Startups Speak: Reward Individuals Who Have Contributed

Michael Ang (or Mang as he is better known) is an engineer from Canada. He works for Changemakrs here in San Francisco. In fact, Michael has been working in the United States for over fifteen years -- mostly within the startup community. He was the first employee of Xoom -- a company that is now post IPO and employs hundreds of Americans. Despite Michael’s experience, his masters degree from NYU, and his contribution to the startup community -- and the U.S. economy as a whole, he has only ever been granted a succession of temporary visas. Watch Michael tell his story, and tell us what he’s most excited about in the new immigration bill.

Startups Speak: Michael Ang from Engine Advocacy on Vimeo.

 If you have an immigration story to tell, email editorial@engine.is.

How the Gang of Eight Immigration Bill Impacts Startups

After months of waiting, the bipartisan Gang of Eight Senators released an immigration reform bill (full 844 pages here!) The plan we’re seeing today is not only the first real attempt at truly comprehensive immigration reform -- it might also have a shot. The eight Senators included provisions for high-skilled labor that are a testament to the powerful role the tech community has played coming together strongly on this issue.

Despite some areas for improvement, this plan is something the technology community can, and should, rally behind. The new Invest Visa (better known by the community as a Startup Visa) will really encourage smart individuals to start businesses in the United States. In addition, provisions making it easier for students to apply for green cards will encourage the best and the brightest to come to school here and stay, and relieve the pressure on the H-1B system. This bill is also planning for the next generation of innovators with much-needed investments in our own education system.

First Look Key Takeaways:

1. Starting a business is lot easier for foreign founders with two types of Startup Visa

2. Hiring Foreign Talent

• H-1B reform will increase the number of visas available
• Increases in wage requirements do not take into account equity or other benefits, and require startups to pay median wages determined by metro area. This might make it difficult for smaller companies to compete with larger companies -- with deeper pockets -- for top talent.
• More green cards for startup workers through plans to reduce the backlog, and institute new categories: a larger skilled workers employment-based category, and a merit-based category.
• New merit visa includes provisions for entrepreneurs and individuals in high-demand jobs.

Here are the details:

1. Foreign startup founders get a Startup Visa

Currently, there is no visa class for foreign individuals who want to stay in the United States to start a company. This proposal makes it easier by creating an Invest (Investing in New Venture, Entrepreneurial Startups and Technologies) Visa with two categories -- the first is a temporary visa, the second grants permanent residency. Both categories establish reasonable criteria for startup founders as they work to establish their business in this country.

The startup community knows this better as the startup visa. With reasonable requirements and options for renewal, this is a big step in the right direction. Moreover, it gives lifelines to founders whose first venture might have failed. If further investment is forthcoming, the individual can start again. According to the definition for entrepreneur in this section, up to three individuals of the founding team can use this visa.

a) Non-immigration Invest Visa

• 3 year temporary visa

• No numerical caps, or limits to the number of times an individual can renew.

• To qualify, individuals must show $100,000 in investment from an accredited investor, venture capitalist, or government entity.

• Or if the company already exists, the founder needs to prove that they have created at least three jobs and have an annual revenue of at least $250,000.

• For a full 3 year renewal, the company must employ 3 people with annual revenue of $200,000 for two years, or $250,000 of additional investment.

• For 1 year renewals, the founder must show that the company has made progress towards reaching these requirements.

b) Immigrant Invest Visa

• Grants permanent residency to successful entrepreneurs
• Capped at 10,000 annually
• To qualify, individuals must have maintained a valid nonimmigrant status for at least 2 years, and have created 5 or more jobs in the United States. In addition, the entrepreneur must also have either secured at least $500,000 investment or generated at least $750,000 in annual revenue during the previous 2 years.
• For entrepreneurs with a STEM masters or PhD, the requirement to have maintained a valid nonimmigrant status for at least 2 years is the same, and the other requirements are 4 jobs and $500,000 investment, or 3 jobs and $500,0000 annual revenue.

The revenue and employment requirements should allow most successful startup founders to switch to this permanent visa category. For serial entrepreneurs, however, the time it takes to acquire this visa might be cumbersome. In addition, a founder might not be able to sell a successful venture, or start another, while waiting for visa approval.

2. Hiring Foreign Born Talent

Hiring the right individuals is crucial for startups to grow. Through H-1B reform, changes to the green card allocation system, and new merit-based visas, this bill offers a few changes to the current system that will encourage foreign born talent to remain in the country after completing their studies, slowing the brain drain. But, it might make attracting new talent from abroad comparatively more difficult.

a) Expanding the H-1B

• H-1B visa cap raised from 65,000 to 110,000, with an adjustable cap that can go as high as as high as 180,000 based on the High Skills Jobs Demand Index formula.
• This formula uses the number of visa petitions filed and the unemployment rate in the related occupations category of Bureau of Labor Statistics data from the previous year.

The cap increases are necessary, especially after the 124,000 H-1B applications and resulting visa lottery this year. But this is where the bill falls a little short. Since the cap can only be raised by 10,000 annually, H-1B supply might still be unable respond to the demand. We advocate for an H-IB visa cap that is responsive to the needs of the market.

Higher wage requirements for H-1B recipients

• Previously, employers have been required to pay the prevailing wage for the job.
• This bill changes the method of calculating that wage, identifying it by metro area.
• The range for each metro area would be further divided into tiers -- high, average, and low. H-1B employers will be now required to pay at the “average” level.

