Startup News Digest 09/25/26

The Big Story: H-1B fee would put high-skilled talent further out of reach for startups

The Trump administration is pursuing a change that would make a visa program often used to hire high-skilled tech talent practically inaccessible for U.S. startups. Engine submitted comments this week on a proposed rule that would implement a $103,265 fee on cap-subject H-1B petitions. The proposed fee would add substantial cost to a visa program that is already expensive, unpredictable, and difficult for startups to use, limiting their ability to access the talent they need to build and grow in the U.S.

Startups already face a “difficult calculus” when sponsoring foreign-born workers, and the proposed fee would make it harder for startups to hire foreign-born high-skilled talent by practically foreclosing the H-1B program as an option. The fee would amount to spending around two months of an average seed-stage startup’s operating runway on a single petition—not guaranteed to be granted—before paying the potential employee a dollar in salary.  One practical consequence of further restricting startups’ ability to hire high-skilled foreign-born workers in the U.S. is pushing  that hiring—and the innovation, economic growth and government tax revenue—to other countries with more navigable immigration systems. 

The fee is one of many efforts the administration is undertaking to restrict hiring of foreign-born talent in the U.S. This week, President Trump signed a proclamation to extend the $100,000 fee he imposed last year by executive action—which remains blocked by a federal court—and a separate order directing federal agencies to increase scrutiny across the H-1B program. And the administration is working toward further changes to make the U.S. less desirable and accessible to foreign born talent, including plans to eliminate the 60-day grace period that lets H-1B workers who lose their jobs stay in the U.S. while they find a new employer, strip work authorization from spouses of some H-1B recipients, and restrict Optional Practical Training, the program that lets international students work in the U.S. after graduation. Rather than supporting U.S. innovation and economic growth, these policies will make it harder for startups to access high-skilled talent and undermine founders’ ability to grow their teams in the U.S.

Policy Roundup: 

Policymakers debate international coordination on AI. At the United Nations General Assembly and separate high-profile U.S.-China bilateral summit this week, key world and tech leaders shared their preferred approaches to advanced AI. Some of those approaches are countervailing, with many expressing a desire for international coordination on AI governance while President Trump said the U.S. “totally rejects any attempt to construct a globalist scheme,” for the technology. China intimated that the U.S. was seeking to maintain its “technological edge through monopoly,” before leaders of both countries struck a more conciliatory tone at their meeting together later in the week. The debate is not likely to be settled in the short run, but will determine who shapes rules for AI and how much they vary globally.

New chapter in Administration push for political control over federal grants. Following pushback this week, the White House has dropped plans for an executive order that would have created a new layer of political review in the grantmaking process. The reversal comes amid the administration’s broader push to increase political control over federal grants, including a proposed rule requiring political review of discretionary grants that Congress temporarily blocked in its stopgap funding bill. Political control over federal grants would create greater uncertainty around and likely undermine a key source of early capital for startups.

Innovation advocates file brief on startup impact of patent case. This week Engine joined ACT in filing an amicus brief in case Collision Communications, Inc. v. Samsung Electronics Co., underscoring the importance for startups of the framework governing permanent injunctions in patent cases set by the Supreme Court's decision in eBay Inc. v. MercExchange, L.L.C. That balanced framework helps ensure injunctive relief remains available in cases of actual infringement, while limiting abuse of injunctions in patent litigation in ways that hinder innovation and stifle competition.

Lawsuit seeks release of frozen CDFI grants. A group representing community lenders sued the Treasury Department this week, seeking the release of nearly $300 million in federal grants for Community Development Financial Institutions (CDFIs) before the funds expire at the end of the fiscal year on September 30. CDFIs provide funding for small businesses and entrepreneurs who often struggle to access capital, and uncertainty around the funding could further limit resources available to founders in underserved communities.

On the Horizon: 

TUE 09/29: The Senate Judiciary subcommittee on intellectual property will convene an oversight hearing on the U.S. Patent and Trademark Office (USPTO), featuring testimony from USPTO Director John Squires, at 2:30 PM ET.

WED 09/30: The Federal Communications Commission will convene an Open Commission Meeting to examine several items, including proposals to streamline environmental reviews for communications infrastructure and make additional spectrum available for satellite broadband, at 10:30 AM ET.

WED 09/30: The Senate Small Business and Entrepreneurship Committee will convene an oversight hearing examining U.S. Small Business Administration programs, at 2:30 PM ET.

WED 09/30: A Senate Homeland Security and Governmental Affairs subcommittee will convene a hearing examining AI agents at 2:30 PM ET.

Startup Roundup:

#StartupsEverywhere: Omaha, Nebraska. Heather Nelson is a professor of management and  entrepreneurship at the University of Nebraska at Omaha. After 23 years of guiding her students towards new and innovative ideas, she launched her own startup—Poll The Vote—to connect voters and constituents to their candidates and elected officials. We sat down to talk with Heather about her company, her approach to content moderation on her platform, and more.