What Obama’s New Proposal Would Mean for Immigrant Entrepreneurs by Jeremy Quittner @FortuneMagazine August 29, 2016, 3:03 PM EDT E-mail Tweet Facebook Linkedin Share icons For Vishal Sankhla the Obama administration’s proposed startup rule, which would allow foreign-born entrepreneurs to stay in the country and grow their businesses, is welcome news, if a little late. Sankhla, a native of India, moved to the U.S. 15 years ago. In 2011, he founded ViralHeat, a startup that measures metrics around social engagement, which attracted $4.5 million in venture capital dollars and grew to employ 35 people before it was acquired in 2015. Throughout the process, Sankhla’s residency status was uncertain, as he moved from a student visa to an H-1B, and eventually to a green card in 2013. “I was mainly worried that I wouldn’t be able to stay to pursue growing my company,” Sankhla says. The rule, announced last week and now in the formal comment period through the Department of Homeland Security, is meant to help entrepreneurs like Sankhla. If approved, it would allow non-native business owners who found companies in the U.S. to stay in the country for an initial period of two years to build their startups. To qualify, entrepreneurs must have at least a 15% ownership stake in a startup where they have a central role in operations, and have raised either $345,000 from private investors, or $100,000 from government sources. All told, the U.S. Citizenship and Immigration Services says upwards of 2,100 entrepreneurs could be eligible to stay annually. ‘A good idea for getting started’ In lieu of more sweeping changes to immigration policies that would give entrepreneurs a foothold to grow their businesses, the rule is only an intermediate step, many experts said. “Our goal is to get comprehensive immigration reform, with a startup visa,” says Ben Veghte, a spokesman for the National Venture Capital Association, which lobbied for the current rule. In contrast, the rule is about as far as the president could go, short of another executive order. That’s important, given the legal challenges that the president’s executive order on immigration from 2014 now faces. “It is not creating a brand new path of law, but using existing options that are available,” says Robert Loughran, managing partner of Foster Global, an immigration law firm with headquarters in Houston, Texas. As such, it’s not likely to move the needle much on immigration issues, but will afford entrepreneurs up to five years more to deal with documentation and applications for citizenship. (After the initial two year window, entrepreneurs can stay an additional three years if they meet a new set of criteria, including double-digit annual revenue growth, revenues of at least $500,000, and the creation of at least 10 full-time jobs.) Among the problems the rule does not address, and which Silicon Valley firms most frequently note as an impediment to growth, are caps on highly skilled engineers, typically here on H-1B visas. What’s more, many qualified entrepreneurs may not meet the criteria. Numerous startups are able to grow without taking on additional investment money. Similarly, plenty are able to do quite well operating with just a handful of employees, says Deepak Kamra, a general partner at Canaan Partners, where immigrant entrepreneurs started about one third of its 400 portfolio companies. He worries the guidelines could create uncertainty for company owners, who might be encouraged to check boxes in order to stay. “You need the right mix of guidelines,” Kamra says. Imperfections aside, the rule would make it somewhat easier for Unshackled Ventures, a venture capital fund that invests solely in U.S. firms founded by non-native entrepreneurs, to operate. Related: Anyone Can Invest Like a VC Now—So Why Aren’t They? Founded by immigrant entrepreneur Nitin Pachisia in 2014, the firm counts AOL founder Steve Case and First Round Capital’s Josh Kopelman among its investors. To date, it has evaluated 1,200 startups, and invested a total of $3 million in 12 companies. Along with investment capital, it provides entrepreneurs with a pathway to continuing legal status. That includes legal assistance obtaining six different types of visa, including a green card. The new rule could help Unshackled Ventures’ entrepreneurs remain in the country. “We are very excited with this step, and I personally have been hoping for something like this to exist for years,” Pachisia says.