Despite trying to counter the perceived abuse of wage depression of H-1B system, the change in wage requirements is where this bill could do more harm than good for startups. Though this is not as steep as expected, and we haven’t seen these wage ranges for startup cities, we’re still concerned that this tenet of the bill will make H-1B hires unaffordable for startups, in comparison to larger companies with bigger budgets. Startups, generally clustered in large metro areas, think San Francisco and New York, with already inflated incomes across a large range, may simply not have enough funding to meet the prevailing wage requirement. This provision also does not account for equity or other benefits, so startups with limited budget for payroll might be able to attract talent, but unable to afford it under these new rules.

Reducing the burden on H1-B

• Up to 25,000 advanced degree holders in STEM fields are exempt from the H-1B cap.
• Students on F-1 visas, earning a bachelors degree or above, will be allowed dual intent, i.e. students with lawful status are also permitted to apply for green cards if employment is secured while still at school, and their potential employers can apply an employment-based visa category (see below).

b) More green cards for startup workers

• Per country caps removed
• Deals with backlog of family and employment based visas by making unused visas available, in addition to using the visas allocated for the new merit based system.
• New definition of family to include spouses and children, exempting them from the employment-based visa cap.
• Priority workers (including developers, without advanced graduate degrees) and advanced degree holders will both be allocated 40% of the available visas, up from 28.6%.

This bill makes great strides towards improving the green card system. Many changes will impact individuals who had long waits for green cards as a result of the country caps. The new family definitions will also make a significant difference, considering that spouses and children of green-card holders used 78,000 the 140,000 EB visas that were approved last year.

c) Merit Based Visas

• Takes effect in 5 years
• Replaces the diversity visa
• Capped at 120,000, to increase in in 5% increments, but must not to exceed 250,000.
• Bequeaths permanent resident status
• Divided evenly into two tiers: high skilled workers and low skilled workers
• The first tier is awarded points based on education (PhDs get more points than masters which get more points than bachelors), years of employment and type of occupation based on job zones (determined by the level of education and skill required for an occupation.)
• Additional points for entrepreneurs who employ 2 other individuals in zone 4 (as many points as for a masters degree), and points for individuals with an offer of employment in a high demand job.
• How high demand jobs are determined is unclear.

What next?

The bill will now be debated on the Senate floor with a period of time allocated for members to attach amendments. While it will certainly help that the Gang of Eight is a bipartisan coalition, opposition still lurks, and arguments about border security, American workers, family visas, and the price tag of reform might make their way into the debate. The danger is that high-skilled reform could get caught in the crossfire. Ideally, the bill would be done before the August recess after which Congress switches to campaign mode ahead of the 2014 midterms.

As Senators Schumer (D-N.Y.) and McCain (R-Ariz.) wrote in the Wall Street Journal yesterday, “Like all genuinely bipartisan efforts, this bill is a compromise. It will not please everyone, and no one got everything they wanted.” Still, this plan is starting from a higher base of support than any other we’ve seen yet, and high points for the tech community are the startup visa and pathways to permanent residency. But that doesn’t mean there isn’t for improvement. Join us, and our friends at March for Innovation, and keep the pressure on.

Gang of Eight Immigration Bill Includes Startup Visa

After months of work, and internal debate, the Senate Gang of Eight has reached an agreement on immigration reform. While we’ve yet to see the full text of the bill, here’s a quick rundown of what we know so far.

The plan predominantly deals with the controversial issue of undocumented immigrants already in the country, border security, and visas for low-skilled workers. Still, there are also a number of provisions that impact the technology community.

Key Provisions:

• Startup Visa for foreign entrepreneurs who want to start a business in the US
• H-1B visa cap raised from 65,000 to 110,000, with an adjustable cap -- as high as 180,000 -- based on the High Skills Jobs Demand Index formula. But the most the cap can increase or decrease each year is 10,000
• H-1B cap exemption for masters and PhD STEM graduates increased to 25,000
• Higher wage requirements for H-1B recipients. Jobs must also be posted on a new searchable portal created by the Secretary of Labor
• 120,000 merit-based visas for talented people, based on education, employment and length of residence in the US, alongside other considerations. The individuals with the most “points” will earn the visas. This allocation also has an adjustable cap that can reach up to 250,000 during years of low unemployment
• All PhDs exempted from green card cap. People of extraordinary ability, outstanding professors and researchers, certain physicians, and dependents are also exempted
• STEM visa for individuals with an advanced degree, or the equivalent experience
• Dual intent for all students on BA degree programs, or above. This allows those with job offers to apply both for green cards and H-1B visas

Stay tuned for full analysis.

Startups Speak: GoodApril Founder Says Reward Risk-Takers With Visas

It is a near-universal fact that no one enjoys filing their taxes. It’s usually difficult and most definitely a boring way to spend our too-scarce time.

GoodApril wants to change all that by disrupting the way that Americans plan for and file their income taxes. Like any founder with an idea who wants to make our lives better, Benny Joseph wanted to assemble the best possible team to execute his idea.

So that’s what he did. But right when the company was ready to take the next step, and incorporate as an official business entity, Benny realized that there was no way through the visa issue he was facing with his best engineer. The result? “We had to part ways; we couldn’t go forward together.”

Unable to hire his top-choice engineer, Benny lost the knowledge and talent he wanted, and an individual with the nerve and desire to take the risks associated with starting a company. As a result, it took the team at GoodApril longer to build their first product, and to raise funding to hire the people they needed -- including more engineers, writers, and marketers.

From the perspective of the engineer in question, he was tied, through the terms of his existing visa, to a company he didn’t want to work for. With a soon-to-expire H1B visa, and a stalled green card application, he is still being held hostage as an employee with no freedom to pursue other job opportunities.

