United States: International Entrepreneurs: New Proposed Work Authorization For Founders Of Start-Ups And A Comparison To Other Visa Options

On August 31, 2016 the Department of Homeland Security (DHS) proposed an "International Entrepreneur" (I.E.) rule that would allow qualifying foreign investors to develop and grow their start-up companies in the United States.  DHS already has the authority to temporarily parole individuals into the United States without a visa for urgent humanitarian reasons or for a significant public benefit.  The proposed rule would invoke this authority and allow foreign investors to enter the country for the purpose of enhancing entrepreneurship, innovation, and job creation.  However, the rule comes with its own set of strict qualifying criteria.


To be considered for this type of parole, both the entrepreneur and the start-up must meet certain criteria.  This includes the following:

  • The entrepreneur must have formed the start-up in the United States within three years of the application for parole;
  • The entrepreneur must own at least 15% of the company; and
  • The entrepreneur must play an "active and central role" in the company's operations and future growth. The entrepreneur cannot merely be a silent investor.
  • Further, to show a strong and reliable indication of the start-up's potential for rapid growth and job creation, the entrepreneur must establish that U.S. investors have financed the start-up within one year of the application. Specifically, established U.S. investors such as venture capital firms, angel investors, or start-up accelerators must have invested at least $345,000 into the company.  Alternatively, the start-up must have received at least $100,000 in grants or other funding from Federal, State, or local government entities.  Or partially satisfying one or both of the above capital investment criteria along with other compelling evidence of growth potential and job creation.


Under the proposed rule, a maximum of three entrepreneurs can be granted parole per start-up.  Also, the spouse of each paroled entrepreneur would be granted parole and be able to obtain a work permit (EAD) and their minor children (single and under age 21) would be paroled in as well.

For each applicant, DHS may initially grant parole for up to two years, but entrepreneurs could request an additional three years if their start-up is continuing to provide a "significant public benefit" as evidenced by substantial increases in capital investment, revenue, or job creation.  The entrepreneur would also have to establish that they continue to possess significant ownership in the start-up and continue to play an active and central role in its operations.  Notably, DHS would have the discretion to provide any length of admission, including a shorter or longer period, where appropriate.

As with other employers of foreign workers, the start-up entity would have to verify that its employees are authorized to work in the United States, as is the paroled entrepreneur.  The entrepreneur's employment authorization would be limited to the specific start-up entity listed on the application.

The proposed rule would require that parole be terminated for the entrepreneur if: (1) the period of parole expires; or (2) the entrepreneur ceases employment with the start-up or ceases to own at least 10% of the company.


The public has 45 days to comment on the proposed rule before it is adopted.  After the 45-day comment period, DHS may issue revised regulations.  Therefore, the final rule is not expected until at least January 2017.


While the proposed International Entrepreneur rule is laudable and would help with job creation, it may get challenged in the courts by those seeking to limit Executive Action.

We saw that the DHS initiative in November 2014 to expand Deferred Action for Childhood Arrivals (DACA) and Parents (DAPA) ultimately got stuck in the court system.  The States argued that the initiative would saddle them with additional costs and the final rule was never implemented.

In the case of entrepreneurs, there would not be any adverse impact to the States.  The initiative would create jobs in local economies and revenue for State and local governments.  Further, Congress has already granted the Executive Branch the authority to parole individuals into the U.S. for urgent humanitarian needs or a significant public benefit.  Clearly, job creation is a significant public benefit.

However, the U.S. has a long history of having an E-1/E-2 non-immigrant treaty regime, which allows for foreign national investors to use their investment in a company as a basis to live and work in the U.S.  The United States currently has such treaties in place with over 80 countries.  Those treaties require ratification by the U.S. Senate before DHS or the U.S. State Department can issue work authorization.  For more information regarding visas based on an E-1 or E-2 treaty, see:  https://travel.state.gov/content/visas/en/fees/treaty.html.

