What is the International Entrepreneur Parole Program?
The new International Entrepreneur Parole Program or “start up visa” has now come in effect, offering foreign entrepreneurs another appealing way to start up a new business in the United States.
Its origin goes back to the Obama Administration. In 2014, Secretary of Homeland Security Jeh Charles Johnson issued a memo on November 20, 2014. Under section C promoting research and development in the United States. The International Entrepreneur Parole rules stems out of the interest in providing guidance to promote greater use of the EB-2 National Interest Waiver (NIW).
The memo indicates using the significant public benefit parole authority grant status on a case-by-case basis to inventor researchers and founders of start-up enterprises who may not yet qualify for National Interest Waivers.
This memo helps us understand the standard for getting the IEP / startup visa is lower than the standard of the National Interest Waiver.
Next on January 17, 2017 USCIS issued a final rule providing more clarity revising a 2016 notice. These are now the regulations under 8 CFR 212.19. These regs serve the basis for many of the questions you may have if you see the criteria for this program.
Let’s go through these questions and the answers you need to know if the International Entrepreneur Parole Visa could be the immigration solution for you, referring to the precise wording of the final regulations.
What is substantial ownership to obtain lawful status to operate a startup in the US under the International Entrepreneur Parole program or startup visa?
8 CFR 212.9 (a)Definitions states:Entrepreneur means an alien who possesses a substantial ownership interest in a start-up entity and has a central and active role in the operations of that entity, such that the alien is well-positioned, due to his or her knowledge, skills, or experience, to substantially assist the entity with the growth and success of its business.
For purposes of this section, an alien may be considered to possess a substantial ownership interest if he or she possesses at least a 10 percent ownership interest in the start-up entity at the time of adjudication of the initial grant of parole and possesses at least a 5 percent ownership interest in the start-up entity at the time of adjudication of a subsequent period of re-parole.
During the period of initial parole, the entrepreneur may continue to reduce his or her ownership interest in the start-up entity, but must, at all times during the period of initial parole, maintain at least a 5 percent ownership interest in the entity. During the period of re-parole, the entrepreneur may continue to reduce his or her ownership interest in the start-up entity, but must, at all times during the period of parole, maintain an ownership interest in the entity.
What defines a start-up under the International Entrepreneur Parole program or startup visa?
Start-up entity means a U.S. business entity that was recently formed, has lawfully done business during any period of operation since its date of formation, and has substantial potential for rapid growth and job creation. An entity that is the basis for a request for parole under this section may be considered recently formed if it was created within the 5 years immediately preceding the filing date of the alien’s initial parole request.
For purposes of paragraphs (a)(3) and (5) of this section, an entity may be considered recently formed if it was created within the 5 years immediately preceding the receipt of the relevant grant(s), award(s), or investment(s).
So 5 years is easy to understand, but potential for rapid growth and job creation is not defined. This can be good or bad, so it is best to be persuasive and used evidence. One technique is to use experts to define this. An expert is independent, someone that may know the beneficiary or company but not have a vested interest or in the company or influenced by them like a current or former boss or employee.
Evidence in support can be a business plan that complies with the matter or Ho, which financial projections and job creation projections, actual payroll records, articles or press releases indicating growth or potential growth. A statement from the beneficiary or someone in the company detailing projected growth over a specific time could also be helpful but would need to be supported by evidence.
What is qualified government award or grant under the International Entrepreneur Parole program or startup visa?
8 CFR 212.9 (a)Definitions states:
Qualified government award or grant means an award or grant for economic development, research and development, or job creation (or other similar monetary award typically given to start-up entities) made by a federal, state, or local government entity (not including foreign government entities) that regularly provides such awards or grants to start-up entities. This definition excludes any contractual commitment for goods or services.
This is pretty clear, it is interesting that it precludes foreign grants and purchases of goods and services. While it does not state it, we are asked whether scholarships or other awards to attend educational institutions are awards under the O-1 or EB-1 criteria, they are not and would not be considered awards for the purposes of this criteria either.
What is a qualified investment under the International Entrepreneur Parole program or startup visa?
8 CFR 212.9 (a)Definitions states:
Qualified investment means an investment made in good faith, and that is not an attempt to circumvent any limitations imposed on investments under this section, of lawfully derived capital in a start-up entity that is a purchase from such entity of its equity, convertible debt, or other security convertible into its equity commonly used in financing transactions within such entity’s industry.
Such an investment shall not include an investment, directly or indirectly, from the entrepreneur; the parents, spouse, brother, sister, son, or daughter of such entrepreneur; or any corporation, limited liability company, partnership, or other entity in which such entrepreneur or the parents, spouse, brother, sister, son, or daughter of such entrepreneur directly or indirectly has any ownership interest.
Interesting in how it omits putting in your own money or from family members or their companies. It also cannot be a loan without the ability to covert to equity. This differs from the E-2 which will permit a debt instrument to the investor, include debt from family members as well as investment from the beneficiary.
Who is a qualified investor under the International Entrepreneur Parole program or startup visa?
