In support of the Startup Visa

If you think we could use a few more jobs in the U.S. right about now, you should know about the Startup Visa, an idea that has been gaining momentum in the blogosphere since last spring. Last month, Senators John Kerry and Richard Lugar introduced a bill that would create a new class of visa for foreign-born entrepreneurs who start companies (and attract funding for them) here.

Ex- Cantabrigian Paul Graham, an entrepreneur who sold an e-commerce company to Yahoo in the late 1990s and is now well known as the founder of Y Combinator, got things rolling last April with a post titled "The Founder Visa." Graham wrote:

The biggest constraint on the number of new startups that get created in the US is not tax policy or employment law or even Sarbanes-Oxley. It's that we won't let the people who want to start them into the country.

Letting just 10,000 startup founders into the country each year could have a visible effect on the economy. If we assume four people per startup, which is probably an overestimate, that's 2500 new companies. Each year. They wouldn't all grow as big as Google, but out of 2500 some would come close.

By definition these 10,000 founders wouldn't be taking jobs from Americans: it could be part of the terms of the visa that they couldn't work for existing companies, only new ones they'd founded. In fact they'd cause there to be more jobs for Americans, because the companies they started would hire more employees as they grew.

Brad Feld, a venture capitalist at Foundry Group, circulated Graham's idea to several U.S. representatives. Feld is also an MIT alum and founder of TechStars, a program in Boulder, Boston, and Seattle which invests small amounts in a few dozen start-ups each year, connects them with mentors, and gives them free office space for several months.

Last September, Feld wrote on his blog:

Two of the ten TechStars Boulder teams were comprised of non-U.S. founders — two from Canada and two from the UK. Both lived in Boulder for the summer and want to relocate here and build their businesses in the U.S. (and — specifically — in Boulder). Over the summer we struggled to figure out ways to get them visas — all of the proposed approaches were expensive, risky, and tiresome. Both companies are still trying, but each [is] now seriously considering returning to their home countries to build their businesses.

I cannot come up with a single reason why this makes any sense from a U.S. perspective. These are young, talented entrepreneurs that have come out of a three month program with amazingly interesting startups. They are in the final process of raising their first rounds of financing. Post financing they will be creating U.S.-based high-tech jobs. If they are successful, they will create a lot of jobs. Plus, they are young so they will do this multiple times in their lifetime.

A number of local venture capitalists signed on to support the idea, representing firms like Spark Capital, .406 Ventures, and Flybridge Capital Partners. And earlier this month, the board of the Massachusetts Technology Leadership Council voted to support the legislation introduced by Senators Kerry and Lugar, which would issue at most 10,000 visas a year (and probably many fewer than that.) Entrepreneurs who hope to obtain one of the new visas must raise $250,000 in funding from an investor in the U.S., and they become a permanent legal resident after two years if their company has either raised an additional $1 million, hit $1 million in revenue, or created at least five full-time jobs in the U.S.

MassTLC president Tom Hopcroft explained the trade organization's support for the idea on his blog:

First, throughout our history we've relied on foreign-born entrepreneurs to help spur economic growth. Nationwide, about a quarter of our technology companies have been founded by immigrants. Here in Massachusetts, some of our most notable tech giants were created by brilliant, visionary immigrants like An Wang of Wang Laboratories, Desh Deshpande of Sycamore Networks, and Ash Dahod, who recently sold Starent Networks to Cisco for nearly three billion dollars.

Second, now more than ever, our foreign-born students can return to their home countries to find opportunity. A recent study found that 52 percent of the Chinese students attending U.S. colleges and universities believed they would find greater opportunities if they returned home after graduation.

With some 445K students currently enrolled at Massachusetts colleges and universities, we naturally have one of the nation's largest pools of foreign-born students, a disproportionate talent asset that, in turn, can create tremendous innovation and wealth in our Commonwealth. We need to retain every one of those students who is willing to strike out on his or her own to start a company and create new jobs and wealth in our Commonwealth.

...To maintain our leadership position, we need the best entrepreneurs — domestic and foreign-born — to stay here and build tomorrow's leading technology companies in the Commonwealth.

I'm on board. Are you? Do post a comment.