reasoning “ridiculous.”
Farrah added: “It’s ironic that the Trump Administration said it lacked sufficient support for investors and businesses, yet groups like ours that represent venture capital investors and the angel capital investors and other investors were some of the biggest advocates for the rule.”
Caralynn Nowinski Collens, a medical doctor and CEO of Dimension Inx, a U.S.-owned company that creates materials for organ and tissue implants, said foreign-owned startups create jobs and an atmosphere of competition that helps everyone.
“Generally speaking, we’re faced in the U.S. with a globally competitive market and when we’re not able to retain talent and build the best businesses we can because some people are excluded, I think that’s detrimental to the U.S. and affects the competitiveness of all companies,” Nowinski Collens said.
Farrah said his group’s goal is getting Congress to make the rule a law.
“Our end goal is to have a startup visa passed into federal law, to actually have Congress create a new visa category for foreign-born founders,” Farrah said. “It would be a lot more durable [than an executive order] and not subject to the whims of future administrations that might not administer it the appropriate way.”