Startup Visa Act is Flawed, but Still Worthy, Legislation

Ann All

Earlier this month I wrote about for legislation that would modify the existing EB-5 visa to make it easier for foreign-born entrepreneurs with financial patrons to immigrate to the United States, saying in my headline that the Startup Visa Act would invite foreign investment in the U.S. Sadly, as with the hot-button H-1B visa program, it would also likely create the potential for abuse.


R. Lawson, one of the commenters on my post summed it up nicely, writing:

In theory it sounds great.
In practice, it will be yet another example of how the worst in our country abuse the most vulnerable for profit. The sad fact of the matter is that you can't mix big money and immigration. Corporations simply are not to be trusted when it comes to administering something that I believe is sacrosanct.

Immigration should be about people seeking a brighter future in a country that championed democracy. And that is all it should be about. Keep big business and exploiters of immigrants out of the immigration process!

Writing on his Venture Chronicles blog and citing a Business Insider piece by Pascal-Emmanuel Gobry, Jeff Nolan gets to the heart of the problem by noting the Startup Visa Act would make foreign entrepreneurs incredibly beholden to their investors. "I can't imagine a situation primed for more potential abuse than one where the entrepreneur is dependent not only for funding from a VC but also residency in this country," he writes, echoing Lawson's point.


Nolan also taps other potential problems, namely:

  • The venture firm providing investment funds could go belly-up during the three-year period allotted to the entrepreneurs to produce $1 million in revenue or additional investment and to employ five people, something that Nolan says is not uncommon.
  • An emphasis on short-term revenue vs.long-term sustainability creates temptation for entrepreneurs and their investors to cook the books. This same temptation brought us Enron and countless other financial scandals. But it's exacerbated here by the relatively short three-year timeframe and the fact that U.S. citizenship, not just financial riches, is at stake for the entrepreneurs.
  • The bill doesn't require entrepreneurs or their investors to create new business in the tech sector. Nolan says this could lead to a "scenario where this program is used by U.S. investors to establish companies onshore with cheap offshore entrepreneurs in exchange for green cards again it empowers investors to turn foreign nationals into indentured servants." His point is sound, although I'm not sure why other industries would be any more prone to this kind of abuse than tech.
  • It places a limit on the number of possible visas, which like the H-1B program "all but ensures that a legal specialty industry will attach itself to it like a parasite for the sole purpose of selling off access to the visa program," says Nolan. This, I think, is the biggest issue. I've often wondered if lifting caps on hotly contested visas would ultimately result in less gaming of the system, especially if a removal of caps was accompanied by requirements for more transparency in how visas are used, something that seems sorely lacking in the current H-1B system.


Despite these reservations, Nolan thinks Congress should let the bill live, but "go back and address these weaknesses with draft language that passes muster and puts reasonable checks and balances in place that ensures the intentions of lawmakers and investors are being met." His support for the bill is linked to the fact that he personally knows some of the investors backing the bill and believes their intentions are honest.


The important thing, as both Nolan and a commenter named Pete Warden note following the post, is to keep the bill's requirements fairly streamlined to avoid making the process so complex that it requires immigration lawyers to get involved. Warden, who says he'll become a U.S. citizen soon, describes the slow pace of the immigration process, a problem I've written about before: six months to transfer an H-1B visa and seven years to get a green card.

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Add Comment      Leave a comment on this blog post
Mar 24, 2010 12:09 PM B B  says:

Employers can legally discriminate against qualified Americans by firing them without cause and recruiting only H-1B guest-workers to replace them.  The U.S. Department of Labor (DOL) has said:  'H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of a foreign worker.'  Some companies that discriminate against American workers are so brazen that their job advertisements say 'H-1B visa holders only.'  And some companies in the United States have workforces that consist almost entirely of H-1B guest-workers.

Mar 24, 2010 12:20 PM Ann All Ann All  says: in response to B

Thanks for your comment. However, the post only mentions the H-1B in passing. The subject is a proposed new visa for foreign startups. Both the H-1B and this new visa create the potential for employers or investors to take advantage of visa holders. I do not think you'll find many companies that publicly advertise for h-1B visa holders only. Companies tend to keep that kind of employment bias to themselves or risk being sued.

Apr 4, 2010 4:36 PM Ron Ron  says:

And then they will let these new generation of Green Card holder suffer and live a life of prisoner just like 1.5 million are doing so right now. And most of these 1.5 million made huge contribution to the US by working for Intel, IBM, NASA, Pfzer... just to know that they will be deceived and treated as a robotic labor and will be banned to be with their families:

Read here: http://www.unitefamilies.org/

Apr 9, 2010 5:18 PM anonyous anonyous  says: in response to B

You are not stating properly. MOST OF THE COMPANIES prefer H-1B holders. Most of these H-1B holders are poorly educated. They speak very less on the job so that they are not exposed. Thier communication skills are very limited. Most techanical jobs they are some how able to manage but they are given GRE verbal 70% will not score even 300 out of 800. WHY GOVT DOOES NOT ENSURE THAT BEST AND BRIGHTEST ARE REALLY have acceptable score in ENGLISH and computer science reletd subjects.  It will rediuce the abusive visa practice. The industry is dumping lower grade freshers with worst degree and some software knowledge. PLEASE EXAMINE THE REAL DEGREE OF THOSE WHO WERE GRANTED VISA IN PREVIOUS YEARS.

Apr 23, 2010 7:58 PM mk mk  says: in response to Ann All

I have a question, specifically relating to the H1B program though...

I'm thinking about the early poster, who raises issues about US employers who can legally discriminat against qualified Americans and I'm curious to know what you say about this in general?  Do you agree that the H1B program (e.g. non-immigraiton program) has helped to deteriorate what was "once" a "thriving" IT industry?  Do you agree that US corps are not adhering to existing laws/rules/guidelines, pertaining to the H1B program?  Do you agree that these laws are also not being enforced by the US government?

I believe all of the above, however interested in your opinion.  With that said, sadly I see so many intelligent, experienced IT professionals (some employed, some unemployed, some who have had a decrease in pay; & others who have been forced to get out of IT consulting altogether), ... due to the H1B program.  It's good that people are actually understanding and talking about this issue which has had a large impact on the IT industry... However sadly I don't see anyone with good suggestions (other than to suggest that you write your politicians) about how we can address the issue and restructure the Non-immigration (H1B and other 1bs) program which is eliminating jobs, permitting discrimination and harming US workers.  Why is it is so unpopular to be a US citizen these days...? or to enforce laws that protect US jobs... sometimes I wonder if we are so "political" today, we are so quick to call someone a racist, ... that no one really wants to speak up.  I am gainfully employed right now, but very concerned about what is happening to the IT industry altogether.

Do you know what could potentially be done legally, fight against this discrimination against US workers? ... as well as illegal activity, by corporations, with respect to existing H1B/ non-immigration laws?

Thanks for listening, so many people recognize the issue today and that's good. But very few can really say what should be done, or what can be done to stop the harmful impacts of the H1B (and other 1b) programs.  I write my congressmen and sentetors at least 2 times a month about this issue, ... but see little progress. Interested in knowing what your thoughts on what can be done legally for US citizens...


IT professional

Mineapolis, MN


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