“I didn’t see the sun for four or five months. We were trying to negotiate six-figure deals over an iPad screen”
Horror stories from the immigrants launching Valley companies “Every day is a day they could kick you out of the country”
Standing under fluorescent lights at a San Francisco hospital, employees of Medisas were celebrating the debut of their medical records software. It was the product of two years of planning, coding, and countless meetings with hospital administrators, all driven by Gautam Sivakumar, the startup’s founder and chief executive officer. But Sivakumar spent that day at a computer in his childhood bedroom near London.
His face appeared on an iPad via video chat as colleagues toted him around “like a baby,” he recalls. “I’d say, ‘I need to talk to that person. Can you take me over there?’ ” The awkward arrangement was a byproduct of an all-too-common phenomenon at U.S. tech startups: immigration limbo.
When it comes to starting businesses, immigrants do more than their fair share. While 13 percent of the U.S. population is foreign-born, about 24 percent of tech and engineering companies created from 2006 to 2012 had an immigrant founder, according to the Kauffman Foundation, a researcher that advocates for startups. In Silicon Valley, it was 44 percent. Among those founders are WhatsApp CEO Jan Koum and Instagram’s technical lead, Mike Krieger. Kunal Bahl returned home to India to build e-commerce company
Snapdeal, having failed to secure a U.S. visa after graduating from Wharton. Snapdeal was valued at $5 billion by investors last year and employs more than 4,000 people. There’s no visa specifically designed for foreigners who start companies in the U.S. A six-year effort to create one died in Congress last year. Legislation won’t have a chance at passing until at least 2017, and more likely not until 2022, says Craig Montuori, an advocate for reform who estimates that hundreds of founders in the U.S. are struggling to get federal work authorization. “We got a lot of support on Capitol Hill and very little opposition, but few people were willing to make it a priority,” he says. In Washington, most of the debate around tech visas centers on H-1Bs, typically used by big companies and research universities. Lobbying groups such as
Mark Zuckerberg’s FWD.us say more temporary work visas would keep U.S. companies from losing out on top talent. Protectionist legislators and Republican front-runner Donald Trump say they depress wages and take jobs away from Americans. Either way, H-1Bs often aren’t a practical option for startups, because they’re tough to get and meant for employees, not owners.
Sivakumar, like many startup founders, applied for an extraordinary ability work permit, also known as a “rock star” visa because of its use by famous musicians. ( Justin Bieber has one.) In 2013, after a three-month stint with business incubator Y Combinator, Sivakumar incorporated Medisas in the U.S., met with investors, and began recruiting while hopping back and forth from the U.K. Once he applied for a visa, attorneys advised him not to return to the U.S. until it was approved to avoid agitating officials. For nine months he lived with his parents in England and kept California hours, sleeping during the day and working through the night with a webcam pointed at his face. “I didn’t see the sun for four or five months,” he says. “We were trying to negotiate six-figure deals over an iPad screen.”
The tech industry has begun taking matters into its own hands. Montuori started the Global Entrepreneur in Residence Coalition, which is working with the University of Massachusetts at Boston and the University of Colorado at Boulder to wrangle the schools’ H-1Bs for wouldbe founders. Unlike companies, which enter a lottery for a limited number of H-1B spots each year, colleges can apply for as many as they want. The group says it’s secured about 10 for startup founders so far.
Unshackled, a $4.5 million venture fund, has taken a more radical approach. The fund offers visas and as much as $160,000 to immigrant entrepreneurs in exchange for 5 percent of their companies. So far, Unshackled has doled out 12 visas this way. “The same way a developer looks at a code base and comes up with the best product solution, we’re going to look at the legal code base and come up with the best way to support immigrant entrepreneurs,” says founding partner Manan Mehta.
The legality of Mehta’s immigration hack is questionable, says Peter Roberts, an immigration lawyer who works with Y Combinator. H-1B workers are only supposed to be paid by a single employer, and stock in the founder’s own startup could be considered a second source of compensation. Sharon Rummery, a spokeswoman for U.S. Citizenship and Immigration Services, referred questions about the programs to a statement saying visa applicants should consult the application forms. “The original intent of the program is good,” says Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa), who introduced a bill in November that would limit H-1B visas. “But the abuse of the system is real.”
For now, some founders have remained in the U.S. on tourist or business tourist visas, which forbid working or earning money while in the country. Deferring compensation is easy enough, but what constitutes work isn’t well-defined. “Is talking to investors work?” says Bastian Lehmann, CEO and co-founder of the courier startup
Postmates. “If it is, you’re not supposed to do it. But it’s not a rule. It’s in the opinion of the border guard that you happen to talk to.”
Lehmann, who’s a British citizen, spent Postmates’ first year ducking in and out of the U.S. on a tourist visa. He was always fearful of crossing a line that could get him banned. Eventually, he secured a visa tied to his job, but that presented new problems. “As CEO, you want to build a large company, but every nine months, you have to get your visa renewed, and suddenly the company is 80 or 90 people, and you’re like, ‘S---, I hope nothing goes wrong with this extension,’ ” says Lehmann, whose company has about 240 employees. “The higher the stakes on what you’re building, the weirder that feeling becomes.”
Applying for a visa takes at least six months and can cost $10,000 or more in legal fees and other expenses. It also takes a mental toll. “When you talk to other people in San Francisco, you don’t want to talk about these visa issues that make you cry every day,” says Aurora Chisté, an Italian who spent a year and a half trying to build up a company in the U.S. while visa delays kept her out. “You know that every day is a day they could kick you out of the country, but you hide those things because you know it could affect business.”
It could indeed, says Jeff Bussgang, general partner at venture firm
Flybridge Capital Partners. “VCs don’t want to invest in entrepreneurs who are at risk of being sent away,” says Bussgang, who has been involved in efforts to establish a founder visa. “It’s a huge distraction.” In Riga, Latvia,
Browserling co-founder Peteris Krumins has been waiting for six years to get his business tourist visa renewed. His U.S. co-founder has moved on from the app-testing venture. “Our partnership fell apart,” Krumins says.
Sivakumar’s story has a happier ending. In July 2014 he got his rock star visa to work for Medisas and no longer has the threat of deportation looming over his head. Still, he can’t help but wonder what might have been. Medisas has 20 employees, instead of the 60 or 70 he says it could have had without his year of delays. “We were in hibernation mode,” Sivakumar says, “until this was resolved.”
The bottom line Startup founders and backers are pursuing a range of unconventional ways to cut through the visa logjam.
24% of tech and engineering companies created from 2006 to 2012 have an immigrant founder 13% of the U.S. population is foreign-born 44% of companies created in Silicon Valley have an immigrant founder