This week the Department of Homeland Security (DHS) published a final regulation providing the Department the discretionary authority to grant parole to entrepreneurs of startup entities in order to increase and enhance entrepreneurship, innovation, and job creation in the United States.
The final rule adds new regulatory provisions which permit DHS to grant parole to qualified foreign entrepreneurs on a case-by-case basis where the entrepreneur can demonstrate, with respect to their startup entity, substantial and demonstrated potential for rapid business growth and job creation and that they would provide a significant public benefit to the United States.
A foreign national seeking to operate and grow his or her startup entity in the United States would generally need to demonstrate the following to be considered for a discretionary grant of parole under this final rule:
- Entrepreneurship - That the applicant is an Entrepreneur of the startup entity who is well-positioned to advance the entity’s business. This may be demonstrated through evidence that the applicant has (1) significant (at least 10%) ownership interest in the startup; or (2) an active or central role in the operation and future growth of the entity such that their knowledge, skills, and experience would substantially assist the operations and growth of the entity in the U.S. Note, financial investment alone will not qualify.
- Significant U.S. Investment/Government Funding/Substantial Potential for Rapid Growth - The applicant may further validate the startup enterprise’s substantial potential for rapid growth and job creation in one of several ways:
- Investment from Established U.S. Investors - The applicant can show that the entity has received at least $250,000 or more in investment capital from established U.S. investors (such as venture capital firms, angel investors, or startup accelerators) with a history of substantial investment in successful start-up entities.
- Government Grants - The applicant can show that the startup enterprise has received $100,000 or more in monetary awards or grants from Federal, state, or local government entities that typically provide such funding to U.S. businesses for economic, research and development, or job creation purposes.
- Alternative Criteria Demonstrating Substantial Potential for Rapid Growth & Job Creation - Applicants who partially meet one or more of the above criteria related to capital investment or government funding may be eligible if they can provide additional, reliable and compelling evidence that they would provide significant public benefit to the United States and demonstrate a substantial potential for rapid growth and job creation.
- Discretionary Determination - In addition to meeting the above criteria evidencing significant public benefit, the government must also conclude that the applicant merits a grant of parole as a matter of discretion.
The regulation states that no more than three (3) entrepreneurs may receive parole with respect to any one qualifying startup entity.
If granted, parole would provide the applicant and his or her dependents family members (spouses and minor, unmarried children under 21) a temporary initial stay of up to 30 months (2.5 years), which may be extended by up to an additional 30 months through a second application. Applicants will receive employment authorization incident to status (but only with respect to the startup entity) and their dependent spouses will be eligible to apply for separate employment authorization.
It is important to note the differences between parole and a visa. Specifically, unlike a nonimmigrant visa holder, parolees are not considered to have been admitted to the United States and, thus, are not eligible to adjust or change their status from within the United States. Therefore, a parolee who is eligible for and is the beneficiary of an approved nonimmigrant or immigrant visa petition would need to depart the United States and apply for the visa with the Department of State at a U.S. consular post abroad prior to being admitted as a nonimmigrant worker or lawful permanent resident.
The new regulation will take effect on July 17, 2017.
UPDATE: On July 10, 2017 DHS issued an update to the Federal Register postponing the effective date of the Final Rule on Parole for Start-Up Entrepreneurs until March 14, 2018. For more information please click here.