In a move that could benefit Indian entrepreneurs, the US Citizenship and Immigration Services (USCIS) is proposing a new rule to woo immigrant entrepreneurs. Under the International Entrepreneur Rule, as it is called, entrepreneurs from outside the US will be granted a two-year stay in the country to scale up their startups with a subsequent option to extend it by another three years provided these startups show enough evidence of revenue and job creation.
"It's a good step. It could definitely encourage Indian entrepreneurs to headquarter in the US, where they have better access to funds and higher valuations. Existing investors in such qualifying companies may also encourage their portfolio to do this, as it could provide better exit opportunities, by way of acquisitions and IPOs," said Karthik Mahalingam, national practice head for venture capital in law firm Shardul Amarchand Mangaldas.
The US EB5 visa does offer immigration benefits for entrepreneurs investing in businesses in the US. But that is more restrictive. And it requires a minimum investment in the US of $1 million ($500,000 in certain areas of high unemployment or rural areas).
"The proposed rule would allow the Department of Homeland Security (DHS) to use its existing discretionary statutory parole authority for entrepreneurs whose stay in the US would provide a significant public benefit through the substantial and demonstrated potential for rapid business growth and job creation," the USCIS said in a statement.
The startups considered under the rule have to meet certain criteria. The entrepreneur has to have a significant ownership interest in the startup (at least 15%) and have an active and central role to its operations. It should have been incorporated in the US in the last three years and should have raised $345,000 from US investors or should have received grants of at least $100,000 from federal or state government authorities.
Vikram Shroff, head of HR law practice at law firm Nishith Desai Associates, said startups may find it difficult to meet the eligibility criteria including demonstrating the potential for rapid business growth and job creation. "It remains to be seen if Indian entrepreneurs will truly make best use of this new visa rule, like they did with H-1B and L-1 visas," he said.