8 CFR 212.9 (a)Definitions states:
Qualified investor means an individual who is a U.S. citizen or lawful permanent resident of the United States, or an organization that is located in the United States and operates through a legal entity organized under the laws of the United States or any state, that is majority owned and controlled, directly and indirectly, by U.S. citizens or lawful permanent residents of the United States, provided such individual or organization regularly makes substantial investments in start-up entities that subsequently exhibit substantial growth in terms of revenue generation or job creation.
The term “qualified investor” shall not include an individual or organization that has been permanently or temporarily enjoined from participating in the offer or sale of a security or in the provision of services as an investment adviser, broker, dealer, municipal securities dealer, government securities broker, government securities dealer, bank, transfer agent or credit rating agency, barred from association with any entity involved in the offer or sale of securities or provision of such services, or otherwise found to have participated in the offer or sale of securities or provision of such services in violation of law. For purposes of this section, such an individual or organization may be considered a qualified investor if, during the preceding 5 years
(i) The individual or organization made investments in start-up entities in exchange for equity, convertible debt or other security convertible into equity commonly used in financing transactions within their respective industries comprising a total in such 5-year period of no less than $600,000; and
(ii) Subsequent to such investment by such individual or organization, at least 2 such entities each created at least 5 qualified jobs or generated at least $500,000 in revenue with average annualized revenue growth of at least 20 percent.
The challenge will be to obtain this evidence from the investor to prove that they meet the criteria to help the recipient of their investment obtain approval of this status. Of course this would be easier if they were closely related, but the regs preclude them.
How much funding must be raised to qualify for the International Entrepreneur Parole program or startup visa?
The criteria of the International Entrepreneur Parole program under 8 CFR 212.19(b)(2)(ii)(B)(1) states that the applicant’s start up has either:
(1) Received, within 18 months immediately preceding the filing of an application for initial parole, a qualified investment amount of at least $250,000 from one or more qualified investors; or
(2) Received, within 18 months immediately preceding the filing of an application for initial parole, an amount of at least $100,000 through one or more qualified government awards or grants.However, Alternative criteria states, A foreign national who partially meets one or both of the criteria may provide other reliable and compelling evidence of the start-up entity’s substantial potential for rapid growth and job creation.
How long can a person hold the International Entrepreneur Parole program status?
8 CFR 212.19(f) states A foreign national shall not receive more than one initial grant of entrepreneur parole or more than one additional grant of entrepreneur re-parole based on the same start-up entity, for a maximum period of parole of five years.
These are granted in 2 ½-year or 30 month increments.
What is the criteria for extending International Entrepreneur Parole status an additional period?
8 CFR 212.19(c)(2)states:
(2) Criteria for consideration –
(i) In general. An alien may be considered for re-parole under this section if the alien demonstrates that a grant of parole will continue to provide a significant public benefit to the United States based on his or her role as an entrepreneur of a start-up entity.
(ii) General criteria. An alien may meet the standard described in paragraph (c)(2)(i) of this section by providing a detailed description, along with supporting evidence:
(A) Demonstrating that the alien continues to be an entrepreneur as defined in paragraph (a)(1) of this section and that his or her entity continues to be a start-up entity as defined in paragraph (a)(2) of this section; and
(B) Establishing that the alien’s entity has:
(1) Received at least $500,000 in qualifying investments, qualified government grants or awards, or a combination of such funding, during the initial parole period;
(2) Created at least 5 qualified jobs with the start-up entity during the initial parole period; or
(3) Reached at least $500,000 in annual revenue in the United States and averaged 20 percent in annual revenue growth during the initial parole period.
(iii) Alternative criteria. An alien who satisfies the criteria in paragraph (c)(2)(ii)(A) of this section and partially meets one or more of the criteria in paragraph (c)(2)(ii)(B) of this section may alternatively meet the standard described in paragraph (c)(2)(i) of this section by providing other reliable and compelling evidence of the start-up entity’s substantial potential for rapid growth and job creation.
Remember the rule of 5s: 5 jobs, raising $500,000 or generating $5000,000 in revenue. If you can’t reach these thresholds, you must show other evidence of potential to get there.
What are the criteria and benefits spouses and children have under the International Entrepreneur Parole program?
8 CFR 212.19(h)(1) says…
The entrepreneur’s spouse and children who are seeking parole as derivatives of such entrepreneur must individually file Form I-131, Application for Travel Document. Such application must also include evidence that the derivative has a qualifying relationship to the entrepreneur and otherwise merits a grant of parole in the exercise of discretion. Such spouse or child will be required to appear for collection of biometrics in accordance with the form instructions or upon request.
(2) The spouse and children of an entrepreneur granted parole under this section may be granted parole under this section for no longer than the period of parole granted to such entrepreneur.
(3) The spouse of the entrepreneur parolee, after being paroled into the United States, may be eligible for employment authorization on the basis of parole under this section. To request employment authorization, an eligible spouse paroled into the United States must file an Application for Employment Authorization (Form I-765),
(4) A child of the entrepreneur parolee may not be authorized for and may not accept employment on the basis of parole under this section.
For more information on the International Entrepreneur Parole program and how you may qualify, schedule a strategy session with one of our licensed Immigration attorneys.