From Benny’s point of view, and from ours, we should be rewarding risk takers, and that needs to happen through thoughtful reform. “I think the Startup Visa Act (included in Startup Act 3.0) is a good step in the right direction,” says Benny. “Immigrant entrepreneurs should be encouraged to build new businesses. If you take a look at many of the great companies in our country, a sizable amount are founded by immigrant entrepreneurs. They create jobs and value to the economy and help America keep a step ahead of the rest of the world.”

The current immigration system, with no visas for startups, and caps on existing visa classes for high-skilled workers, is harming entrepreneurs, would-be employees and the American ability to build successful businesses and innovate at capacity.

Startups Speak: Benny Joseph from Engine Advocacy on Vimeo.

Startups Speak: Marker Founder Talks about People and Places

We’re collecting and publishing startup profiles and policy stories. Look out for next installments, and if you have a story of your own, we’d love to hear from you. Contact us at editorial@engine.is.

Places add context and color to a life; where you came from, where you’ve been, where you are and where you’ll go. Countries and cities and neighborhoods build your character and a life with character. But right now, if you don’t come from America, staying here to build a company is very difficult. That needs to change, says Marker co-founder Michael Molesky.

Marker is all about collecting the remarkable places in your life. When users capture the places they want to go, as well as the places they know and love, Marker becomes home to the living stories of the places around you, from the people you care about.

While talking to Michael, it became clear that he believes strongly in the power of people to edit and transform a place, and the power of places to shape people as well. Staying true to the second point, he left the United States to study at Oxford (in England) for his undergraduate degree.

Why? Michael believes that an education is more than just the classes we attend – we get an education from our fellow students too. “In a global economy, it’s important for Americans to have an awareness of other cultures,” he explained. “Silicon Valley is a particularly special example of the best that can come of this global economy, all because of its openness to people from different places with new ideas.”

Ultimately, Silicon Valley believes in the power of diverse information sharing, and the importance of the ability to partner with the smartest people from any country to build the next life-changing company – on American soil.

Unfortunately, the way Michael sees it, current immigration policy is holding back the dreams of Americans by not exposing them to global talent - and he nearly had his dream shattered. For his first company, his co-founders were Romanian and British -- and because of this national diversity, Mike admitted that they almost failed at the starting line. Luckily, Michael successfully sponsored visas for his co-founders, but it still took a year after getting funding to get everyone over and “we scaled more slowly as a result.” Fast forward and LiveRail now employs fifty Americans.

This is why Michael is involved with Engine. “It’s outrageous that there is no visa class for entrepreneurs,” he said, “but we need to think carefully about how we, as a community, want to make our argument.” Michael joined Engine to lend his face and his voice to otherwise anonymous policy issues because “in the end, all politics is local. In order to communicate goals, we need to demonstrate the effects of action and inaction on real people.” And that includes real people outside the Silicon Valley bubble.

In his post on Quora, Michael argues that “the Startup Visa legislation represents the most effective jobs bill on the table in this Congress, fostering the development of America's next great companies from the best talent around the world”, but he also says that to “mount an effective lobbying effort in the US House, we need to find a way to present a more broadly American story, highlighting stories in other cities and colleges around the US which also hold the key ingredients to foster entrepreneurship.”

This brings us back to the importance of places and faces. There are many faces of immigration, and many regions across the country that benefit from global talent, so as a community, this is a story we need to do a better job of telling. High-skilled immigration reform is not simply a pet project for the sole benefit of Silicon Valley. We need to support comprehensive immigration reform to expand America’s potential for growth and our competitive culture of invention.

The Latest Immigration Debate Takes All Faces into Account

There are many faces of immigration, and finally we’re close to a solution that takes them all into account. We in the startup community have been steadfastly focused on making sure that the discussion on high-skilled immigration – with provisions for a Startup Visa and no caps on H-1B visas – gets enough airtime. But there is a flipside. And when a critical mass of lawmakers from both sides of the aisle can agree not only on high-skilled immigration, but also on paths to citizenship for undocumented immigrants, and policies on family visas, then truly comprehensive reform has a real shot.

Ahead of the full plan we expect to see in early April, this week the so-called “gang of eight” came together to discuss the waiting period for undocumented immigrants to become American citizens. The new plan reduces the time it would take to become naturalized, from five to three years (a concession to Democrats), but it would also extend the time that undocumented immigrants must wait for permission to work permanently, from eight to ten (an appeal to the Republicans.) This thirteen year path to citizenship matches the White House draft plan; bipartisan agreement on what’s been the most contentious issue over the years is a real achievement.

The worry that remains, however, is that a three year naturalization time creates a system where becoming a citizen is faster for undocumented immigrants than for individuals who came here legally. Moreover, the group remains at odds over a number of other major issues including the guest-worker program for low-skilled immigrants, employer verification, family visas, and who has authority on border security.

Meanwhile, the high-skilled immigration debate is being shaken up in the Senate Judiciary Committee. Committee member Sen. Chuck Grassley introduced a bill that explores the abuses of the H-1B system and tightens restrictions on the temporary worker visa program (H-1B). While the bill does not address the visa cap, it does set out more rigorous checks and balances, such as a higher wage threshold and requirements that companies try to hire Americans first.

While it seems that system abuses are fairly rampant, will Senator Grassley’s bill make things better for prospective employees and startups? For example, the requirement to list available positions on a Department of Labor sponsored website for a period of 30 days prior to petitioning for foreign labor seems onerous and unnecessarily time-consuming for startups that are all about high-speed growth.

Second, a key point in this debate is the concept of “indentured” visa holders – foreign workers who are paid less than their American counterparts because they are starting from a weaker bargaining position, having been reliant on their employers for sponsorship. The data bears out this reality. But, while ensuring that visa holders are paid the same as Americans is absolutely necessary, who is the authority on the “prevailing wage” for any industry or specific job? And what’s to say that authority won’t fudge the numbers to retain the current status quo?

