DHS’ New International Entrepreneur Rule

In January 2017, The Department of Homeland Security (“DHS”) published a new international entrepreneur rule (“IER”), which had been originally slated to start on July 17, 2017. The IER allowed for certain entrepreneurs to be paroled into the country for an initial stay of up to thirty (30) months in the United States. Less than a week prior to the scheduled effective date, DHS announced that it would delay implementation of the Obama-era rule until March 2018, and seek to rescind the IER citing President Trump’s Executive Order 13767 (“Border Security and Immigration Enforcement Improvements”). The delay was challenged in the U.S. District Court for the District of Columbia in National Venture Capital Association v. Duke, and on December 1, 2017 the federal district court vacated the delay as a violation of the Administrative Procedure Act. On December 14, 2017, in accordance with the federal district court ruling, USCIS announced they would begin accepting applications under the IER.  

The IER applies to entrepreneurs who have formed a new start-up company within the previous five (5) years, the company has since conducted lawful business, and the company has substantial potential for rapid growth and job creation. The IER will allow certain entrepreneurs to be paroled into the United States, based on the discretion of DHS, if the entrepreneur can prove that he or she will provide a significant public benefit to the country.  The IER does not grant any immigration status, nonimmigrant visa, or immigrant visa to the entrepreneur. Instead, the entrepreneur will be eligible for entry into the United States under DHS’ authority to parole. Should the entrepreneur seek a nonimmigrant or immigrant visa, he/she would have to leave the United States and apply abroad.

To prove that the entrepreneur will provide a significant public benefit to the United States, each candidate will have to show (1) that they possess at least a 10% ownership interest in the start-up company, (2) that they hold a central and active role in the operations of the start-up, (3) that they are well positioned, due to knowledge, skills, or experience, to substantially assist the start-up to grow and succeed, and (4) that their company received at least $250,000 from one or more qualified investors, OR that their company received at least $100,000 from one or more qualified government awards or grants, within 18 months of the initial application for parole. If the entrepreneur cannot fully satisfy the funding requirement, they may also provide other “reliable and compelling evidence” that their start-up company has substantial potential to rapidly grow and create jobs.

Please note that a qualified government grant or award applies to federal, state, and local governmental entities which regularly provide such awards or grants, and the awards or grants were for economic development, research and development, or job creation. A qualified investment refers to an investment of “lawfully derived capital” which is a purchase from the start-up company for equity, convertible debt, or other security convertible AND does not include direct or indirect investments from the entrepreneur, an immediate relative of the entrepreneur, or any companies or entities owned in whole or part by the entrepreneur or any of the entrepreneur’s immediate relatives. Finally, a qualified investor refers to a US citizen, US green card holder, or company located in the United States and operating through a legal entity organized under the laws of the United States which is majority-owned and controlled by a US citizen or US green card holder, provided that this individual or entity regularly makes substantial investments in start-up companies which grow and succeed.

The entrepreneur will also have the ability to request one additional period of parole, lasting up to another (30) months, as long as they can prove they will continue to provide a significant public benefit to the United States. The criteria is slightly modified for additional periods; to be eligible for additional periods of parole, the entrepreneur (1) must have maintained at least a 5% ownership interest in the start-up company since their initial parole entry, (2) must continue to show that they are well positioned, due to knowledge, skills, or experience, to substantially assist the start-up to grow and succeed, and (3) that their company received at least $500,000 from one or more qualified investors, qualified governmental grants or awards, or a combination of these two sources of funds, OR that their company created at least five qualified jobs, OR that their company reached at least $500,000 in annual revenue averaging 20% annual revenue growth since the initial parole entry. If the company cannot full satisfy the funding or job creation requirement, they may also provide other “reliable and compelling evidence” that their start-up company continues to have substantial potential to rapidly grow and create jobs.         

Furthermore, up to three (3) entrepreneurs from the same start-up company may be granted parole, the entrepreneur’s spouse and children may also be paroled into the United States, the entrepreneur’s spouse will be eligible for employment authorization, and the entrepreneur must maintain household income that is greater than 400 percent of the federal poverty line for his or her household size. 

In practice, the entrepreneur will have to file the Form I-941, Application for Entrepreneur Parole, along with a $1,200 filing fee and an $85 biometrics services fee with USCIS. The entrepreneur’s spouse and dependents will file Form I-131, Application for Travel Document, along with a $575 filing fee per application and an $85 biometrics services fee if the dependent is between the ages of 14 and 79. Once the entrepreneur’s spouse is paroled into the United States, the spouse will be allowed to apply for employment authorization with the Form I-765, Application for Employment Authorization, which carries a filing fee of $410.

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The information provided is not intended as legal advice. This article contains general information only and is intended for informational purposes only. If you have a question about your situation please contact an attorney directly.