Startup Act 2.0: Great For Foreign Graduate Students, But Not Foreign Tech Entrepreneurs

Editor’s note: Yuri Ammosov is a serial Internet and mobile entrepreneur and an Assistant Professor of Entrepreneurship at the Department of Computer Science, PhysTech (Moscow, Russia).

Startup Act 2.0 was just introduced in the U.S. Congress, and hearings of the bill are starting shortly.

When it comes to U.S. visas, company founders are among the most discriminated folks. Unlike employees, they cannot get a work visa (called H1-B) – or any other long-term visa. I care about attempts to enact legislation that will make it easier for foreign-born entrepreneurs to move to the U.S and start companies here for a good reason.

I train students that graduate with master’s degree in Math and Computer Science from definitely most selective and arguable the best technology school in Russia and go on to Ph.D. programs and employers worldwide. Our program includes a year of startup building, and a lot of my graduating students not only have the ability and drive to succeed as entrepreneurs but frequently also a team that worked together for several years and a prototype. Many of these projects could take off as startups in Silicon Valley – if only the young founders could get here and stay. I read the new bill with a marker – and the more I read, the greater was my disappointment.

The most important issue about any visa is “eligibility”. Who can get a visa? Well, to start, there are two types of new visas.

Section 3 creates 50 000 visas for those who have “advanced degrees” (master’s or doctor’s) in STEM fields. STEM is a shortcut for “Science, Technology, Engineering and Math” but the bill references a specific Homeland Security document that lists all degrees that are “STEM”.

Here’s where fine print starts. STEM includes many bona fide science professions but also contains items like dairy science, paleontology, personality psychology, archaeology and actuarial science.

Professions that require a graduate degree like MBA, JD, MD, architecture and so on, are not eligible, as well as STEM disciplines that are not listed (no “storage” or “cloud”, for example).

On to more fine print.

“The term ‘institution of higher education’ has the meaning given the term in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)).”

What the heck is section 101? It is a 1998 amendment to 1965 law. Well, here’s where things start getting sour –

(a) INSTITUTION OF HIGHER EDUCATION- For purposes of this Act, other than title IV, the term `institution of higher education’ means an educational institution in any State that–

No need to read further. “In any State…” – only graduates of U.S. universities can get a visa. To make sure there is no confusion, next section 102 defined non-US universities.

So, the first visa is only for folks with U.S. “STEM” graduate degree. And only for those with active student visas – you have just one year after graduation to apply (Sec.216B(b)). All other STEM masters and doctors who went back home are not welcome.

Maybe, a second visa is better? The section is titled “Immigrant Entrepreneurs” and promises them 75 000 visas.

Keep reading to Definitions in Sec. 210A(e)(3) and check out this –

The term ‘qualified alien entrepreneur’ means an alien who–
‘(A) at the time the alien applies for an immigrant visa under this section–
‘(i) is lawfully present in the United States; and
‘(ii)(I) holds a nonimmigrant visa pursuant to section 101(a)(15)(H)(i)(b); or
‘(II) has completed or will complete a graduate level degree in a STEM field from an institution of higher education;

Full stop. You can apply only if you are already in the U.S. and are an H-1B employee or have a STEM graduate degree from a U.S. university. No exceptions. If section 210 would refer to Section 102 instead of 101 of Higher Education Act of 1965 – gates to foreign entrepreneurs would open. But it says 101. Go get a U.S. STEM degree to be counted as immigrant entrepreneur.

Now, join me for an imaginary experiment. Imagine you are a USCIS officer in charge of reviewing petitions of immigrant entrepreneurs. Act to the letter of the law and take decisions. Here’s your stack:

Peter Thiel. Germany. Founder of PayPal. J.D., Stanford Law School.
Michael Moritz. Wales-Britain. Sequoia Capital. M.A., History, Oxford, M.B.A., Wharton School.
Steve Chen. Taiwan. Founder of YouTube. Dropped out of University of Illinois-Urbana Champaign after 3 years.
Linus Torvalds. Finland. Creator of Linux core. M.Sc, Computer Science, University of Helsinki.
Shai Agassi. Israel. Founder of TopTier and BetterPlace, ex-CEO of SAP. B.Sc, Computer Science, Technion – Israeli Institute of Technology.
Marten Mickos. Finland. Founder, MySQL. M.Sc., Technical Physics, Helsinki University of Technology.
Serguei Beloussov. Russia-USSR. Founder of Parallels and Acronis. Ph.D., Computer Science, Moscow Institute of Physics and Technology.
Max Levchin. Ukraine-USSR. Founder of PayPal and Slide. B.A., Computer Science at the University of Illinois at Urbana-Champaign.
Elon Musk. South Africa-Canada. Founder of Tesla Motors. Dropped out of Applied Physics and Material graduate program at Stanford.
Niklas Zennstrom. Sweden. Founder of Skype. M.Sc, Engineering Physics, Uppsala University.
Janus Friis. Denmark. Co-Founder of Skype. High school dropout.
Mark Shuttleworth. South Africa. Founder of Thawte. Bus.Sc., Finance and Information Systems, University of Cape Town.
Stepan Pachikov. Russia-USSR. Founder of Evernote. Ph.D., Math Logic, Soviet Academy of Sciences.
Vivek Wadhva. India. Founder, Relativity Technologies. MBA, New York University.

Your action? REJECT ALL APPLICATIONS.

And if Bill Gates (Microsoft), Steve Job (Apple) and Mark Zuckerberg (Facebook) were not lucky enough to be U.S. citizens by birth, they would have also been added to pile of rejections.

All these people (and many more I should have named) are permanent residents or citizens of the U.S., but not because of what they accomplished as entrepreneurs. Some were brought in by parents as children, others came as students or employees and found a way or loophole to become residents and eventually citizens. None of them entered U.S. to build a startup.

Startup Act 2.0 is not worthless. There are still many science and tech graduate students who will be able to take advantage of it. But it would be more appropriate to rename it to STEM Masters’ and Doctors’ Visa Act. This will be a better description of what’s inside.

In the meantime, I will tell my students to go get a master’s degree in any STEM field at any U.S. graduate school, get legalized in the U.S. and then start a company.

Disclaimer: the author, as M.P.A., Princeton University, Assistant Professor of Entrepreneurship at Department of Computer Science, Moscow Institute of Physics and Technology, and co-founder of 6 STEM startups, is also not eligible for a “Startup Visa”.