“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”

Bloomberg Businessweek (Asia) - - CONTENTS - −Ellen Huet

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

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