Still, despite the problems with the system that certainly need to be investigated and addressed, neither party is happy with the status quo for high-skilled immigration, and leaders from both parties are promising change. The hurdle will be getting an agreement through Senator Grassley and the Judiciary Committee – and accepting that change is likely to come with requirements such as higher wages, higher application fees and more central control over the process. 

Introducing another angle, the committee also heard arguments suggesting that the H-1B program discriminates against women.

While the debate is far from over, what’s clear is that bipartisan agreement is central to the success of comprehensive reform. And if that’s what we’re rallying for, then we need to understand what’s happening to all the faces of immigration.

Answer a few quick questions about your take on immigration reform and how it affects you.

Photo courtesy of Anuska Sampedro.

Good STEM Education Needs to be Available to Everyone. Early.

The Commerce Department estimates that fewer than 40 percent of students entering a STEM field in college ultimately graduate with a STEM degree. This is a headline problem that impacts the long term success rate of American innovation. But college dropouts are not the only problem – for some students the issue is making it to the table at all.

Increasing American opportunity and innovation means encouraging STEM education and creating a more level educational playing field in order to produce more qualified young people entering the workforce. Looking at STEM education starting with college obscures the fact that technological awareness and education starts much earlier -- at home and at school. If students fall behind early, they’re likely to stay behind.

Unsurprisingly, socio-economic inequality is currently cutting the deck in educational opportunity. According to the Pew Research Center’s Internet & American Life report, low income students in poorer school districts are getting left behind. Eighty-four percent of Advanced Placement and National Writing Project teachers raised the issue of increasing disparities between low- and high-income students and school districts regarding access to technology.

Thirty-nine percent of AP and NWP teachers of low income students say their school is “behind the curve” on the use of digital tools in the classroom, compared to only 15 percent of teachers in wealthier districts. It’s clear that low income students might also be suffering from not having access to the internet and other technology in their homes -- only 18 percent of teachers in the study said their students have the necessary access to digital tools at home.

The kids that don’t get left behind might go on to study STEM subjects at college, and they might graduate (though over 60% do not), and then they might manage to secure one of the highest paying jobs that do much to push the economy forward.

Based on the latest research, students are not on the right path in great enough numbers to get to the desired result – and the diversion is happening at middle school.

When half the youth population is falling behind their peers, it’s bad news for the future of American innovation. When the half left behind is from the lower end of the socio-economic scale, it perpetuates the message that prosperity and success is only for those born into privilege and opportunity. To change the message, we need to change the reality.

We need to face up to one of the root problems of poor-performing students and a low STEM graduation rate – the effect of poverty on education – and endorse programs like the Discovery Research K-12 Mathematics and Science Partnerships (and celebrate the successes of approaching the issue early), as well as those that policies that seek to attract and retain students in STEM degree programs through scholarships and financial aid.

Education and access are key to opening opportunities for personal growth and national economic success. In addition to supporting college programs, as a community we need to support investment along the so-called education “pipeline” from kindergarten to bachelors and masters degrees, and beyond. Starting with college is too late.

Photo courtesy of Patrick Giblin.

Startup Act 3.0 Understands the Importance of Skilled Labor -- American or Foreign-born.

Recently, Senators Mark Warner (Democrat) of Virginia, Chris Coons (Democrat) of Delaware and Jerry Moran (Republican) of Kansas introduced Startup Act 3.0 to the Senate. An updated version of Startup Act 2.0, the new bill’s central goal is both to attract top talent and to keep high-skilled workers and talented entrepreneurs inside the U.S.

The bill proposes the creation of 75,000 visas for immigrant entrepreneurs who can raise $100,000 or more in investment capital to start a company, 50,000 new visas for STEM students, providing them with a path to citizenship, and removing to cap on visas for high skilled H-1B workers. (Check out this infographic for more details.)

Research continues to corroborate the positive impact of skilled immigrants on job creation and innovation in the United States. A 2012 report by the Information Technology Industry Council, the Partnership for a New American Economy and the U.S. Chamber of Commerce found that “every foreign-born student who graduates from a U.S. university with an advanced degree and stays to work in STEM has been shown to create on average 2.62 jobs for American workers—often because they help lead in innovation, research, and development.” And in 2011, a report by the Partnership for a New American Economy revealed that immigrants were founders of 18 percent of all Fortune 500 companies, many of which are high tech companies with an estimate that as of 2010, these companies generated $1.7 trillion in annual revenue and employed 3.6 million workers globally.

Most recently, a February 2013 report by the Kauffman foundation estimates that offering startup visas has the potential to add, conservatively, between 500,000 and 1.6 million new jobs in the United States over the next ten years. The impact this could have on the U.S. economy cannot be overemphasized. By some estimates, this range of jobs represents 0.5 to 1.6 percent of GDP or about $70 billion to $224 billion in economic gain.

Comprehensive immigration reform that addresses the needs of foreign born startup entrepreneurs and highly skilled workers is crucial for the advancement of the U.S. innovation economy. Despite having the world’s best higher education system, the U.S. continues to lag significantly in its openness to high skilled immigration at a time when other countries around the world are opening their borders to talented STEM founders.

We have previously highlighted efforts that countries like Canada, Singapore and Chile are making to attract the world’s best and brightest to start high growth businesses on their soil. In today’s knowledge economy, a protectionist labor market for technology talent can significantly hurt innovation, slowing down job growth and economic progress.

