Visa Restrictions are Depriving the US of Promising Foreign Entrepreneurs

Andy Grove of Intel, Sergey Brin of Google, Pierre Omidyar of eBay or Jerry Yang of Yahoo! – these founders of some of the biggest American companies have one thing in common. Like 41 percent of directors of the 500 biggest corporations of the United States, they are all immigrants (90 of them) or children of immigrants (104 of them), according to a study from the Partnership for a New American Economy. Famous Apple founder Steve Jobs himself was the son of a Syrian immigrant, now residing in Nevada.

In February, in a speech to Facebook employees, President Barack Obama affirmed that “we want more Andy Groves here in the United States,” referring to the success story of the founder of Intel, of Hungarian descent. “We don’t want them starting Intel in China or starting it in France,” the American president continued. But in spite of the success those emblematic figures of the American economy have had, the system still does not have any special visa provision for foreign entrepreneurs, as British magazine The Economist noted on Saturday, June 9.

A few days earlier, project Startup Act 2.0, which would provide for a new category of visa to be created for entrepreneurs, was introduced to the House of Representatives. But so far only an investor visa is available, with administrative fees as high as $1,500. It requires the applicant to invest between $500,000 and $1 million, and to guarantee that they will create at least ten full time jobs reserved for American citizens.

44 jobs created for every 100 qualified immigrants

The American administration is thus making it difficult for young foreign entrepreneurs to obtain a visa, despite the fact that their contribution to the national economy is widely recognized. Indeed, the study “Immigration and American Jobs,” led in December 2011 by the American Enterprise Institute for Public Policy Research and the Partnership for a New American Economy, shows that the arrival of 100 highly qualified immigrants on American soil allows for the creation of 44 new jobs for nationals. Temporary workers, qualified or not, also largely contribute to revitalizing the economy, according to the study.

From 1995 to 2005, immigrant entrepreneurs have contributed to the foundation of a quarter of high tech companies in the United States, creating in the process some 450,000 jobs. The study from the Partnership for a New American Economy, dated June 2011, show that among the top 500 American companies, those founded by immigrants or children of immigrants alone employ 3.6 million people, “a figure equivalent to the entire population of Connecticut.” Put together, their income is larger than the gross domestic product (GDP) of any country in the world, outside the United States, China and Japan.

But while 18 percent of those Fortune 500 companies were founded by first generation immigrants, the number of visas delivered for economic reasons has been dropping in the United States, unlike countries like Canada or Australia. According to The Economist, in 2011, economic visas accounted for 76 percent of permanent visas delivered in Canada, compared to only 18 percent in 1991. In the United States, this share has on the contrary receded in 20 years; economic visas only comprise 13 percent of permanent visas granted, compared to 18 percent in 1991.

From the United States to Chile

The British magazine mentions on this subject the story of Claudio Carnino. This young Italian entrepreneur, who had received the approval of investors in Rhode Island, saw his visa request refused by immigration services. He went to live in Chile, where he is now the director of a company that helps other companies use Facebook to find new customers. The young man obtained a visa there in the space of two weeks.

In Chile, the visa system for entrepreneurs is incomparable with the rules in force in the United States. Through the Start-Up Chile program, selected foreign start-up founders are granted a temporary one-year visa, while they develop their project. The Chilean government also grants them $40,000, without requiring any contribution in return.

Australia too is an attractive country for foreign entrepreneurs. The number of visas for highly qualified workers there went from 103,000 to 126,000 over five years, according to The Economist. This number is equivalent to the number of visas granted to qualified workers by the United States, but for a population 14 times smaller.

A worrying situation for companies

Next to the efforts made by those various countries, the restrictions in place in the American system are worrisome, especially in view of some recent cases of visa refusals. The example of Amit Aharoni, a young Israeli graduate from Stanford University, is one of the most telling. After having secured financing of $1.45 million for his start-up CruiseWire.com and having employed nine people in the space of a year, he had his application for a visa refused by the American immigration services last October.

Compelled to leave the country for Canada, he eventually managed to come back to the United States thanks to a support movement. But this kind of situation is worrying American companies, who are asking for a reform of the visa delivery system for highly qualified workers. In 2011, according to Reuters, Intel was unable to get authorization to transfer 50 Finnish engineers to the United States.

In February, immigration services finally held an online conference to understand the impact of immigration policies on entrepreneurship. One of the participants, Vivek Wadhwa, a researcher from Duke University, told Reuters that the Silicon Valley, hotspot of innovation in the U.S., was “bleeding” because of these restrictions. According to him, the current rules prevent start-ups founded by foreign entrepreneurs from sponsoring — that is, from financing — their visas.

Indeed, more and more highly qualified immigrants are leaving the country, preferring to launch their companies in China, Brazil or India. Vivek Wadhwa led a study on this matter, published in April 2011. “Innovation that would otherwise be happening here is going abroad,” he admits in an article published on website Venture Beat. “Without realizing it, we are exporting our prosperity and strengthening our competitors.”