Why Immigration Policy Matters for Startups

Written by Paul on October 29th, 2012

It’s our responsibility to be a bridge to venture capital and functional expertise — as private citizens *and* as a country. The United States is where the internet started and, when you think about economic development and job creation, it’s where many of the most successful internet companies have flourished over the past few decades. However, the internet landscape is changing: more people are online than ever before, technology costs have dropped to an all-time low, and capital is becoming a commodity.

In early 2012, I flew across the country to meet with a few folks from USCIS that were tasked with running the Entrepreneurs in Residence program. I spent an hour getting to know the interviewers but, in hindsight, I’m pretty sure I talked a little too much about the challenges my colleagues and I faced when we tried to bring the smartest startup founders into the US. Amongst other things, here a few ideas I brought up:

  • Internet penetration is rapidly rising all around the world. More importantly, internet penetration within the US will begin to slow in the coming years… if it hasn’t already. (To be clear, all I’m pointing out is that >75% of US homes have internet access and, depending on which reports you believe, >60% of US cell phone accounts have some sort of internet access. Conversely, places like India and Brazil have incredibly large populations that are just now starting to get access to the internet.) The web is getting bigger, the world is getting smaller.
  • As the internet becomes more accessible across the planet, early stage internet startups can increasingly operate from anywhere. From an immigration standpoint, it’s incredibly important that we encourage the best startup founders around the world to start their businesses here in the US – after all, they’re less likely to move here once they’ve planted their roots elsewhere and business starts booming. It used to be safe to think that the best internet companies would start in the US (usually because most of the money came from here, most of the customers/users were here, etc.)… but that’s not true anymore. Places like Brazil and India are seeing a rapid growth in their middle class and, more importantly, their populations are rapidly coming online. In parallel, more US investors are willing to invest beyond their backyards.
  • The US’ strength, in the context of internet startups, is the functional expertise we’ve gained while building companies like LivingSocial, Facebook, Instagram and Mint. One of the big opportunities in early stage investing is to be the API to venture capital and functional expertise for companies that aren’t already in the US. In other words, let’s use our experience with things like data, design and distribution to help foreign companies climb the learning curve faster than their peers — regardless of whether they’re targeting the US or foreign markets.
  • Taking the above point one step further, the US already has the most angel/early stage investors that are ready to invest and understand what early stage companies look like. If we can encourage the founders to incorporate here in the US, we’ll be able to pave the way for even more US investors to put money into the company and, whenever the company ultimately exits, the monetary gains would come right back to US citizens. As Carl Pierre recently wrote, “If you take a look at the history of wealth-generation in this country and how companies have generated hundreds of millions in returns regarding what they invested in, it wasn’t in a 2% allocation of gold as a hedge, it was from investing in privately-owned companies that triggered market growth and job creation.

A few days later, I was selected to join the team and we hit the ground running earlier this year. We spent the first 48-72 hours getting up to speed on the various non-immigrant visa categories. In the early weeks, we also traveled to the processing centers where the bulk of the paperwork is handled. Suffice it to say, it’s much more complicated than I imagined — USCIS is a large scale operation that must balance policy, logistics and execution.

Now, a few short months later, I can tell you that we’ve made quite a bit of progress and I’m extremely proud of what we’ve accomplished. Amongst other things: we’ve implemented new startup/business related training, we’ve updated internal documents/procedures to streamline the information gathering process and we’ve even taken the USCIS team to visit a few startup accelerators so they can get a feel for what today’s startups look like. The bottom line is, we’ve accomplished quite a bit in 90 days and our efforts caught the eye of the White House which launched the Presidential Innovation Fellows program.

There’s still quite a bit of work to be done and, more importantly, all the folks I’ve worked with (at USCIS, DHS, The White House, The State Department and more) have been incredibly supportive of the work we’re doing. So supportive, in fact, that they’ve extended my appointment for another year — we’ve accomplished an incredible amount in the first 90 days, I’m looking forward to seeing what we can accomplish over the next 12 months.

As much as I’d love to say that the next big-ass internet stories are going to start in the US, the fact is that they can be based anywhere now. If we can’t figure out how to at least help them incorporate and raise money within the US, we’re effectively shooting our own economy in the foot.

2 Responses to “Why Immigration Policy Matters for Startups”

  • Sasha Eslami

    Great job man! Really excited to see some progress on the visa issues and see how actively the government is pursuing it.

    — 10/31/12 at 1:39 am

  • Jason

    Paul, your work on immigration policy for startups is so important.

    May I add that this is also related? – H4 dependent spouse inability to legally work in the US means the best and brightest who have families may find it challenging to work for startups incorporated in the US.

    — 11/04/12 at 8:11 am

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