Startup Acts 1.0 and 2.0 unfortunately never made it past the Senate floor. It is crucial that Startup Act 3.0 be given a chance this time. Despite the odds, more than 44% of companies started in Silicon Valley since 2006 were started by immigrants. Imagine the flood of innovation that could be unleashed if this bill is signed into law.

So show your support for entrepreneurship and American innovation by joining the positive momentum behind Startup Act 3.0.

Photo courtesy of Senator Mark Warner. 

What You Need to Know About Immigration Reform

In the past few weeks, immigration reform has come back into the limelight on Capitol Hill. The post election climate is such that immigration is a priority for both Republicans and Democrats. President Obama made it clear last week during his State of the Union address that he expected a comprehensive bill on his desk in just a few months, not in a year or two. Though there is no comprehensive reform bill as yet, lawmakers have started drawing the battle lines around issues such as border protection and the path to legal residency for the thousands of undocumented immigrants who already live in this country.

A few lawmakers, however, are looking at another side of the issue as well. As the President outlined in both his immigration reform proposal and the State of the Union address, comprehensive reform must include high skilled workers, many of whom work at startups. Take for example the stories of Fabien Beckers and Rutul Dave highlighted in the Wall Street Journal last week. Beckers, who co-founded Morpheus Medical, a company that creates 3D models of soft tissue from MRI readings, struggled to find funding for his startup because he could not get an H-1B visa (the visa category for temporary workers). As a co-founder, he was not technically employed by the company, therefore he did not qualify for the employer-tied H-1B visa. Rutul Dave, co-founder of Bright Funds, was sponsored by Cisco and unable to start his own company until his green card came through.

Among startup founders, stories like these are not unusual. According to a recent study, immigrants are almost twice as likely to start a company than American workers. In fact, nearly a quarter of the engineering and technology companies founded in the U.S. between 2006 and 2012 had at least one key founder who was foreign-born. In 2012, these companies employed roughly 560,000 workers and generated $63 billion in sales. However, immigration laws are such that we are still sending U.S. educated STEM (Science, Technology, Engineering, and Mathematics) graduates back to their native countries because of visa caps.

Here’s a look at the various proposals circulating right now that are aiming to address these issues:

The White House proposal:

The only comprehensive proposal in consideration right now has come from the White House. There is no legislative text, but rather, an outline that lays out the Administration’s goals.

The President’s proposal specifically creates a new visa category for entrepreneurs who are financed by U.S. investors or U.S. customers. If the company grows, this startup visa allows them to stay in the U.S. permanently. For those who receive advanced STEM degrees in the U.S., the President’s outline calls to “staple” a green card to their diploma once they find employment. Though these masters and doctoral students will undoubtedly contribute to the American economy, this plan may not help startups hire talent who choose to enter the job market after completing a bachelors degree.

The Senate’s solutions - Startup Act 3.0 and I-Squared Act:

In addition to the President’s proposal, friends of the startup community have introduced legislation to fill the void, including the Startup Act 3.0 and the Innovation Immigration Act (I-Squared Act).

The Startup Act 3.0, introduced by Senators Moran, Warner, Coons, and Blunt, creates a new visa category for startups. The bill creates 75,000 entrepreneur visas for entrepreneurs who secure $100,000 in VC funding and already have an employer-based H1-B visa or any student F-1 visa. The Startup Act also introduces a new visa category for STEM masters and PhD graduates by creating 50,000 new STEM visas. For the Entrepreneur visa, the individual must have completed college, but the Entrepreneur visa does not require a masters in a STEM field. Though skilled founders will have to find some way to get here before qualifying for this entrepreneur visa, their educational background will not be limiting, as it was in the previous version of this bill.

The key takeaway here for startups is that a foreign founder cannot move to the U.S. just to start a business. For someone like Fabien, who graduated from an American university, the Entrepreneur visa would have made his immigration process easier. But the act doesn’t grant a visa to an entrepreneur who wants to move to the U.S. to start a business that employs Americans -- and who has already received VC funding -- simply because she is currently outside the states.

The I-Squared Act, which was introduced by Senators Coons, Hatch, Klobucher, and Rubio, handles the backlog of visa requests a little differently. Instead of creating a new visa category to address the needs of startups and high-skilled workers, it increases the cap for employer-based H-1B visas from 65,000 to 115,000. It goes even further in reducing the backlog by tying the number of available visas to market demand. This system is less limiting -- H-1B visas are reserved for college graduates in any field, as long as they can prove that their skills are needed by an employer.

In terms of startup founders, the I-Squared Act relies heavily on changes to green card policy. It exempts STEM masters and PhD. graduates from the green card caps, allowing highly educated STEM workers to pursue their own startup dreams. For example, this could have made it easier for Rutul to start his company years ago, rather than having to wait for his green card.

Both the I-Squared Act and the Startup Act 3.0 eliminate the per country-cap on employment based visas, making it easier to recruit top talent from any country. The key difference with the I-Squared Act is that when the technology economy is booming, as it is now, and the demand for technical talent is high, more visas would be allocated.

What does it all mean?

None of the proposals do enough on their own to champion the needs of startups, though all have components that are key. There are two key needs that should be addressed by any high-skilled immigration proposal: First, we must make it easier for entrepreneurs who want to come to this country to start a business and create new jobs. The Startup Act 3.0 addresses this problem by creating a new visa category, but requires that recipients already have another employment or student visa. The second need is the ability to hire the best and the brightest talent, no matter where they are from. Increasing the H1-B visa cap is the best way to do just that, and the I-Squared Act addresses this need through it’s market-based approach.

However a few questions remain: What of those founders whose first venture fails? Take for example Twitter, which started as a taxi dispatch service. In a culture that values and forgives failure, where ‘pivoting’ a business venture is the norm, and where second opportunities are part of our founding ethos, entrepreneurs need time as much as they need money-- a need that none of the bills or proposals addresses. If a brilliant computer scientist gets a visa to start a company that isn’t successful, she isn’t provided a chance to innovate and try again--and we lose another talented inventor. Both of these bills and the President's proposal attempt to quell the demand for technical talent, relying heavily on masters and doctoral students to fill the ranks at startups. But when was the last time you met a software engineer at a startup with a Ph.D.?

Let’s face it, startups want smart people - it doesn’t matter if they have a STEM degree, where they were educated, or what their nationality is -- as long as they are passionate about the business, and have the talent to help an enterprise grow.

Entrepreneurship, Innovation and the Global War for Talent

Innovation – “the process by which individuals and organizations generate new ideas and put them into practice” – has over the past two centuries been the bedrock of the United States’ economic growth and national competitiveness. From the energy to the computer industries, America’s innovative sectors have been the key drivers of the economy, raising living standards and improving workforce productivity.

Last year, the Information Technology and Innovation Foundation and the Kauffman Foundation released the Global Innovation Policy Index and benchmarked the effectiveness of the innovation policies of 55 countries - including virtually all countries in the European Union, those in the Organization for Economic Co-operation and Development (OECD) and the BRIC economies (Brazil, Russia, India & China) among others. The Policy Index assessed nations based on seven core innovation policy areas: trade and foreign direct investment, science and R&D, domestic market competition, intellectual property rights, information technology, government procurement and high-skill immigration.

Based on the index, the United States placed in the top tier in every category except openness to high skill immigration.

As the competition for global innovation leadership intensifies, countries around the world are strengthening their innovation policy agenda to attract the world’s brightest and best. Just this month, Canada announced that it will roll out a startup visa that will encourage partnerships between foreign innovators and the Canadian investment community.

Singapore which has for long been ranked by the World Bank as the world’s easiest company to do business in has rapidly risen as a magnet for foreign entrepreneurs looking to establish their businesses attracted by provisions such as the EntrePass designed to facilitate the entry and stay of entrepreneurs.

Chile’s startup program, “Startup Chile” is well known for attracting early stage businesses to start their business in Chile with the ultimate goal of attracting world-class early stage entrepreneurs to start their businesses in Chile and converting Chile into a global innovation hub.

Staying competitive in the global economy will be determined by a myriad of factors; key of which is the global competition for talent. As the market for talent becomes more and more diffuse, smart policy should focus on attracting the world’s best to innovate and create the next game changing businesses.

Congress: Pass Bipartisan STEM Visa Legislation This Year

Earlier today, Engine Advocacy released a letter to Members of both Houses of Congress, strongly advocating for legislation this year to increase access to visas for qualified, highly-skilled, foreign-born graduates of Science, Technology, Engineering and Mathematics disciplines from U.S. universities.

The letter can be read here, and we urge you to contact your Members of Congress as well, and tell them to move on important legislation this year.

Senators Call for Startup Hearing

Yesterday, members of the Senate Committee on Small Business and Entrepreneurship called for a hearing on the state of entrepreneurship in America, citing the need to support U.S. job creators at a period in time when new startup formation is slowing.

New firm establishments are the driving force in the U.S. economy, responsible for virtually all net new jobs created in the past three decades. Senators Jerry Moran from Kansas, Scott Brown from Massachusetts, and Marco Rubio from Florida requested the hearing in a letter to Chairwoman Mary Landrieu, citing America’s significant decline in international rankings of startup friendliness. “Once in the top five, the United States has dropped nine places in international rankings...in just four years,” the Senators wrote.

How are the Senators suggesting we regain our edge? With startup-friendly policies to encourage entrepreneurship and new firm foundation. Specifically, with Startup Act 2.0, a bipartisan bill introduced in both houses of Congress earlier this year, and co-sponsored by Senator Moran.

Startup Act 2.0 contains provisions to ease the way for foreign-born entrepreneurs to remain in the country after graduating from U.S. universities, so they can start their businesses on U.S. soil and create local jobs. It provides incentives to get R&D from our universities on the market. And it provides tax incentives that could encourage investment in startups to create new jobs, boosting startups in driving economic growth and employment. Engine has been a strong supporter of the policy measures proposed in Startup Act 2.0, with information and a tool for action here. 

We encourage Chairwoman Landrieu to convene this hearing on entrepreneurship in America. Congress needs to hear from the founders and innovators driving the economy and creating the products that will keep America globally competitive.

Engine @DNC Day 3: Education Takes Center Stage

A rainy Tuesday at the Democratic National Convention saw speeches from candidates, elected officials, and celebrities with a particular focus on the importance of education to the economy. Engine has pursued greater support for education in the United States and the speeches last night in Charlotte drove home the importance of this resource to American ingenuity.

Keynote speaker Julian Castro, mayor of San Antonio, put a sharp point on the issue, saying “you can’t be pro-business if you’re not pro-education.” First Lady Michelle Obama, Massachusetts Governor Deval Patrick, and actor and former White House liaison Kal Penn each made calls for continued support and reform of the education system from pre-K to Pell Grants.

Our recent work with the Bay Area Council Economic Institute highlights the critical role technology jobs play across the country. We can’t continue to fill these jobs without qualified workers graduating from U.S. schools. The strength of our economy is dependent on the quality of the students we graduate, particularly in the science, technology, engineering, and mathematics disciplines.

Engine is excited to hear more about plans to boost education and will be continuing our conversation with elected officials and delegates throughout the convention season. Stay tuned here for updates from Charlotte and don’t forget to look through our primer on issues that matter to startups. 

