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What is the International Entrepreneur Rule?

As the U.S. continues to evolve as a global hub for innovation, policymakers and stakeholders must collaborate to address the challenges associated with the International Entrepreneur Rule.

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The United States has long been a beacon for entrepreneurs seeking opportunities to innovate, create jobs, and contribute to economic growth. Recognizing the importance of attracting international talent, the U.S. government introduced the International Entrepreneur Rule (IER) to facilitate the entry of foreign entrepreneurs with promising startup ventures. The goal of the law is to create jobs for Americans with the help of foreign businesses. It also serves as an entry point for wealthy immigrants. This article explores the origins, key provisions, and impact of the International Entrepreneur Rule on the entrepreneurial landscape in the United States.

Background

Table of Contents

The International Entrepreneur Rule was proposed by the U.S. Department of Homeland Security during the Obama administration in 2016, to provide a pathway for foreign entrepreneurs to establish and grow their startups in the United States. The law encourages foreign business owners to ethically create jobs for Americans. Although it does not provide any residential benefit, the rule aimed to address the absence of a specific visa category for startup founders, acknowledging the vital role they play in fostering innovation and job creation.

Key Sections of the International Entrepreneur Rule

To be eligible for the International Entrepreneur Rule, entrepreneurs must demonstrate substantial ownership (at least 10%) and an active role in a startup that was formed within the five years preceding the application. The startup must have a substantial and demonstrated potential for rapid growth and job creation. Entrepreneurs seeking to benefit from the IER must secure significant capital investment or government funding. For initial parole (temporary stay) approval, a minimum investment of $250,000 from qualified U.S. investors or $100,000 in government grants is required.

The IER provides for “entrepreneurial parole,” allowing qualified foreign entrepreneurs to enter and work in the United States for an initial period of up to five years. The parole can be extended for an additional five years if the startup continues to meet the growth and job creation criteria. Entrepreneurs must commit to creating a significant number of full-time jobs for U.S. workers during the parole period. 

The IER requires a minimum of five full-time jobs, with additional job creation criteria outlined for extension eligibility. The DHS maintains oversight over entrepreneurs granted parole under the IER, with periodic evaluations to ensure continued compliance with the eligibility criteria. Non-compliance may lead to revocation of parole status.

Impact on the Entrepreneurial Landscape

The IER has played a crucial role in attracting innovative startups to the United States, contributing to the nation’s reputation as a global hub for technological advancements and groundbreaking ideas. The infusion of diverse perspectives and expertise from international entrepreneurs has fueled innovation across various industries.

One of the primary objectives of the IER is to stimulate job creation and economic growth. By providing a platform for foreign entrepreneurs to establish and expand their ventures in the U.S., the rule has resulted in the creation of thousands of jobs, enhancing local economies and supporting communities. It has also had a positive ripple effect on the startup ecosystem in the United States. It has encouraged collaboration between U.S. and international entrepreneurs, fostering an environment where ideas can flourish, and businesses can thrive.

The International Entrepreneur Rule has facilitated the entry of entrepreneurs from diverse backgrounds, promoting global collaboration in the business world. This diversity enhances the richness of ideas, perspectives, and solutions, contributing to a more vibrant and dynamic entrepreneurial landscape.

Challenges and Criticisms

One notable limitation of the IER is its temporary nature. Unlike some other visa programs, such as the EB-5 Immigrant Investor Program, the IER does not provide a direct path to permanent residency or a green card. This can be a deterrent for entrepreneurs seeking long-term stability in the United States

The fate of the International Entrepreneur Rule has been subject to administrative changes. According to an article written by the Law Office of David A. Breston, the rule was initially delayed and then targeted for removal during the Trump administration. While it has survived legal challenges and remains in effect, uncertainties about its future under different administrations can create concerns for entrepreneurs. The 2024 election may be a determining factor as to whether or not the law will stay as is or if it is repealed. As of now, President Biden has shown no interest in repealing the law, however, Trump has openly stated that he will have a much tighter border prioritizing American businesses rather than foreign ones.

Meeting the investment or funding requirements outlined in the IER can be a significant hurdle for some entrepreneurs, especially those with limited access to capital. This limitation may exclude certain promising startups from taking advantage of the rule.

The job creation targets outlined in the IER may be challenging for some startups, particularly those in industries that do not require a large workforce. Meeting these targets could prove impractical for certain ventures, potentially limiting their eligibility for parole extension. Currently, some of the largest providers of jobs in the southern United States are foreign car manufacturers such as Toyota, Mercedes-Benz, Volkswagen, and more.

The International Entrepreneur Rule stands as a testament to the United States’ commitment to fostering innovation, economic growth, and global collaboration. By providing a pathway for foreign entrepreneurs to establish and expand their startups in the country, the IER has contributed to the dynamism of the U.S. entrepreneurial landscape. Despite its limitations and administrative uncertainties, the rule remains an essential tool for attracting diverse talent and groundbreaking ideas.

As the U.S. continues to evolve as a global hub for innovation, policymakers and stakeholders must collaborate to address the challenges associated with the International Entrepreneur Rule. This includes considering the implementation of a more permanent residency-focused path and exploring avenues to make the program more accessible to a broader range of entrepreneurs. Ultimately, the success of the IER hinges on its ability to adapt to the ever-changing needs of the entrepreneurial community while maintaining its core mission of promoting economic growth through international collaboration.

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Emenike Emmanuel is a multiple award-winning blogger, CEO of Entrepreneur Business Blog, Chief Evangelist of Ebusinessroom Ventures, and the Lead Coach of an online community of over 12,000 business owners called, The Excellent Entrepreneurs' Network. He’s here to help you start, manage and grow a profitable and sustainable business using digital marketing strategies. Follow him on Facebook, Twitter, Instagram, LinkedIn & Pinterest with this handle, @emenikeng. Telegram group - t.me/yourfirst1000 | Email: [email protected]

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