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Greg Siskind on Immigration Law and Policy

TIME FOR A FOUNDERS' VISA?

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Vivek Wadhwa has a cool new proposal for a visa targeted toward entrepreneurs with great ideas and start up capital to launch new enterprises. Here's some of what he writes in Businessweek:

Here's how it would work. Suppose a talented engineer who is not a
U.S. citizen has a great idea for a new type of search engine and wants
to start a company. This entrepreneur wants to start that company in
the U.S., where venture capital markets are the most mature,
intellectual property laws are strong, and the talent level is high. It
turns out that the would-be founder's search engine idea is actually
very good. So a qualified U.S. investor decides to put real money--say,
$250,000 to $500,000--into the startup. That investor could nominate the
potential founder for a Founders Visa while also making a formal
commitment to fund his or her company.

The idea and the
founder's résumé would then need to pass muster with a government or
industry-appointed board of venture capitalists, financiers, or
technology experts. After passing, the founder would be granted a
permanent resident visa.

To open up visa slots, Ries, Feld and
others propose altering an existing visa known as the EB-5, now for
immigrant investors. Created by the Immigration Act of 1990, the EB-5
lets foreign nationals who invest at least $1 million in the U.S., and
thereby create 10 jobs, obtain a green card. In areas where
unemployment is high, foreign nationals need only invest $500,000 to
obtain residency. By adding a Founders Visa provision such as that I
have outlined to the EB-5 visa, we could avoid having to create a new
class of visas and any political hassles this might entail.

Democratic Congressman Jared Polis and arch-conservative Republican Newt Gingrich are two politicians championing the idea. Hopefully, some of the folks drafting the immigration reform bill in Congress will take note.

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Comments

  1. Adi's Avatar
    "The idea and the founder's r?sum? would then need to pass muster with a government or industry-appointed board of venture capitalists, financiers, or technology experts. After passing, the founder would be granted a permanent resident visa."
    ya sure I will invest $500,000 in this economy and add to it the uncertainity of immigrant visa etc. What does Wadhwa think investors are? Fed's printing press.
    Developing countries will give returns multiple folds as compared to pathetic returns here. Their governments are laying red carpet for investors and here people have to fight for residency. Sure this will bring people to invest in US. Absurd logic.
  2. George Chell's Avatar
    Pretty absurd logic indeed!
  3. dsf's Avatar
    also see:
    http://www.techcrunch.com/2009/10/21/incubating-change-to-immigration-law-with-the-startup-visa-movement/

  4. gg's Avatar
    ALERT !!!...

    House to work 17 days (total) for months of Jan and Feb 2010 ...

  5. gg's Avatar
    Instead of coming up with all these crazy ideas, I think he better focus on GC's for folks who have already created tens of thousands of jobs in the US either directly or indirectly.
    Case in point : Headhunters in the US who make hundreds of thousands of dollars every hour on their H1 consultants. Without these H1 folks most of the headhunters and their families would live on food stamps.

    I think Vivek has not heard of this saying

    Fool me once shame on you, fool me twice shame on me - don't fool me ...
  6. Roy Lawson's Avatar
    This might surprise you, since everyone thinks I am ant-immigration. I like Vivek's idea (for once).

    The H-1b (or how it is usually used) is about a race to the bottom. If someone wants to invest in our country and help us in a race TO THE TOP, then I am all for it.

    I know, there is some H-1b worker making 6 figures reading this thinking I'm out to lunch on the H-1b race to the bottom. I'm talking macro-economics here - not about you outliers or execptions to the rule.

    In short, I'm OK with lowering the investment visa (EB-5) from $1M to $500k. The legislation need to be solid and without loopholes because I'm sure there will be people trying to circumvent the spirit of the law. That would be my only concern.
  7. Adi's Avatar
    "In short, I'm OK with lowering the investment visa (EB-5) from $1M to $500k. The legislation need to be solid and without loopholes because I'm sure there will be people trying to circumvent the spirit of the law."
    It just makes me wonder (and laugh) with this attitude. Is it like you (or US) are doing a favor to investors by allowing them to invest their precious money in this country, especially in this economy?
    People who want to invest look for returns and US offers pathetic returns in this market. Developing economies are offering staggering returns for their investment. Why would anyone in their sane mind would want to deal with immigration hassles and then invest half a million dollars in this economy? Even business savvy Americans are not interested in investing in US, let alone foreigners.

    Sometimes it can help people to read news around the world and look for oppurtunities rather than being a frog in a well.
  8. Roy Lawson's Avatar
    "Why would anyone in their sane mind would want to deal with immigration hassles and then invest half a million dollars in this economy? Even business savvy Americans are not interested in investing in US, let alone foreigners. "

    First, the US economy is the most vibrant in the world. Despite a cyclical (and yes severe) recession we will remain strong. We are a very good place for investors.

    I would argue that the growth in China and India is not sustainable - probably a bubble ready to burst. How long do you think the world can go into debt to support the growth of these economies? They are benefitting from exports, but when the exports dry up their economies will collapse. Domestic consumption will not drive the type of growth that exports to the EU and USA are driving.

    In short, there is now recognition that "fair trade" is the only sustainable path for western nations among today's leaders. When fair trade laws are passed, it will be the end of double digit growth in India and China. Because the United States is a democracy, we are self-correcting. We are one of the most resiliant countries on Earth.