Mars Rover Brings Curiosity Back to Earth

 A week and a half ago, NASA landed its Curiosity rover on Mars, opening a new stage of exploration on our neighboring planet. The mission opens doors for the next generation of Americans to experience the boundaries pushed by NASA as images of the Martian landscape are posted across the web.

Carl Sagan’s Emmy and Peabody award-winning 1980 series Cosmos highlighted the power of astronomy, cosmology, and exploration and inspired a generation. Sagan has again become popular on the internet, on YouTube and in memes lately, alongside Richard Fenyman and Neil deGrasse Tyson. Users are attempting to recapture the spirit of Cosmos and evangelize science and technology anew. While I have many favorite moments in the series, one video that sticks with me is Sagan teaching children in a Brooklyn classroom about the universe. I would easily trade all of my schooling to be in that classroom on that day.

You may be wondering why all of this matters to startups. It’s

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hard for me to look at individuals like Bobak Ferdowski, Flight Director for the mission, or Sagan, Feynman, or deGrasse Tyson without dwelling on the importance of education to the future of innovation and technology in the United States. Despite a revival of enthusiasm for these scientific public figures, fewer students are graduating with high tech degrees. According to the Department of Commerce, fewer than forty percent of students entering college pursuing degrees in science, technology, engineering, and mathematics leave with a degree in one of these fields.

The U.S. needs STEM graduates to build more than Mars rovers. One stereotypical image associated with startups is of enterprising college dropouts building businesses in garages, but the fact is that STEM graduates are needed to build the next generation of American businesses. Recent debate over immigration reform for high skilled workers demonstrates the need for more students ready to take on the technical challenges posed by businesses that harness technology -- whether computer science-based or in fields such as health and energy -- to create a new class of disruptive products.

The discussion of education and U.S. schools’ priorities have lagged behind the debate about NASA’s funding in a time when the economy dominates U.S. politics. Lawmakers need to make a stronger connection between education, scientific achievement, and the progress of the economy as a whole. Startups and high tech firms help drive job growth beyond STEM degree holders. Research has shown that startups that survive and become successful companies create millions of jobs, most of which include administrators, accountants, and executives.

Though its easy to focus on our differences in an election year, the success of NASA serves as a reminder of our commonly held values and the importance of pushing boundaries, exploring, and innovating. We need more than the space program to inspire students to reach for the stars. Lawmakers need to make sure this generation of American students have the resources, encouragement, and opportunity to launch the economy of tomorrow.

Image via NASA.gov

EIR Program Works on Immigration Policy

For the past 3 months, I have been working on improving the state of our immigration system with a group of entrepreneurs, investors, and other experts as part of the Entrepreneur in Residence program held by the U.S. Citizenship and Immigration Services.

This Monday, we discussed some of our findings and recommendations for improving the immigration process for entrepreneurs at an event at Georgia Tech. The event was attended by faculty, students, immigration professionals, and others interested in the issue.

The EIR program is designed to bring together experts to find pathways to optimize the current immigration system for foreign-born immigrants who want to start or grow their businesses in the United States. These entrepreneurs represent a key factor in the growth of the U.S. economy, building successful businesses that generate revenue as well as creating American jobs. In a global economy, it is vital that this country retain the top worldwide talent and businesses in order to compete. I wrote more about the program at the beginning of my residency. 

Key areas that we have specifically looked into are the process include the confusing multitude of visa options, training of immigration officers, and policy.

One of the most confusing decisions for an entrepreneur is deciding which of the many visas they should petition for; there is H-1, L, O, OPT for recent grads, etc. We will be launching soon a web resource for entrepreneurs to understand what the requirements for each of those classifications are and what evidence to provide for support.

We also see the training of immigration workers to be a key area where we can implement change: we’ve designed and rolled out training for visa adjudicators on issues such as startup structures, financing, documentation, and operations.

There is still more work to be done in this initiative, particularly on the policy side, so we’ve decided to extend the program for an additional 9 months to continue on this effort. You can follow what we’re doing at USCIS, and stay up to date with other measures to reform immigration, like Startup Act, here on Engine.is.

Innovation Depends on Visa Reform

Foreign-born “computer professionals” represent the largest share of H-1B visa applicants, according to a study released this week from the Brookings Institution. The study explores the demand for the H-1B class of highly skilled professional visas across different U.S. metropolitan areas, assessing which geographical and professional areas rely most heavily on foreign-born talent.

The findings show that science, technology, engineering, and mathematics (STEM) occupations accounted for more than half of all H-1B requests in 92 of the 106 metropolitan areas studied, pointing to the disparity of United States STEM graduates and advanced STEM occupations needing to be filled. The Obama administration estimated in February 2012 that less than half of U.S. students pursuing a degree in STEM fields ultimately earn a degree in a STEM discipline. 

The H-1B visa system also plays a major role for small companies and startups which rely on these highly skilled workers to develop products and services. “Our study shows that private firms account for the vast majority, 90 percent, of requests,” Neil Ruiz, a co-author of the study, said in an email to Engine. The top 100 H-1B employers make up only 20 percent of these visas requests. “I would not be surprised if some of them [the remaining employers] are smaller companies or startups,” Ruiz said. For more from Ruiz, see his video. 

The study also noted that specialized skills tend to cluster in certain regions of the world. For example, 56 percent of the world’s engineering degrees are awarded to students studying in Asia, compared to the United States, which graduates just 4 percent of these degrees.

