TECH APRIL 23, 2013
Alejandro Muther has been trying to create jobs in the United States for more than a year now.
In 2012 he left Buenos Aires, where his father founded an Internet consulting company in 1983, to bring his retail analytics startup to a Microsoft-run startup accelerator—a sort of short-term mentoring program—in Redmond, Washington. But he only had a business visa, which meant he could only spend 180 days in America per year, so he had to go back to Argentina—temporarily, he hoped.
"We knew that the U.S. was the right market for our product," Muther says. "Argentina is much more behind in terms of technology for retailers. We knew we had to come back."
Luckily, his company—Kimetric, which measures in-store foot traffic to gauge the effectiveness of marketing campaigns—was accepted to another startup accelerator program, in Miami. But he's still on his business visa, so he's shuttling between the continents, which gets expensive. Worse, American investors don't want to back a company whose founders’ immigration status is in limbo, which means that he can't hire staff. And right now, the long term options aren't rosy: He's not someone else's employee, so the H and L visas for specialized workers are off limits. He doesn't have an extra $500,000 to spend on an investor visa. The only thing left is the "O" visa for people of "extraordinary ability," but it’s difficult to prove you qualify for that kind of subjective standard. At this point, Muther isn't sure he'll ever be able to establish his company in the U.S.
"I was very frustrated with the fact that there was no direct entrepreneur visa or startup visa," Muther says. "I would love for there to be some solution, or some entity, even if it were very restrictive, that you could apply to."
Miami is dense with people like Muther—Latin American entrepreneurs who want access to the American market, while staying close to their roots. Brandon Young, who runs a small network of angel investors, says about half the pitches he entertains are from foreign founders. They tend to have more technical expertise and be knowledgeable about the American market, but he can't back them if their immigration status is in doubt. "We're less likely to fund someone who's just going to take the money and run to another country," Young says.
That’s made it difficult to foster a viable startup scene in Miami, where computer science students at local universities book flights to Silicon Valley and New York the moment they graduate.
For the past few years, a bipartisan handful of legislators in Congress have been trying to fix the problem, with a new category of visas for foreign-born entrepreneurs. It hasn't drawn much opposition, but never went anywhere after being introduced in 2011. Two of its three original co-sponsors—Democrat John Kerry and Republican Richard Lugar—then left the Senate. The one remaining, Democrat Mark Udall, figured it stood a better chance as part of a comprehensive package. Another version, Republican Senator Jerry Moran’s Startup Act, met the same fate.
"A huge bloc of elected officials, whether they were supportive of the Startup Act or not, saw that if you move anything piecemeal, especially the popular pieces, you weaken the ability to move anything comprehensive," says a tech lawyer who spoke anonymously because he's working on the bill. "Anytime anything was gaining momentum, some of the opponents of immigration would saddle on a Christmas tree of amendments that dragged down the whole bill."
Meanwhile, other countries have lapped us: The United Kingdom, Chile, and Canada all introduced startup visas of their own, which is already making them more attractive destinations, despite their relative lack of investment capital.
Finally, there's the so-called Gang of Eight’s immigration package on the floor. It has some of what the startup visa backers wanted—-room for 10,000 people rather than 75,000, and a requirement that the founders raise $500,000, generate $750,000 in revenue, and create five jobs. That's a high bar for almost any young company.
But negotiations on the Hill have just begun, and some worry that even that small bullet point could be shaken loose. Immigrant entrepreneurs still soak up venture capital that could go to people from the U.S., after all, which might tick off a legislator with nativist impulses. Early attempts faced some confusion between the startup visa and the investor visa, which critics complain allows outsiders to “buy their citizenship.” And unlike nearly doubling the number of employee visas, which the tech sector demanded be a part of immigration reform, foreign founders don't have the same kind of lobbying muscle behind them. Most statements from the big industry associations welcoming the legislation didn't even mention the provisions for entrepreneurs.
"I think it's less of a problem of organized opposition than there's no organized support," says Dane Stangler, a director of research and policy at the Kauffman Foundation who did a study calculating that 75,000 startup visas—which is what Moran’s bill had proposed—would create 1.6 million jobs over a decade. "I heard the back chatter in Washington that it is a bargaining chip, which would be unfortunate. Startups don't have an organized lobby in Washington. A, because they're not strong enough and big enough, and B, they don't exist yet.”
There is supposed to be a startup lobby, Engine Advocacy, but it's young and puny. The group’s political director, Mike McGeary, worries that his people might get left behind: As a vote approaches, if the numbers look close, losing or weakening the startup visa to appease an anti-immigrant fence-sitter might be the concession that pulls the whole package over the finish line.
"There are going to be lots of moving parts," McGeary says. "The startup initiatives may have the tendency to fall by the wayside and be used as bargaining chips. In the larger fight of 'can they get a bill like this passed,' it begins to get scaled back all the way down the line. We just have to make sure that we don't lose our skin in that also."
Thus far, tech has gotten much of what it asked for in the immigration bill. Facebook was even successful in nixing the requirement that U.S. companies prove they couldn't find any qualified Americans before importing someone from overseas. The startup visa, though, likely won’t be a dealbreaker for the giant tech companies, which can simply process thousands of H1-B applications for their own employees. But it's the kind of thing that could create the next Facebook, and shouldn't be bargained away.