New visa proposal to help create the next big thing

By Maggie Shiels

Technology reporter, BBC News, Silicon Valley

Investors worry the US is not doing enough to entice founders here A proposal that will make it easier for foreign entrepreneurs in the US to start the next Google or Yahoo will be debated in the new year. Congressman Jared Polis has proposed a start-up visa to entice "foreigners with good ideas" to stay in the US. The issue has been gathering steam in Silicon Valley where half of all tech company founders are immigrants, according to Duke University research. The idea is part of a proposed overhaul of the US immigration system. "Every day the American economy is losing ground - not to mention high-tech jobs and technologies - to India and China because foreign-born entrepreneurs cannot secure a visa to stay in the US," he said. Lost opportunity Eric Diep, who has just turned 22, could be regarded as one entrepreneur who got away. He came to Silicon Valley as a student like many immigrant founders who have helped start companies such as Google and PayPal. Mr Diep was one of the first developers to get into social games with his application called Quizzes, initially launched on the social networking site Facebook. Google, Pfizer, Yahoo and eBay were in-part founded by immigrants Over a year ago he started to apply for a visa to allow him to carry on working in the Valley, but he soon encountered problems. "The reason it was so difficult for me was because I dropped out of university and the stipulation for a lot of visas is undergraduate experience. My age also seemed to be an issue for the attorneys "At the beginning it wasn't the expense in terms of legal fees but the big problem soon became one of distraction. I was trying to spend as much time working on perfecting my product but then I would have to go away and figure out the legalities of applying for the visa," Mr Diep told BBC News. In the end, Mr Diep decided to base himself in his native Canada and travel back and forth to Silicon Valley. "The flying is so tiring between the two places and it's expensive. At one point, I had no money left in my bank account but at the last minute money came in and now I feel pretty fortunate that I can still do this. "It was a pretty close call," he added. He backs a start-up visa because, for him, being in Silicon Valley is where he needs to be. "Being there at the time really launched me. I would never have spotted the social gaming opportunity had I not been there." Visa details The start-up visa is aimed at streamlining the country's EB-5 visa system which was initially introduced in 1990 to attract foreign capital to the US. Each year 10,000 EB-5 visas are available but to get one, applicants need to invest $1m and create 10 full-time jobs. Mr Polis said he wants "a new class of eligibility" with the start-up visa. The new visa would require $100k-$250k in venture capital funding It would be granted to foreign entrepreneurs if their business plan attracts either $250,000 from a venture capital operating company that is primarily US based or $100,000 from an angel investor. They must also show that the business will create five to ten jobs or generate a profit and at least $1m in revenue. Some of these requirements may well be changed when the bill goes to committee in the new year. "Immigration reform is a big discussion in Washington," said supporter Brad Feld, who is also a managing director with venture company the Foundry Group. "We think the start-up visa is an easy thing to talk about and get consensus around in terms of having a positive spin on entrepreneurship and creating jobs." Job creation Some critics fear that making it easier for entrepreneurs to set up shop will hurt Americans by taking jobs away from them. "I feel incredibly strongly that that is a misinterpretation of the proposal," said Eric Ries a venture advisor and author. Start-up companies are needed to boost the economy say backer of the visa "Some people have called those opposed to new immigration reform xenophobes and that is why I think it is important we craft this proposal so it addresses those concerns. This is not a new visa category but reform of an existing but flawed category," he told BBC News. The proposal's backers say that far from taking away jobs, new jobs will emerge that were never there in the first place. "If the capital is available for the market, we should jump to bring those people here. Those jobs only get created once the founders get funded. This is a market driven decision," said Dave McClure, an internet entrepreneur, investor and start-up advisor. YouNoodle is a start-up company founded by two British entrepreneurs. It tracks the start-up sector and said the figures speak for themselves. "If just ten thousand start-up visas were made available this would mean over 3000 additional new innovative and funded companies would be based in the US every year," said Kirill Makharinsky, YouNoodle co-founder. "They would generate more than 10,000 jobs on average every year. In the first 10 years that would add up to over 500,000 highly-skilled new jobs "So the upside is huge and the downside is negligible because no jobs are being taken away from US citizens," Mr Makharinsky told BBC News. And for Mr McClure, the consequences of not establishing a start-up visa class are obvious. "We will lose out because we are not being competitive with the rest of the world," he said. "There are similar programmes in Canada, the UK and Australia. They are all vying for the top entrepreneurs and if we only look at our own citizens, we are only taking 10-20% of the world's talent into consideration here. That would be short-sighted in the extreme."



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