Clustering effects aren’t limited to skill set distribution. Innovation centers in the United States are situated near universities, metropolitan areas endowed with venture capital, and research and development hubs. These areas, from the tech hub of Silicon Valley to the Research Triangle Park in Durham, North Carolina, rely on the H-1B visa program to stock the talent pool for startups in need of highly skilled workers.

The H-1B visa is an essential tool for growing technology centers and the economic benefits they provide. The study’s recommendations include forming a non-governmental, non-political commission to assess the needs of metropolitan areas and assign H-1B caps accordingly.

Legislation proposed this year, including measures such as Startup Act 2.0, seeks to eliminate per-country visa caps, along with other measures designed to allow tech businesses easier access to the foreign-born talent they need in order to grow and thrive in a globally competitive market.

It has become more and more clear that domestic demand for highly skilled labor is outpacing supply. This gap must be addressed by policymakers before the lack of STEM-educated professionals dampens innovation, growth, and entrepreneurship in the U.S. economy. We support measures introduced by lawmakers to end the cap system that arbitrarily prevents talented individuals working for U.S. companies. Policymakers should also consider reforms of the immigration system that would make it easier for entrepreneurs to enter the U.S., start businesses, and create American jobs.

Image from the Brookings Institute.

Entrepreneurs Need Startup Act 2.0

Earlier this week, the office of Senator Jerry Moran, a leading co-sponsor in the Senate of Startup Act 2.0, released a short video detailing the need for reform of the immigration processes for entrepreneurs as would be enabled by Startup Act. 

In the video, Morpheus Medical Co-Founder and Engine member Fabien Beckers, a French citizen by birth, tells his story, and outlines why, despite receiving his education in the U.S. and founding a company here, he and his employees may be forced to close up shop because of his visa situation. 

Check out the video at Sen. Moran's YouTube page here, and remember to call your member of Congress today at http://engine.is/startupact and ask them to co-sponsor and champion Startup Act 2.0 in the House and Senate. With your voice, we can help make this law a reality for founders like Fabien all across the U.S. and keep startups thriving here at home.

High Skilled Immigrants Driving U.S. Innovation

Immigration reforms similar to those proposed in Startup Act 2.0 would help the United States retain foreign students that are driving innovative patents in the domestic economy, according to a report released June 26. The report, conducted by the Partnership for a New American Economy, found that 76 percent of patents issued in 2011 to the top 10 patent-producing universities had at least one foreign-born inventor.

The partnership’s reviewed 1,466 patents awarded to the top 10 schools and highlighted the endowment of foreign-born inventors on patents in “cutting-edge fields.” These inventors were observed to contribute to as many as 87 percent of patents issued in fields which include semiconductor device manufacturing, information technology, pulse or digital communications, pharmaceutical drugs or drug compounds, and optics.

Patents are one measure of new and innovative products developed in the U.S. economy. The report doesn’t just present the statistics, it also shares some of the stories behind the people and projects these patents protect. Innovators from Cyprus, Malaysia, and India involved in patents for technologies behind seawater purification, enhanced digital photography, and strong-as-steel metal that can be molded like plastic.

Foreign-born innovators like these may blossom as domestic-entrepreneurs after emerging from academia. Engine recently featured one such immigrant entrepreneur Rutul Davè, co-founder of Bright Funds -- one of 18 startups that attended Startup Day on the Hill. Rutul earned a master’s degree in computer science before founding his growing startup.

Research and development spending at U.S. universities has increased five-fold over the past 25 years, growing from about $10 billion in 1985 to nearly $50 billion in 2007. Harnessing spillover benefits of this research is critical to the growth of high tech industries. With STEM job growth anticipated to continue through 2017 and less than half of U.S. college students completing the STEM degrees they start, more highly-skilled workers are needed for the U.S. to remain competitive.

Startup Act

2.0 tackles the issue of highly-educated immigration head-on, creating new visas for MA and PhD recipients in STEM fields and extending their ability to find and accept work with companies in the United States. You can learn more about the measure and contact your representative about immigration at www.engine.is/startupact.

Take Startup Act One Step Further, says Marvin Ammori

Startup Act should include a provision to encourage training in computer programming in the U.S., says Marvin Ammori in a piece for the Atlantic today.

The tech world is coming out in strong support of Startup Act 2.0, a bipartisan bill that eases the way for entrepreneurs to hire the foreign-born high-skilled workers they need to build and scale high-growth startup businesses without moving offshore.

While making changes to the skilled immigration process is an essential measure in getting startup talent in this country, Ammori writes that Startup 2.0 is “a great bill, but it could be better”. The gist of the article is that the key to unlocking success for future generations of startups is in setting up all Americans for success in innovative and technology based new businesses -- this means giving public schools funding and incentives to teach all kids how to code, just like all kids are taught basic math and grammar, Ammori says.

An entrepreneurial mentality will be key in navigating the requirements of today’s job market, and the current education system which encourages an obedient worker mentality is unsuited to an economy that increasingly relies on new startups and innovation. Further than encouraging entrepreneurship in our students, though, we should be equipping kids from an early age with programming skills that are fast becoming as ubiquitous a requirement as learning english or math.

Ammori suggests federal government involvement , suggesting that a new iteration of the bill, “Startup Act 3.0, could fund grants for expanding programming classes, beginning with small-scale pilot programs”.

Ammori’s views might not be revolutionary, but he is dead on the money when it comes to the need for a multilateral approach to the dearth of high-tech graduates coming out of U.S. universities. The short term solution is fixing the skilled immigration system, as Startup 2.0 does. The longer term solution is catching the U.S. education system up to the economy of today and the future. We as a country need to set a course on both of these goals, and we can’t afford to wait.

Click here to learn more about Startup Act 2.0 and connect with your representative to let him or her know that it’s important to you.