In the few weeks since I wrote the post The Founders Visa Movement there has been a ton of positive momentum, input, ideas, and support. Thanks to the efforts of Dave McClure and Eric Ries, we shifted the name to the StartupVisa, figured out that the EB-5 visa was the most logical one to try to “modify”, and got a web site up about it. In the mean time, I’ve now had extensive conversations with three of my congressmen, all of whom get it, including one who is deep in working on some draft legislation around it. I’ve also gotten a CU Law JD/MBA student to work with us as an intern to help put some substance around the approach and proposal. I’ve also been taken to task by some folks who think I’m naive, misguided, or simply are against increasing the number of legal immigrants into our country.
I have no idea how to address the entire immigration issue in the US. However, I strongly believe that we should make it easy for people to start new entrepreneurial ventures in the US. As a result, the EB-5 is an interesting visa to consider. The simple version is that if a foreign national invests up to $1,000,000 in a US company that creates at least 10 jobs, the foreign national can apply for the visa. This seems backwards to me. Rather than grant the visa to an investor, let’s grant the visa to the entrepreneur. If we change the EB-5 so that foreign nationals starting US companies that are backed by qualified US investors can apply for the visa it seems like we can preserve the general construct of the EB-5 while applying it to a more compelling recipient (the entrepreneur).
From the various conversations I’ve had, the biggest issue – not surprisingly – is figuring out ways to create an efficient and fair evaluation process for the visa that does an effective job of preventing people from gaming the system. In thinking this through, it seems like there are two goals: (1) use as much existing SEC and IRS filings as possible as the basis (so as to not create new filings) and (b) create appropriate thresholds to make the definitions and parameters easy to test and validate.
Following are some items for discussion. This are not a firm proposal, but rather my synthesis of a bunch of different conversations, including an attempt to synthesize the comment threads on the various blogs posts such as Fred Wilson’s that I’ve seen. I encourage an open discussion of these – please tell me why these are constructs or thresholds that won’t work and feel free to suggest better ones. I’m definitely still in “figuring this out mode” and the more input I get – both positive and negative (preferably constructive) is really helpful.
Proposal: An entrepreneur applying for a StartupVisa can be sponsored by a qualified VC or a qualified Super Angel who is investing at least $100,000 in an equity financing of at least $500,000.
Definition of a Qualified VC: Whenever a VC raises a fund, they have to file a Form D indicating that they are a venture capital company and disclosing the amount of funding that has been committed to them. For purposes of the StartupVisa, this form can be amended to include the disclosure that the VC firm is a US-entity comprised of US citizens. To eliminate the chance that anyone can set up a VC fund for this purpose, the VC fund needs to have a minimum amount of capital commitments (say – $5m).
Definition of a Qualified Super Angel: For angels, let’s define a category called “Super Angel”. A “Super Angel” is an accredited investor (as per the SEC accredited investor rules) and has to have made at least five angel investments in the preceding three years totaling at least $250,000.
Duration: The StartupVisa is valid for two years.
Renewal: For the StartupVisa to be renewed, the company needs to either (a) create 5 new jobs every two years, (b) raise at least $1m every two years, or (c) generate at least $1m in revenue and be profitable.
Ok – have at it. What’s wrong with these parameters? How can the system be gamed? What am I missing?