Obama’s Immigration Changes Hint at Revival of Startup Visa Idea

Could the federal government finally be creating something like the startup visa, the long-stalled immigration reform that would make it easier for entrepreneurs from foreign countries to start companies in the U.S.?

The door to that possibility might have opened slightly on Thursday night, following President Barack Obama’s speech about immigration reform. Obama used the address to outline actions his administration would take that would change how immigration laws are enforced without waiting for an agreement with the soon-to-be Republican-controlled Congress.

“I’ll make it easier and faster for high-skilled immigrants, graduates and entrepreneurs to stay and contribute to our economy, as so many business leaders proposed,” Obama said.

Among those business leaders are prominent VCs including Fred Wilson, Brad Feld, and Paul Graham. They’ve backed what they call “the startup visa,” a reform they say will attract entrepreneurial workers in the U.S. and allow foreign-born students who have started companies to remain in the country after their student visas expire.

The visa is different than the existing H-1B visa often used by large tech companies. Instead of helping established firms find employees, the startup visa would be focused on people willing to take a risk on founding a company. The latest version of the proposed startup visa law would allow H-1B and student visa holders to stay in the country another three years if they start a company with at least two full-time employees who are not family members. They also would have to invest or raise at least $100,000.

The Kauffman Foundation is a solid supporter of the idea and estimates it could create 1.6 million jobs and boost economic growth an extra 1.5 percent over 10 years of its passing.

A couple of really major caveats apply to Obama’s comments, even before you deal with the political firestorm resulting from his actions and all-important technical details. First, it was the one and only mention of changing the rules in a way that would specifically benefit technology companies. Instead, the 15-minute speech mostly addressed whether to deport undocumented workers.

Secondly, there were no details about actual policy changes in the speech, or even on the White House website. The page dedicated to immigration policy was updated with a new infographic and links to a white paper from 2011.

That’s led startup visa backers like Foundry Group managing director Jason Mendelson to delay passing judgment. In 2011, Mendelson testified before a congressional committee in support of the reform.

“It seems very light on details, and it’s not even clear how many people we are talking about here,” Mendelson said in an e-mail. “Until I see real details, I’m holding my breath and thought.”

A reason to be wary is that previous bills that would have created startup visas have stalled in Congress, despite receiving bipartisan support from lawmakers and lobbying groups that support both Democrats and Republicans. Proposals for the law first started circulating in Congress in 2010.

Although Obama did not go into detail about the pro-entrepreneur reforms his administration will make, he has previously supported the startup visa idea. That year, the comprehensive immigration reform package passed by the Senate included the startup visa, but the bill died in the GOP-led House.

With passing new laws apparently off the table, Obama has decided to change how his administration interprets and applies the existing laws. That’s provoked the expected outrage from immigration-reform opponents and most Republicans. Also, his changes could be undone by another president.

Still, Obama’s speech has least generated some favorable reactions from startup visa supporters. On his blog, Wilson praised the president for his newfound assertiveness and said the speech showed that “every once in a while good politics results in good policy.”

The National Venture Capital Association went into more detail about its support.

“In the absence of congressional action to fix our broken immigration system, we appreciate President Obama’s leadership on this important issue,” NVCA president and CEO Bobby Franklin said in a statement.

Franklin pointed to the effort “to expand visa opportunities for venture-backed entrepreneurs who all too often lose out in the race to secure U.S. visas.”

“By targeting solutions to help foreign-born entrepreneurs build their businesses in the U.S., President Obama has made clear he understands the important role the entrepreneurial ecosystem plays in our economy and is prepared to do all he can to ensure the U.S. remains the global hub of innovation,” he said.

Franklin did say that congressional action—that is, actually changing the law, not just how it is enforced—was the best course, and that it the NVCA would continue working in that direction.

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