International Entrepreneur Parole for Startups: A Guide

Dear Sophie: Navigating International Entrepreneur Parole for Startup Founders

This is another installment of “Dear Sophie,” a column dedicated to addressing immigration questions relevant to those working within the technology sector.

Sophie Alcorn, a Silicon Valley-based immigration lawyer, emphasizes the importance of these inquiries, stating, “Your questions contribute significantly to the dissemination of knowledge, empowering individuals globally to overcome geographical limitations and achieve their aspirations.” She extends an invitation to those in people operations, founders, or job seekers in Silicon Valley to submit their questions for consideration in a future column.

Access to weekly “Dear Sophie” columns is available to Extra Crunch subscribers; a 50% discount is offered on one- or two-year subscriptions using the promo code ALCORN.

Dear Sophie,

I’ve encountered frequent discussions regarding International Entrepreneur Parole. I am interested in understanding whether both my co-founder, currently holding an H-1B visa that is being transferred to our startup, and an employee on STEM OPT, whom we are considering making a co-founder, would qualify for this program. Could you explain how parole functions and the typical processing timeframe?

Furthermore, we are nearing the completion of securing $200,000 in investment. Is an additional $50,000 in funding required to sponsor an individual for parole?

— Looking for Answers in Los Altos

Dear Looking,

Thank you for contacting me with your questions concerning International Entrepreneur Parole (IEP)! The appeal of IEP lies in its inherent adaptability. A startup can allow up to three co-founders to petition for IEP independently, eliminating the need for employer sponsorship. This differs from visas like the H-1B, as the applicant maintains control of the company.

Even if your startup has secured less than $250,000 in funding, your team can still meet the IEP requirements by providing evidence of substantial growth potential and anticipated job creation. I recommend listening to my podcast episode on IEP, which details the application process and addresses frequently asked questions.

Should your co-founders choose to pursue IEP, I strongly advise, as a standard practice, that they consult with an immigration attorney. This is particularly crucial given the significant implications for your company and the relative novelty of the program, meaning U.S. Citizenship and Immigration Services (USCIS) officers have limited experience with IEP applications.

The program, while relatively recent, has a complex history. Although IEP was initially made available in 2017, the prior administration attempted, without success, to abolish it. The Department of Homeland Security recently withdrew the proposal to rescind the IEP program, and the Biden administration has committed to its full implementation.

A 2020 Congressional Research Report on “Immigration Parole” indicated that USCIS received 28 IEP applications between the program’s inception and February 10, 2020. Of these, only one was approved, 22 were rejected, three were withdrawn, and two remained pending.

Currently, the exact processing time for IEP applications remains unknown – USCIS indicated in a recent stakeholder meeting that a processing time has not yet been established. My firm is actively submitting applications on behalf of clients and anticipates receiving decisions shortly. We will provide updates as they become available!

Understanding Parole Provisions

The Department of Homeland Security, alongside its constituent agencies like USCIS and Customs and Border Protection, possesses the authority to authorize parole. This authorization permits individuals to enter the United States and remain for a defined, temporary duration.

Historically, parole has been extended in circumstances demanding urgent humanitarian consideration. Examples include individuals fleeing persecution as refugees or those requiring specialized medical care within the U.S. It is also granted when an individual’s presence would demonstrably benefit the public, such as aiding in disaster relief efforts, assisting law enforcement, or providing testimony in legal proceedings.

The International Entrepreneur Parole Program

The International Entrepreneur Parole (IEP) program was established by the Obama administration as a response to Congressional inaction regarding a dedicated startup visa. IEP facilitates temporary stays within the U.S. for entrepreneurs whose ventures are deemed to offer a “significant public benefit.”

This benefit is typically demonstrated through the creation of employment opportunities for U.S. workers and the overall expansion of the national economy. Upon approval of an IEP application by USCIS, the entrepreneur receives a parole document initially valid for a period of 30 months.

Important Considerations Regarding Parole Status

It’s crucial to understand that parole does not equate to a traditional non-immigrant visa status. Consequently, co-founders currently residing in the U.S. on visas like H-1B or F-1 cannot simply apply to change their status directly to IEP while remaining within the country.

To secure parole, founders are required to depart the U.S., re-enter, and obtain an official “parole” stamp from a border officer. This stamp confirms their authorized entry under the parole provision.

Family Member Eligibility

Should an entrepreneur receive IEP approval, their spouse and any dependent children – defined as unmarried individuals under the age of 21 – are also eligible for parole for the same duration.

Upon arrival in the U.S., spouses become eligible to apply for an Employment Authorization Document (EAD). This EAD permits them to seek employment or establish their own business ventures.

Understanding IEP Eligibility Criteria

To be considered eligible for the International Entrepreneur Parole (IEP) program, each of your company’s co-founders must demonstrate specific qualifications.

• The startup must be a legally registered U.S. corporation with an operational history of less than five years.
• Each co-founder needs to hold at least a 10% ownership stake within the startup.
• Active involvement is crucial; co-founders must be central to the company’s operations. A C-suite position – such as Chief Executive Officer, Chief Operations Officer, or Chief Technology Officer – or a senior-level title like President is highly recommended.
• The startup must have secured a minimum of $250,000 in funding from qualified U.S. investors, or alternatively, received at least $100,000 in grants or awards from federal, state, or local government entities.

Should your startup have only raised $200,000, supplementary evidence demonstrating substantial growth potential and job creation capabilities will be necessary. This could include data on user base, revenue streams, social impact, or broad geographic reach. Legal counsel can assist in formulating these arguments.

Requirements for extending the IEP for an additional 30 months also exist.

• Continued central and active participation in the company is essential for each co-founder.
• A minimum ownership stake of 5% must be maintained by each co-founder.

Furthermore, at least one of the following conditions must be met:

• The startup must have received at least $500,000 in qualified investments and/or government grants and awards.
• The creation of at least five full-time positions within the startup during the initial parole period is required.
• The startup must generate at least $500,000 in annual revenue within the United States, with an average annual revenue growth of 20% during the initial parole period.

If the startup only partially fulfills the funding, job creation, or revenue criteria, compelling evidence of continued high-growth potential and job creation prospects must be provided, with support from your legal representative.

While the IEP program doesn't mandate a specific wage level (unlike the H-1B visa), each co-founder’s household income must exceed 400% of the federal poverty line, as defined by the Department of Health and Human Services. Currently, for a family of four, this threshold is over $106,000.

It is anticipated that by the time co-founders seek an IEP extension, new legislation establishing a dedicated startup visa and green card pathway may be enacted. I had the privilege of collaborating on draft legislation with Jeff Farrah of the National Venture Capital Association, and positive developments are expected soon.

Best of luck with your endeavors!

Sophie

Do you have a question for Sophie? Submit it here. We retain the right to edit submissions for clarity and brevity.

Please note that the information presented in “Dear Sophie” is intended for general informational purposes only and does not constitute legal advice. For a complete understanding of the limitations of “Dear Sophie,” please refer to our full disclaimer. Direct inquiries can be addressed to Sophie at Alcorn Immigration Law.

Sophie’s podcast, “Immigration Law for Tech Startups,” is accessible on all major podcasting platforms. She is currently accepting applications for potential guests!