Why the International Entrepreneur Rule Doesn’t Work Well
/The International Entrepreneur Rule was designed by the Department of Homeland Security during the Obama administration to create a pathway for entrepreneurs seeking to stay in the United States to start and grow their companies through a grant of parole (not status!) The threshold criteria and key elements for the International Entrepreneur Rule are:
Entrepreneurs may be either living abroad or already in the United States.
Startup entities must have been formed in the United States within the past five years.
Startup entities must show substantial potential for rapid growth and job creation by showing at least $311,071 in qualified investments from qualifying investors, at least $124,429 in qualified government awards or grants, or alternative evidence.
The spouse of the entrepreneur may apply for employment authorization after being paroled into the United States. (Children are not eligible for employment authorization.)
The entrepreneur may be granted an initial parole period of up to 2.5 years. If approved for re-parole, based on additional benchmarks in funding, job creation, or revenue described below, the entrepreneur may receive up to another 2.5 years, for a maximum of 5 years. (At that point or earlier, there are other Options for Noncitizen Entrepreneurs to Work in the United States.)
Up to 3 entrepreneurs per startup can be eligible for parole under the International Entrepreneur Rule.
On its face, the rule appears enticing for those who meet the investment requirements. However, once one digs in, the rule has many drawbacks that become apparent after pursuing this pathway.
First, the Rule’s requirement showing that the startup entity has received at least $311,071 in qualified investments from qualifying investors requires a thorough examination of the “qualified investors” and their investments into other companies. The USCIS policy manual provides:
A qualified investor must also regularly make substantial investments in start-up entities that subsequently exhibit substantial growth in terms of revenue generation or job creation by demonstrating that during the preceding 5 years:
The qualified investor made investments in start-up entities in exchange for equity, convertible debt, or other security convertible into equity commonly used in financing transactions within their respective industries comprising a total in such 5-year period of no less than the investment amount in the chart below; and
Subsequent to such investment by such individual or organization, at least two such entities each either created at least five qualified jobs or generated revenue of at least the amount in the chart below with average annualized revenue growth of at least 20 percent
In order to satisfy this requirement, USCIS wants to see what other investments an investor has made to meet the “qualified investor” requirement. USCIS wants to review information about non-parties, a massive privacy concern for investors who may not wish to share their investment strategies and potentially personal identifying information with the US government.
Second, the application is submitted on form I-941 which cannot be premium processed for an additional fee. The USCIS case processing times website does not provide processing times for form I-941 but many have reported that processing currently takes over a year. Founders cannot wait a year as time is of the essence when starting a business.
In sum, the program can and should be overhauled to loosen its restrictions with regards to initial applications and applications for extension. This sentiment is echoed by the number of applications, with a mere 94 applications filed since Fiscal Year 2021. There are many less invasive ways to determine whether an investor is qualified that do not necessitate investigation into non-parties. Lastly, approval of form I-941 merely grants parole and not status. In overhauling this rule, a new visa category, granting status, should be carved out.
