The proposed StartUp Visa Act would open the door to foreign entrepreneurs who create jobs
Peter Tegelaar and Coen Stevens sound like just the sort of entrepreneurs the U.S. economy could use right now. The two friends are working on a Mountain View (Calif.) startup called Newcope and want to hire employees. But there's a problem: They're Dutch. In the U.S. on tourist visas, they'll have to return to the Netherlands this spring, unless something changes fast. Jeff Clavier, a venture capitalist who is considering backing the pair, says their departure would hurt Newcope's prospects, since the company is working on a payment system for online games and much of that expertise is in Silicon Valley. "Their likelihood of success in the Netherlands is close to zero," he says.
Tegelaar, 28, and Stevens, 27, have a chance for a reprieve. With prodding from the U.S. venture community, Senators John Kerry (D-Mass.) and Richard Lugar (R-Ind.) have proposed a two-year visa for any immigrant entrepreneur who can secure $250,000 in capital from American investors. After the two years are up, the person could become a permanent resident if his or her business has created five full-time jobs in the U.S., raised an additional $1 million, or hit $1 million in revenue. The senators hope to pass the StartUp Visa Act this month as part of legislation aimed at helping small businesses add jobs. "This bill is a small down payment on a cure to global competitiveness," wrote Kerry in an e-mail to Bloomberg BusinessWeek.
The startup culture in the U.S. has long been the envy of the world, but other countries are closing the gap. Last year 8% of U.S. residents founded companies, down from 12.4% in 2005, says the Global Entrepreneurship Monitor, a research consortium of the London Business School and Babson College. In 53 other countries that the group tracks, the percentage of residents creating companies rose to an average 11%, from an average 8.7%, over the same stretch. "The incentive for entrepreneurs to bring their ideas to the U.S. would be the prospect of becoming a resident of this country and the potential for a greater market," said Lugar in an interview.
The idea for the bill began with Paul Graham, a partner at the Mountain View startup incubator Y Combinator, who wrote an online essay in April arguing for what he called a "founder visa." The post prompted Foundry Group Managing Director Brad Feld, Founders Fund investor Dave McClure, and other venture types to push the idea in Washington. More than 160 venture capitalists and other investors signed a statement backing the bill. "It's such an obvious win," says Graham. "The smartest and most ambitious people [could] come to Silicon Valley."
The proposal is one of the few with bipartisan support in Washington. Still, passage isn't a sure bet. One matter of debate is how much the U.S. would benefit from the proposed visa. Proponents say it could attract thousands of startups in a few years and tens of thousands of jobs. Ron Hira, associate professor of public policy at the Rochester Institute of Technology, counters that the legislation's backers haven't done enough research to support such optimistic projections.
As for Newcope, Tegelaar and Stevens are spending what may be their last weeks in the U.S. going to the Game Developers Conference in San Francisco and mingling with possible investors. "There's nothing like being exposed to all the people that are here, all the money, all the opportunities," Tegelaar says. "We didn't realize the benefits were so enormous."