U.S. Start-up Companies May Now Employ Their Foreign-born Founders & Key Staff
Partner Andrew Greenfield discusses International Entrepreneur Parole here
A new U.S. immigration law permits U.S. start-up companies that have received significant funding from U.S. investors to employ their foreign national founders and key technical staff in the United States for up to five years.
International Entrepreneur Parole (IEP) is a new type of U.S. work permit based on a provision of the immigration laws known as “parole”. At its discretion and on a case-by-case basis, the government may grant entry and employment authorization to foreign nationals who will provide “significant public benefit” through their key roles for U.S. start-ups with potential for rapid growth and job creation.
IEP was first conceived by the Obama Administration but was dismantled during the Trump Administration. Recognizing the significant public benefit realized through entrepreneurship, innovation and job creation in the United States, the Biden Administration re-launched the program, which establishes general criteria U.S. Citizenship and Immigration Services (USCIS) may use in evaluating IEP applications filed by foreign nationals who will play key roles for well-funded U.S. start-ups.
What does IEP do?
IEP allows the entrepreneur to work for the U.S. start-up for up to five years. It offers work permit options for talented foreign nationals seeking to found, build and/or shape the course of new U.S. businesses, which were not previously available in the current U.S. immigration system. The H-1B visa, for example, is limited by an annual quota, involves competitive compensation requirements, and is often out of reach for start-ups with little or no employees or revenue. The E-2 investor visa is available only to citizens of countries with which the U.S. has a specific treaty, requires that the U.S. business be majority foreign-owned, and, like the EB-5 immigrant investor visa, typically involves a substantial capital investment from the foreign national seeking the visa.
Which foreign nationals and start-ups are eligible?
To be eligible for IEP, the entrepreneur’s education and/or experience must qualify him or her to play a central and active role for the start-up, including managing its operations, working as a technical founder or serving in another fundamental role. The entrepreneur initially must also own at least 10% of the entity, but this ownership may decrease over the course of five years as equity is transferred to other investors.
The U.S. business must have been established within five years of the filing of the IEP application with USCIS, or within five years of the start-up receiving qualified funding. In general, qualified funding means at least $250,000 (or $100,000 in the case of government grants or awards) from established U.S. investors in the 18 months before the entrepreneur files the IEP application.
How does it work?
IEP approval provides the entrepreneur with an initial 30 months of U.S. employment authorization with the start-up. This can be extended - via re-parole - by an additional 30 months, for a total of five years. Applications for re-parole require evidence the start-up has raised substantial additional funding, created at least five full-time jobs for U.S. workers, generated significant revenue and average annual growth, and/or other compelling evidence that the entrepreneur’s role with the start-up will result in the U.S. business’s rapid growth and job creation and continue to provide significant public benefit to the United States.
The entrepreneur has a continuous obligation to notify USCIS immediately of material changes throughout the period of parole. Material changes include, among other things, significant changes in the ownership and control of the start-up.
USCIS has broad discretion to terminate parole if the agency determines the IEP no longer provides the United States with significant public benefit.
Why is this a good thing?
Foreign-born entrepreneurs and technical innovators have long played foundational roles for prominent and successful U.S. start-ups that, in turn, have shaped and propelled the digital economy. The IEP program affords a clear path for these pioneers to enter and remain in the U.S. long enough to fulfil the vision of their enterprises. For them, and for the venture capital firms, accelerators and other U.S. backers who invest in new businesses that rely on the intellectual and commercial contributions of foreign entrepreneurs, the IEP program offers a new opportunity to mitigate the immigration-related risks often presented by start-ups with foreign-born founders.
Need to know more?
For further information on International Entrepreneur Parole, please contact Andrew Greenfield at [email protected] or your Fragomen immigration professional. This blog was published on 15 June 2021, and due to the circumstances, there are frequent changes. To keep up to date with all the latest updates on global immigration, please visit our dedicated COVID-19 site, subscribe to our alerts and follow us on LinkedIn, Twitter, Facebook and Instagram.