Investors sue over International Entrepreneur Rule

The lawsuit claims the U.S. is losing venture capital because of its anti-immigrant stance

In the tech industry’s latest stand against President Donald Trump, a group of leading investors is suing the administration for blocking a policy that would have made it easier for immigrant entrepreneurs to start businesses in the U.S.

By refusing to implement the International Entrepreneur Rule, the administration is preventing promising founders from coming to and staying in the U.S. — a move that is harming the country’s economy and sending jobs overseas, the National Venture Capital Association wrote in a lawsuit filed Tuesday against the Department of Homeland Security. The lawsuit follows months of criticism of the administration by many prominent tech executives and investors, particularly around immigration and the environment.

The Trump administration in July suspended rollout of the Obama-era program less than a week before it was to go into effect, and said it will propose rescinding the rule altogether. If it had been allowed to roll out, the International Entrepreneur Rule, or IER, would have let immigrant founders stay in the U.S. for up to five years with a startup visa if they showed a plan for expanding their business locally.

“Immigrant entrepreneurs play a vital role in strengthening the U.S. economy, creating new jobs for Americans and pushing the boundaries of innovation,” NVCA President and CEO Bobby Franklin wrote in a news release. “Rather than throw up roadblocks that prevent them from bringing their talent and ingenuity to our shores, we should welcome them with open arms.”

A third of U.S. venture-backed companies that went public between 2006 and 2012 had at least one immigrant founder,

according to a 2013 study by the NVCA. Google, Intel, Tesla and Zipcar all have immigrant founders.

But the U.S. is losing its share of global venture capital investment because of its anti-immigrant stance, the NVCA claims. U.S. startups received more than 90 percent of global venture capital investment two decades ago. That number dropped to 81 percent a decade ago, and to 54 percent last year, according to the NVCA.

The NVCA claims the Department of Homeland Security violated the Administrative Procedure Act because it failed to solicit public comment before suspending the International Entrepreneur Rule. The association is asking the court to force the department to reverse the suspension and begin accepting startup visa applications. The federal agency declined to comment on the litigation.

Several immigrant tech entrepreneurs have joined the lawsuit, including brothers Atma and Anand Krishna. The brothers, UK citizens who founded payments platform LotusPay, presented in Mountain View last month as part of prestigious Silicon Valley startup accelerator Y Combinator’s most recent demo day. The brothers are launching their platform in India, and hope to expand it into the U.S. But without the option of a startup visa, Anand Krishna will soon have to leave the country, according to the lawsuit. His brother has already left.