Startups and immigration: Myths, lies and half-truths

Uber has transformed local transportation in American cities and SpaceX aims to enable Americans to travel to Mars. Oscar Health Insurance makes healthcare more accessible for Americans while ZocDoc simplifies making doctor appointments. Razer has created gaming products loved by gamers around the world and FanDuel created a fantasy sports platform enjoyed by sports fans. What do these innovative companies share in common? They were all founded by at least one foreign-born entrepreneur.

In a study by the National Foundation for American Policy, a non-partisan think tank based in Arlington, VA, it was shared that immigrants founded 51 percent (44 out of 87) of U.S. billion-dollar startups and are key members in more than 70 percent (62 out of 87) of these companies.

The research also found that among the billion-dollar startup companies, they have collectively created more than 65,000 jobs. Immigrants clearly play a significant role in job creation, entrepreneurship and the startup ecosystem in the U.S. However, the U.S. has a strict immigration policy and has yet to pass the bill for the “startup visa” and, in the current political climate, it seems increasingly unlikely to do so.

I recently graduated from my Masters program and needed to explore various options for my career. I decided I wanted to start my own company or work for a startup. As with most international students, I was initially under the impression that it would be impossible for me to stay in the U.S. to start a business or work for a startup.

Many of my friends have gone on to work at Apple, Google and Facebook because, to their belief, these are the companies that have the credibility to sponsor an H-1B visa. I also was told that because of the H-1B lottery system that takes place on April 1 each year I would only have one chance of getting sponsorship.

Don’t give up on figuring out your immigration challenges and learning the truth.

Therefore, the “safe route” for foreign-born aspiring entrepreneurs was to work at large companies for a few years before considering the startup route. Dorm Room Fund, a student-run fund focused on investing in student startups, has shared that “immigration challenges” is the top reason why foreign-born student founders choose to work at a large company and not continue with their ventures or work at startups.

However, in my conversations with my mentors and immigration lawyers, I found all these to be at most partially true, and that for the entrepreneurs who are determined to stay in the U.S. to start the next SpaceX, Uber or Palantir or to work at a startup, it’s important to learn about the following list of myths, lies and half-truths.

The H-1B lottery is conditional upon the size or brand of the company

Truth: In my experience, a candidate applying for an H-1B visa at Facebook or Tesla will have the same probability of obtaining the visa as someone at an early-stage five-man startup, given that all other conditions are identical. Granted, the HR department of Facebook or Tesla may be more competent in filing a complete application, but the key point to note is that the lottery is entirely random, and each applicant has an equal chance of obtaining the H-1B visa, regardless of the size or brand of your company.

You only have one shot at applying for the H-1B visa during your optional practical training (“OPT”) period

Truth: The Department of Homeland Security issued a new rule on March 11, 2016, that will allow certain foreign students with science, technology, math or engineering (STEM) degrees to extend their OPT period by 24 months, on top of the 12 months allowed for graduates in all fields. This gives applicants more opportunities to apply for an H-1B visa in subsequent years if they do not get it on their first try.

In addition, because the application deadline is April 1, if you do get a job offer in your senior year or final year of graduate school, you need not wait til your OPT has started to apply for an H-1B, effectively giving you an additional shot at getting the H-1B visa.

H-1B is the only visa possible to stay in the U.S.

Truth: Beyond H-1B, there are various other visa options, including B-1, O-1, E-2, J-1, L-1 and F-1 visas. The B-1 (Business Visitor) visa allows you to stay in the U.S. for up to six months as a business visitor. You may be eligible for an O-1 visa if you can demonstrate extraordinary ability in the sciences, arts, education, business or athletics, which can be supported by sustained acclaim and recognition. An E-2 visa works for you if you invest a substantial amount of money in a new or existing U.S. company. The L-1 visa is for intra-company transferees, which is ideal if your existing company is incorporated in your homeland and you are looking to transfer someone to the U.S. to open a subsidiary company here.

The only way to get an H-1B visa is through the lottery system

Truth: There are other avenues to obtain an H-1B visa. At UMass Boston’s Venture Development Center, the Massachusetts Global Entrepreneur-in-Residence (GEIR) program allows foreign-born entrepreneurs to stay in the U.S. under a cap-exempt H-1B visa by acting as a mentor as part of the GEIR and working on their startups at the same time. The GEIR program began in 2014 as a pilot program of the Massachusetts Technology Collaborative and University of Massachusetts. In addition, internationals born in Singapore and Chile qualify under a non-immigrant work visa called H-1B1, in which the cap on number of visas are rarely met.

Foreigners cannot start companies in the U.S.

Truth: In my conversation with my company lawyer, I learned that foreigners can start companies in the U.S. As a matter of fact, many of my international classmates at school have incorporated their companies while in school or after school. However, you do need to be under the appropriate working visa or OPT to be compensated for productive work.

While applying for your H-1B or other non-immigrant visas for a company in which you are a co-founder, a foreigner cannot own a majority stake (more than 50 percent) in a company and must prove that he or she does not have the controlling power in the firm either through a well-developed board of directors or having other majority shareholders.

Paying massive amounts of money to lawyers is the only way to get a visa 

Truth: There are increasingly more online resources for internationals who like to stay in the U.S. to work. One can easily access online information or work with the growing number of legal startups, including Clearpath Immigration and Legal Hero, etc.

There are also various startup programs in the U.S. focused on championing immigrant founders, helping them to work on their entrepreneurial ambitions. Among them is Unshackled, a mission-centric fund for immigrant entrepreneurs that can help their selected foreign entrepreneurs handle issues of sponsoring work visas or green cards.

For the aspiring entrepreneur who wants to work at an early-stage company or start their own company, it is important while deciding the proper next step in your career to comprehend the myths, lies and half-truths of immigration policy. Information about this subject tends to be opaque and online sources are often not comprehensive. However, one thing is for sure: If you are genuinely passionate about your next startup idea, don’t give up on figuring out your immigration challenges and learning the truth.

Author’s note: I am a Singapore-born entrepreneur who recently graduated from Harvard University. I’m not a lawyer by training and sharing the above through my personal experiences as an entrepreneur who has worked at early-stage startups and founded my own company.