This new International Entrepreneurs rule would bypass treaty ratification by the U.S. Senate.  It also bypasses the State Department, which oversees the issuance of E-1 and E-2 visas to investors at U.S. Embassies and Consulates across the globe.  Instead DHS would accept petition filings and then the investor would receive a "Parole Document" in lieu of a visa, and then U.S. Customs and Border Protection (CBP) would parole them into the U.S. using their passport and parole document issued by USCIS.

So it remains to be seen if this new initiative will be spared a court challenge.


The U.S. does not presently have an E-1/E-2 treaty with China and India.  This new International Entrepreneurs initiative will accommodate some Chinese and Indian nationals that have been left out of the non-immigrant investor visa scheme.

Historically, for countries that did not have an E-1/E-2 treaty with the U.S., the L-1 visa has been the main option for coming to the U.S.  But the L-1 visa is for intra-company transfers, and it is intended for senior management of large multinational companies.  USCIS has frowned upon approving L-1 petitions for smaller companies.  Therefore the L-1 visa could not bridge the gap for all potential entrepreneurs seeking nonimmigrant visa status.

Even if an investor holds nationality from an E-1/E-2 treaty country, the proposed rule would accommodate a young entrepreneur who does not have capital but nonetheless has a great new technological idea for the marketplace, to be able to come to the U.S. to live, work, and develop the company.

If the entrepreneur can convince a venture capital firm to allow him to retain at least a 15% ownership stake along with the VC company contributing at least $345,000, then the entrepreneur could develop the company despite not putting their own personal funds into the enterprise.  With the traditional E-1/E-2 visa, this cannot be done.  The E-1/E-2 visa requires that the entrepreneur invest a minimum of $100,000 of his/her own funds, an amount that a young entrepreneur may not have.


  • An E-1/E-2 visa requires a treaty, a minimum investment of $100,000 (sometimes more), the nationality of the U.S. entity must be at least 50% the same as the investor seeking the visa, a business plan to hire U.S. workers and the funds must be personally invested by the E-1/E-2 investor.
  • The proposed rule would generally require that an established U.S. venture capital firm invest at least $345,000 into the U.S. enterprise. This is substantially more than most initial E-1/E-2 investments.  However, the rule states that USCIS will have discretion to consider lower investment amounts from venture capital firms coupled with a strong indicia of job growth.
  • Also, the proposed rule only requires the foreign national to own at least 15% of the U.S. entity, thus the nationality of the U.S. entity only needs to be 15% foreign.
  • The proposed rule requires that the investment be made in the last 3 years. So this would exclude certain entrepreneurs that made investments prior to 2013.
  • The proposed rule is silent as to what would happen after 5 years. It calls for an initial 2 year status and then one extension involving 3 years.  In addition, USCIS has proposed a complicated formula for determining if the one-time extension is warranted.  This uncertainty could have a chilling effect.  In contrast, the E-2 visa is typically good for 3 to 5 years (depending on the country) and renewable without limits as long as the U.S. entity is viable and growing.
  • For the pursuit of permanent residency (green card), some investors in the past have tapped into the EB-5 program and invested $500,000 in a targeted employment area or $1 million in an urban area, along with the creation of 10 new full time jobs over a 30 month period. In contrast, the proposed rule has no component to create permanent residency for the investor.  The entrepreneur could, however, increase their investment over time to $1 million and help create 10 full time jobs and then invoke the EB-5 program to obtain permanent residency.  However it should be noted that retained earnings within the company cannot be included as a qualifying EB-5 investment so the investor seeking the green card would have to use his/her personal net income to re-invest in the U.S. entity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
30 Apr 2019, Business Breakfast, San Diego, United States

Please join us for Sheppard Mullin's Breakfast With Your Labor Lawyer Seminar Series. This year, you will have to face many new developments in California labor and employment laws that will significantly affect the way you run your day-to-day business operations.

30 Apr 2019, Other, San Francisco, United States

Every company in the world must keep pace with global compliance obligations to protect its reputation, its profitability, and sometimes its very livelihood.

1 May 2019, Conference, Los Angeles, United States

With the GDPR, the reality of data breach notification and response truly hits home for the EU.

Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions