Tech Transfer eNews Blog

Turning foreign students into start-up founders: A trip that requires a savvy guide

By Jesse Schwartz
Published: April 1st, 2020

Universities, research parks, and society at large benefit enormously from the innovative minds that come to America from around the world, but only if our immigration system doesn’t slam the door in their faces.

When a foreign national develops a new idea, one that may result in a new U.S. business he or she wants to own, lead, or simply be part of, there is a labyrinth of laws to navigate. That can be a complex, time-consuming, and resource-intensive journey with several forks in the road. The best guide for this trip is an immigration attorney who specializes in getting foreign nationals on the path that works best for them, his or her university, and the beneficiaries of their inventions.

But there is a wrinkle. “The employment-based immigration system in the United States was created for foreign nationals who come to work for U.S. companies, not to found these companies,” attorney Jason Susser says. “Existing visa categories require that companies control the employment of the individual benefitting from a visa petition. You need to adopt a different strategy when dealing with entrepreneurs.”

Susser said his clients often come to the U.S. for graduate school using F-1 student visas as their entryway. A person in the country on an F-1 visa can study but they cannot work, except for a single year after graduation intended for practical training or work experience. If through their study or research they come up with a new idea, they find themselves stuck between inventing something and being legally allowed to work and develop it.

“Many of my clients come up with an idea,” Susser explains, “but can’t or don’t know if they can incorporate a company, file patent applications, secure venture capital, and do all the things a start-up needs to do. They can go from an F1 visa to Optional Practical Training for F-1, when they have work authorization, giving them time to raise capital and try to go to market. But they do not get a long runway, just one to three years. This time goes quickly considering the time it takes to set up a business, hire people, and search for investors.”

Investment challenges are common for start-ups, but that challenge is even bigger for foreign nationals. “It’s hard to raise capital or sell an idea when you don’t know if you will be here in 12 months,” he says. “Investors want to know, ‘where is the CEO of this company?’ It doesn’t help if the CEO is back in India or China, unable to return to the U.S.”

Students who have earned a degree in certain STEM fields may apply for a 24-month extension of their post-completion OPT employment authorization.

Susser, who practices in the Memphis-based law firm of SiskindSusser PC, tries to find employment-based visas, which comprise the one category intended for something close to the scenario where foreign nationals wish to launch U.S. businesses. But E-2 visas, commonly referred to as investor visas, were designed for active investments, not passive investments, Susser explained. “E visas are for someone who wants to come here and operate a company, and are based on treaties the U.S. has with other countries.”

The U.S. has treaties with 81 countries, but not with some of the countries whose residents most typically (and urgently) seek visas to study and/or work in the United States, like China, India, Russia and Brazil. “Countries not represented in these treaties may allow for entry through other visa categories, so choosing the right path is often done by process of elimination. This can be very complicated,” Susser said.

H-1B is the most common employment visa, designed for specialty occupations, but the situation calls for an employer-employee relationship. “There can be many equity owners but someone else has to control your employment. This is not entrepreneur friendly,” Susser explained, “because foreign innovators have to give up control of their own company or idea, and can even be fired from the company they founded. This is something a U.S. citizen would never do.”

Many universities have used the H-1B approach, offering at least part-time employment to foreign students, who can then use at least part of their time to continue building their venture.

Susser says his preferred option is the O-1 visa, which is designed for “individuals with extraordinary ability or achievement.”

A detailed article on securing visas for foreign student entrepreneurs appears in the March issue of Technology Transfer Tactics. For subscription information, click here.

Posted under: Tech Transfer e-News

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