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As Startup Visa Bill Languishes, Entrepreneurs Leave the U.S.

As Startup Visa Bill Languishes, Entrepreneurs Leave the U.S.
Image credit: AGBeat

This summer, a small group of entrepreneurs ran experiments in a wet lab at NASA's Ames Research Center in Mountain View, Calif. Their goal: Creating a commercially viable cultured-meat product similar to the one recently shown in London by a research group from Maastricht University.

The team includes members from Canada, Russia, Australia, Greece, Italy and the U.S. Because of the difficulty that most of them would face securing U.S. visas, they will likely continue their research outside the U.S., taking their innovations with them.

The group named its nascent startup Lifestock. The team includes a biotechnologist, a biomedical engineer, a veterinarian and policy specialist, an investor and serial entrepreneur, and a business strategist. They first came together on June 15 at the beginning of a two-month graduate program at Singularity University, a private educational institution and technology accelerator in Moffett Field, Calif.

Lifestock is exploring the feasibility of designing a three-dimensional scaffold to grow in-vitro beef, a method they believe will lower production costs. The research group from Maastricht used a two-dimensional method, which Lifestock co-founder Adam Little, a Canadian veterinarian and policy specialist, says contributed to the high cost of the final product -- $300,000 for one burger.

Related: What 'Gang of Eight' Immigration Reform Would Mean for Entrepreneurs

Another innovation Lifestock is exploring, the use of a nonanimal-based stem-cell culture instead of the bovine serum used by the Maastricht group, would lower production costs, with the added benefit of being cruelty free, says Zezan Tam, Lifestock's business strategist.

Those next steps in development will probably be taken outside the U.S. "We're looking at the feasibility of working in a few different countries, running a few experiments until we have something to come back together with," says Little.

The difficulty in securing permission to stay in the U.S to launch a business is a dilemma familiar to foreign-born entrepreneurs working on new ventures here. Advocates for entrepreneurship say the U.S. economy is missing out, too, when these innovators leave the country. Backers of a proposed startup visa say its introduction has the potential to spur job and economic growth across country.

A recent Kauffman Foundation study estimated that the introduction of a startup visa could help create 1.6 million U.S. jobs.

The Immigration Policy Center, a branch of the American Immigration Council, has studied the economic impact of foreign-born entrepreneurs in 10 states. In 2010, the most recent year for which data are available, foreign-born entrepreneurs generated $34.3 billion in revenue for California, 28% of the state's total business income.

"Without it, not only do we stand to lose talented people, many of whom are trained in the U.S., we also stand to lose the opportunity to create much-needed jobs in America that will in turn lead to huge economic growth," says immigration lawyer Tahmina Watson, founder of Seattle law firm Watson Immigration Law, who has written extensively about the Senate bill on her blog.

Efforts to create a startup visa have been stymied for the past three years by opponents in the House of Representatives and -- until recently -- the Senate.

The House of Representatives Judiciary Committee approved its own startup visa bill, the Skills Visa Act of 2013, in June. But the bill was not raised for a vote before the entire house. If the bill is passed during the coming session, the House and Senate will form a conference committee to draft a compromise final version of the bill. Watson and other advocates of the startup visa have exhorted legislators in the House to adopt a bill more consistent with the Senate version.

Related: Immigration Reform Clears Senate, Faces House Fight

"Congress is a problem," says serial entrepreneur Vivek Wadhwa, vice president of academics at Singularity University. "The majority Republicans are battling the Democrats over comprehensive immigration reform. What the Democrats are saying is you won't get the startup visa unless you get us amnesty for undocumented workers."

In June, the Senate passed the Border Security Economic Opportunity and Immigration Modernization Act of 2013, which included several integral provisions of the Startup Visa Act, a bill that stalled in the Senate in 2010, 2011, 2012 and 2013.

The bill, crafted by the "Gang of Eight," a sobriquet coined by the media for the bipartisan group of eight Senators who drafted the bill, included language that would create two visa classes for foreign-born entrepreneurs, a temporary visa and a visa that would start the entrepreneur on the path to a green card.

The temporary visa, known as the X-visa, would allow an entrepreneur to remain in the U.S. for three years. Entrepreneurs would be eligible to renew the visa for an additional three years if they can demonstrate that they've raised at least $250,000 in venture capital or generated $200,000 in annual revenue. X-visa holders are also eligible to apply for two one-year waivers of these requirements if they can demonstrate that their business is economically beneficial to the U.S.

The permanent residence provision, known in the bill as the EB-6 Visa, would allow an entrepreneur to remain in the U.S. indefinitely if he or she can demonstrate that they've created more than four jobs, or more than five jobs if their venture isn't involved in a science, technology, engineering or mathematics field. An entrepreneur also must show that he or she has and received either a $500,000 investment or generated $500,000 in revenue annually to earn a green card. If the company is not in a STEM field, the entrepreneur must show $750,000 in revenue, or receive an investment of equal size.

"The biggest thing about the startup visa is it allows you to get a visa on someone else's money," says Watson.

The bill features more strict benchmarks on the number of jobs an entrepreneur must create and the amount of investor capital that must be accrued to earn a visa.

"The requirements [of the House bill] are too onerous," Watson says. "They're saying that if you raise $500,000 through a venture capital investor or $100,000 through an Angel investor we will give you a conditional green card and two years later, if you want to stay, you need to show that you have raised another $1 million either from an investor or in revenue and created five jobs."

Typically, foreign-born workers enter the U.S. on an H-1B visa, a work visa that requires an employer to sponsor a candidate for temporary employment in the U.S. In 20s10, the U.S. Center for Immigration Services decided to interpret the law in a manner that excluded many self-employed entrepreneurs.

"The government frowns upon self employment in many ways," Watson says. "U.S. C.I.S. interpreted some of the laws quite broadly, and said if you can show that you have an employee-employer relationship, we will give you a self -employed H-1B Visa and that has worked in some situations, but not all, and that doesn't lead to a green card."

This leaves entrepreneurs with two options to receive a green card, and both require a large investment of personal funds.

The E-2 investor visa allows an entrepreneur to work in the U.S. for five years, and there is no limit on the number of times it can be renewed, but to receive one, an individual must first make an investment of at least $100,000 in a startup. This visa is available only to citizens of treaty countries, which excludes applicants from Brazil, Russia, China and India.

The other option, the EB-5 immigrant investor visa, requires the applicant to invest between $500,000 and $1 million, depending on whether the company they are investing in is in a "high unemployment" industry.

For Lifestock, neither of these visas are a viable option. And its founders don't have time to wait for Congress to act.

The team has looked at Canada and Chile as potential options. Both countries offer programs to attract startups from beyond their borders. "Some people on our team have to go back to their countries to reevaluate what their commitments can be," Little adds.  

Related: White House Plays Offense: Says Immigration Reform Will Turbocharge Entrepreneurship

Joseph Adinolfi is a New York City-based journalist.

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