    Democracy is self-correcting. Even if we make a mistake, we will eventually fix it. Don't count the USA out.
  9. Sid's Avatar
    Roy,

    India and China are very different economies. Domestic consumption is not an issue in India. It is not as dependent on U.S. exports as China and was affected to a much lesser degree during this recession. India has the other advantage of being a very young country compared to the U.S. and China. The problems are obviously corruption and government bureaucracy but things are moving along despite that. And BTW, India is a democracy as well.
  10. Adi's Avatar
    "I would argue that the growth in China and India is not sustainable - probably a bubble ready to burst. How long do you think the world can go into debt to support the growth of these economies? They are benefitting from exports, but when the exports dry up their economies will collapse. Domestic consumption will not drive the type of growth that exports to the EU and USA are driving."
    Reading before writing certainly helps.

    "In 2007, India exported an estimated US$151 billion worth of goods onto the international trade marketplace. Indian imports totalled $230 billion, resulting in India's overall $79-billion trade deficit last year."

    What export driven economy are you talking about?

    Or is your thinking driven by stellar paper economy of US in last decade, burst of which resulted in lost decade?
  11. LFWF's Avatar
    Roy,

    You really don't know a lot about the world, do you?
    India has an overwhelmingly domestic driven economy. True, that opening up to the world has brought prosperity and growth, but let's be clear- the export markets have already collapsed, how nuch worse can the US and Europe reccession be? And yet, India is growing at 6% annually. Have you forgotten why US companies are desprate to be in India? A 300 million strong middle class market feeds the local economy and keeps it going. So where is the bubble?

    Also, your presumption that the "bad eggs" in H1B are teh overwhelming majority and the "true earners" are outliers is just that, your presumption. Now that you are faced with the idea that there are high earners in H1B you resort to calling them exceptions. Sure, the bad eggs exist, but they cannot be used to color everyone in this manner. I'm sorry but your prejudice aganst the program shows and does not allow you to be taken seriously.
  12. Roy Lawson's Avatar
    "Also, your presumption that the "bad eggs" in H1B are teh overwhelming majority and the "true earners" are outliers is just that, your presumption. Now that you are faced with the idea that there are high earners in H1B you resort to calling them exceptions."

    This is a known fact, not subject to speculation. If you look at BLS data, it is quite evident who the outliers are. Of course there are people with H-1b visas who earn more than 6 figures. We've always known this.

    The H-1b visa would be much less controversial if the statistics, provided by the BLS, didn't demonstrate that most H-1b workers are paid tier 1 (out of 4) salaries.

    Obviously your first statement was intended to provoke some sort of response from me. I'll just respond with fact. Once again, the statistics tell us about who the middle class in India is. The "middle class" in India looks nothing like the middle class in the US. I found where you get the 300 million in the middle class statistic. If you read the first sentence of that page it says: As of 2005, 85.7% of the population lives on less than $2.50 (a day). http://en.wikipedia.org/wiki/Standard_of_living_in_India

    Per capita purchasing power is $2,659 a year. You won't be buying an American car (or any other high value American product) with that. That is actually LOWER purchasing power than the average Chinese citizen (by nearly half).

    I see how trade benefits India. Clearly, we will buy cheap goods and services manufactured in India. That benefits the consumer. Because consumers also need jobs in order to remain consumers, and as such the massive trade deficit is not sustainable. The trade relationship between our nations is one-sided and India benefits much more from it than the United States does.

    I can't predict when the trade relationship will change, but it eventually will. One of two things will happen. One possibility is that we continue accumulating trade debt until our economy collapses and the dollar is worthless. In which case we stop buying from India and things balance out. Another possibility is that law-makers pass balanced trade laws, which will also balance things out (and the dollar grows stronger). Either way, free markets self-correct. The only question is when, and under what circumstances.
  13. Sid's Avatar
    Roy,

    The argument was not that the Indian middle class is comparable to the American middle class in terms of purchasing power but that the Indian economy is structurally closer to the US economy than China's. Here's an article based on a report by McKinsey -

    http://www.livemint.com/2007/11/04145027/Indian-consumer-to-spend-Rs200.html

    "In 2005, private spending of Rs17 trillion accounted for 62% of India's GDP, which is closer to the developed economies like the US (70%) and Japan (57%) than to China (37%) and other fast-growing emerging markets in Asia."

    The Indian middle class (and the GDP) is expected to grow at a faster rate than the American middle class. The American companies will still get a steady revenue from the US consumer spending but their revenue growth is expected to come from India and China. They're still not going to buy expensive cars from American companies in large numbers (who does? even Americans prefer Japanese cars) but there are other American companies in retail, technology and services that are doing very well in the Indian market.
  14. Sid's Avatar
    Here is a link to the McKinsey report -

    http://www.mckinseyquarterly.com/Tracking_the_growth_of_Indias_middle_class_2032

    You might have to register to read it.

  15. Sid's Avatar
    Here is a link to the McKinsey report -

    http://www.mckinseyquarterly.com/Tracking_the_growth_of_Indias_middle_class_2032

    You might have to register to read it.
  16. eb5 visa program's Avatar
    I cannot say enough good things about these visas. I have personally seen many immigrants go from being well off foreigners, to thriving American businessmen in a matter of months. That's not even mentioning the benefits provided to the recipients of the investments!
  17. Eb5 Visa Program's Avatar
    Hopefully, this Startup Visa will become a reality some day. The country can use all the help it can get at putting Americans to work, and I think this will create a fantastic and feasible new pathway for that process.
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