The Big Story: Startups push back on new immigration barriers
Startups are voicing their concerns as the Trump administration is considering policies that will restrict talent in the innovation ecosystem. More than 30 startup founders, investors and support organizations called on the Trump administration to reverse recent policy changes that will make it more complex and expensive for high-skilled talent to come to the country, ultimately harming U.S. innovation, competitiveness, and economic growth, as well as job creation. Also, in comments this week, Engine responded to a recent proposal by the Trump Administration to allocate H-1B visas based on wage levels, which prioritizes companies that pay higher salaries. Both of these proposed changes will move the country’s immigration system away from the reforms needed to make the H-1B process more affordable and accessible for high-skilled, global talent who want to bring their skills and ideas to the U.S.
The recently announced $100,000 fee for H-1B applications would be unaffordable for most early-stage startups. As founders, investors, and support organizations explained in the letter, “unlike large companies which can apply for the lottery en masse, startups are usually looking to bring just one or two key hires into the country. All together this has made even the current H-1B program a visa pathway that is too unreliable, time consuming, and costly for startups to leverage. Adding a $100,000 fee may put it out of the question all together.” Policymakers should exempt startups and early employees from this new fee, and instead pursue policies that make it easier—not harder—for foreign-born talent to continue driving innovation in the U.S. The $100,000 fee is currently being challenged in court.
At the same time, the Department of Homeland Security (DHS) recently proposed a change in the way H-1B visas are awarded, from a random lottery to a wage-weighted selection system favoring the highest-payed employees based on Department of Labor wage levels. As we explained in comments to the Administration, this framework would favor large corporations and disadvantage startups that often offer equity as part of their compensation packages instead of high salaries. This selection approach would also limit opportunities for the large number of immigrant students who receive advanced degrees from U.S. institutions but are unlikely to qualify for higher wage levels immediately after graduating.
Immigrants drive U.S. innovation, creating—not reducing—American jobs. A one-point increase in foreign STEM talent has been shown to boost wages for U.S. college-educated workers by up to 8 percent. More than half of U.S. unicorn startups have at least one immigrant founder, and 65 percent of AI companies are founded or co-founded by immigrants. Policymakers should modernize visa pathways and strengthen programs that support skilled immigrant talent—such as improving International Entrepreneur Parole, expanding O-1A visa access for founders, and creating a dedicated startup visa for foreign entrepreneurs—so that the U.S. remains the best place in the world to start and build a company.
Policy Roundup:
The new “exit,” how policy choices led us here, and what it means for startups. Competition in the AI space has reached increasing highs, leading to record levels of investment and novelly structured deals that depart from the traditional startup lifecycle. In a new blog post this week, we examine what’s driving these unorthodox deals where leading companies pay billions to hire startup leadership teams and license their tech, and how they may impact the broader ecosystem.
USPTO limits startups’ ability to challenge weak patents. U.S. Patent and Trademark Office Director John Squires recently revised Patent Trial and Appeal Board (PTAB) procedures to give himself sole discretion over which inter partes review petitions move forward, a shift that could make it even harder to challenge invalid patents. Engine has long emphasized that such changes undermine patent quality and disproportionately harm startups by restricting access to affordable, effective tools like the PTAB, leaving them unable to defend against costly, low-quality patents.
Senate advances foreign direct investment act out of committee. This week, the Senate Commerce Committee approved the Global Investment in American Jobs Act, which would mandate a report assessing U.S.’ effectiveness in attracting foreign direct investment (FDI). The report would look at both the current role FDI plays in R&D, job creation, and emerging tech innovation, as well as identifying barriers that are limiting greater investment. Engine has long called for policies that prioritize expanding capital access for startups, and this report could help Congress craft more effective and targeted opportunities to support U.S. innovation.
France could include steep increase to digital tax in 2026 Budget. French lawmakers on Wednesday adopted an amendment that would increase their digital services tax (DST) to 15 percent, up from 3 percent. The measure would also increase the applicability threshold from 750 million to 2 billion euros in global revenue, which is specifically designed to “avoid taking on French players,” according to the Member of the National Assembly leading the amendment. The DST targets U.S. companies that U.S. startups rely on to serve customers around the world, and who ultimately bear the burden of the tax through increased costs for those services. To go into effect, the increase will still need to pass several votes in the French legislature.
On the Horizon:
WED 10/29: The Senate Commerce Committee will hold a hearing on “jawboning”—or the government using its implicit power to pressure Internet companies to remove protected speech—at 10:00 AM ET.
Startup Roundup:
#StartupsEverywhere: Alexandria, Virginia Getting all your ducks in a row when moving can be stressful and expensive. Phil Salesses is working to ease moving-related tensions and lower costs through his company, MoveAI. We sat down with Phil to talk about his company, his ecosystem experience in D.C. compared to San Francisco, and the ambiguity that comes with the patchwork policy problem.
