The Reluctant Case against a Founder’s Visa

Berin Szoka links to this article by Brad Feld promoting Paul Graham’s idea for a founder’s visa. Under this proposal, there’d be a special route for immigrating to the United States for foreigners who found startup firms. Berin makes the argument well:

What an absurd country we live in: We accept, for better or worse, massive illegal immigration across our porous southern border as a fact of life, but can’t muster the political will to give legal status to the most creative and innovative from around the world drawn to the Land of Opportunity made possible by capitalism. So, being dutiful and law-abiding, these “Talented Tenth” go home to suffer under the dead weight of bureaucracies even more oppressive, incompetent and corrupt than our own. How sad.

2229937579_f0f4f4170fI’m completely on board with this in principle, but I’d be reluctant to get behind Graham’s specific proposal because it seems awfully narrow. We should be admitting hundreds of thousands more people to the United States every year; a visa that only lets in 10,000 people a year is a relative drop in the bucket compared with the scope of the overall immigration problems. The H1-B program, for example, admits 65,000 people per year, and that comes nowhere close to meeting the demand for high-skilled workers. If the choice is a founders’ visa or nothing, I’ll take the founder’s visa. But I think narrow visa programs like this can have the same effect on the politics of immigration that narrow tax credits have had on the tax code: many interest groups that would otherwise be supportive of broad immigration reform might decide to focus on defending their narrow exemption, with the consequence that narrow exemptions are all we get. We need an immigration reform that liberalizes and simplifies the immigration rules, not a restrictive immigration system that looks like Swiss cheese.

In addition, I think Graham and Feld underestimate the difficulty of enforcing the “startup” requirement. Permanent residence in the United States is an incredibly valuable asset, and people will go to great lengths to secure it. I suspect there are many foreigners with the necessary connections to borrow $250,000 and draft a plausible-sounding business plan that meets the legal requirements. One can imagine, for example, “startups” that mostly do contract work for large companies, making the startup visa a backdoor substitute for an H1-B visa. Now, I’d like to see the H1-B program expanded, so this doesn’t bother me as such. But it would give critics of the policy a lot of ammunition. And it would raise the possibility of immigration bureaucrats micro-managing startup founders’ business plans, both before and after admission, which would almost guarantee that they’d all fail.

I’d much rather focus on promoting Brad Feld’s proposal to grant permanent resident status to anyone who graduates from an accredited college with a bachelor’s degree or better. (He wants to limit it to computer science, while I’d like to see it applied more broadly) This would affect vastly more people, would be harder to game (creating a sham four-year college in the US is a lot more work than creating a sham startup), and I think it would still be a relatively easy sell politically, since I think voters have an intuitive sense that it’s stupid to educate a bunch of foreign students here and then force them to go be productive, tax-paying citizens in their home countries.

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One Response to The Reluctant Case against a Founder’s Visa

  1. Dave McClure says:

    Tim –

    i’d love to support broader immigration reform open to a larger group of folks (and i do / and we should), however that type of legislation can take a long time — like forever, or never. the benefit of focusing on one specific scenario is that you might actually get it done.

    furthermore, by perhaps modifying the EB-5 entrepreneur visa, we could move the recipient of the visa from the investor to the startup entrepreneur, and use the accredited investor qualifications of the people who provide the capital to make sure the startup founder & business are properly vetted.

    for more on the movement, checkout http://StartupVisa.com

    – dave mcclure

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