‘Startup visa’ rule delay triggers suit
A group of entrepreneurs, companies and venture capitalists has sued the Trump administration for delaying the International Entrepreneur Rule, which was intended to help foreign founders live in the U.S. while growing their companies and had been set to go into effect July 17.
The rule was approved by the Department of Homeland Security in January, during President Barack Obama’s waning hours in office. But a week before it was set to take effect, the Trump administration delayed it with the intent to rescind it altogether. This move was seen as a blow to the tech industry, which had anticipated the rule — sometimes informally known as the “startup visa” rule — because currently no
straightforward path exists for foreign entrepreneurs looking to live in the U.S. while building a company.
The lawsuit was filed by the National Venture Capital Association Tuesday in the U.S. District Court for the District of Columbia. The group argues that the administration’s decision to delay the rule was unlawful under the Administrative Procedure Act, which, the association contends, would have required a lengthy notice and comment period from the public before the administration could make any changes.
The group is looking to reinstate the rule, and ultimately permit foreigners who meet its requirements to start applying for temporary work status in the U.S.
The venture capital association said that the delay of the rule — and the lack of a “startup visa” — has impacted investors’ ability to work with some foreign founders. It argued that the rule would have led to new U.S. jobs. The Department of Homeland Security had estimated that about 3,000 people would be eligible for the rule.
“As a matter of policy, we do not comment on pending litigation,” the department said in a statement.
One plaintiff in the case is Omni Labs, a marketing intelligence software company headquartered in San Francisco. According to the complaint, the startup’s founders — Nishant Srivastavaand Vikram Tiwari — have applied for the L-1 and H-1B work visas with no success. The two founders then moved to Canada, where they ultimately secured a work permit.
Tiwari and Srivastava planned to apply for admission to the U.S. under the International Entrepreneur Rule. Because the founders could not get work permits in the U.S., the lawsuit claims that the company has had to endure extra expenses, such as setting up a Vancouver office.
“Simply put, Nishant and Vikram’s inability to obtain lawful status or parole has been a significant hindrance to Omni’s operations and growth, and thereby makes it more difficult to acquire U.S. investment in the future,” the lawsuit reads.
The point of the rule was to give foreign entrepreneurs who do not qualify for existing visa programs a chance to stay in the U.S. and grow their businesses. The visas that currently exist, like the H-1B and L-1 programs — which are also under scrutiny by the Trump administration — are more suited for companies hiring employees or transferring executives from abroad.
Critics took issue with the rule’s use of “parole” authority. In this case, the term parole means that individuals are not formally admitted into the U.S. — as they would be with a work visa such as an H-1B — but that they can stay legally for a temporary period.
The administration said in July that the rule was delayed for reconsideration in light of a Jan. 25 executive order on immigration and border security, which says parole should only be used “when an individual demonstrates urgent humanitarian reasons or a significant public benefit.”
Other plaintiffs in the case include brothers Atma and Anand Krishna, citizens of the United Kingdom and co-founders of business-payment startup Lotus Pay. The company went through Mountain View startup accelerator Y Combinator last summer. Neither brother has been able to get a visa to stay in the U.S., and they were hoping to apply to stay under the International Entrepreneur Rule.
Given the delay in the rule, the brothers have primarily built their business in India and put off expanding in the U.S., according to the complaint.
“It is impossible to overstate the benefits that immigrant entrepreneurs and companies have provided to the American economy and the nation as a whole, and the concomitant importance of ensuring that immigrant entrepreneurs can come to the United States to continue to grow their businesses,” the complaint reads.