Entrepreneurs, Lawmakers Pushing Startup Act 3.0

It’s Startup Day on Capitol Hill.

The timing is apt, as the Startup Act 3.0 was recently introduced in both the Senate and the House of Representatives. The act aims to provide entrepreneur visas for foreign-born entrepreneurs who currently hold employer-based or student visas, as well as a new type of visa for Master’s degree or PhD candidates in STEM fields.

FoxBusiness.com spoke with the legislators behind Startup Act 3.0, organizers of Startup Day on the Hill, entrepreneurs and reform experts to assess the need for high-skilled immigration reform – and whether such reform can actually get passed.

Do We Have a Need for High-Skilled and Entrepreneur Immigration Reform?

Sen. Jerry Moran, (R-Kansas), is both an honorary host of Startup Day and one of the senators who helped introduce the bipartisan bill. He said his motivation to achieve immigration reform by way of the Startup Act actually began with his work on the national debt.

“While I’m not walking away from spending cuts, one of the ways to solve our debt challenge is to grow our economy. With growth, we can get our country back in the right fiscal condition,” says Sen. Moran.

“The Kauffman Foundation shows data that nearly all net new jobs created over the last 3 decades – nearly 40 million jobs – were created by these high-growth entrepreneurial businesses,” Sen. Moran says. “In fact, 40% of Fortune 500 companies were started by first- or second-generation immigrants. The businesses high-skilled immigrants create are the source of jobs for Americans, the source of innovation and economic growth.”

Rep. Loretta Sanchez, (D-Calif.), says the district she represents, Orange County, is number one in the country for patent and trademark requests. “I believe we do need to retain and attract the best talent to grow a bigger and better economy,” she says.

The current visa system, she says, makes it difficult for talented, entrepreneurial immigrants who have graduated from American universities to start businesses in the United States. “With the H-1B visa, they have to work for an employer, who renews it every year. If you wanted to start your own business, you could no longer be on an H-1B visa.”

Rep. Sanchez also says that the capped limit on available H-1B visas means that our country’s most talented foreign-born students get “shipped back to China or Mexico … We lose this brain trust of students who are talented in the STEM fields if we don’t allow them to stay and work for us.”

The in-demand visas are generally sold out on the first day they are offered each year, says Sanchez.

Not so fast, says Bob Dane, spokesperson for the Federation for American Immigration Reform. “The bill is a patchwork of initiatives that falls short of true reform. It’s like putting an addition to a house on a bad foundation,” Dane warns.

Dane says he worries that reform of this nature creates a “disincentive” for American students to invest in pursuing degrees in STEM fields. “We don’t need more high-tech immigrant workers. We need to stop closing the door on the American tech worker and start cultivating them.”

Dane also questions the idea that retaining “the best and the brightest” means providing more visas. “Americans can do the work! Companies are trying to rely on cheaper foreign workers, rather than pay fair wages,” he says.

Steven Walker, Head of Platform Experience at NYC-based startup Quirky, says it’s not just about getting people to do the work – it’s about getting the most talented for the position.

“It’s always difficult when you’re looking for specialized talent. The bar is always getting higher and higher, and finding people that meet that bar is harder and harder. Finding great talent is what makes these companies successful so quickly,” Walker says.

The Challenges Faced by Foreign-Born Entrepreneurs

Rutul Dave and Sumit Suman are two of the entrepreneurs in Washington, DC Tuesday to advocate for immigration reform. Dave’s company, Brightfunds, is attempting to reinvent charitable giving by using an investment approach, building portfolios of causes for clients to donate to.

Dave initially came to the United States 12 years ago from India to pursue a Master’s degree in Computer Science from the University of Southern California; he says he was able to stay in the country after graduation on an H-1B visa sponsored by an employer. When that startup was acquired by Cisco, the larger company sponsored his green card, which allowed him to launch his own company.

“One of the things that inspired me after I started working in Silicon Valley was the sheer ability to take an idea from nothing and make it successful,” says Dave, when discussing why he wanted to stay in the United States to launch Brightfunds.

Suman, also originally from India, has had a more challenging route to establishing his company Mentii in the United States. A trained engineer, Suman arrived in the United States to attend Columbia University’s MBA program, after which he received an employer-sponsored H-1B visa.

When Suman wanted to launch Mentii, however, he still needed an employer sponsor. So, his American co-founder Andrew Ryan assumed the CEO role and effectively sponsored Suman’s visa. While this may seem like a reasonable solution, the payroll taxes that the young company has needed to pay for Suman’s salary, as well as the lawyer and application fees, have taken a huge chunk of the capital used to start the company – 40%.

Had he been able to obtain an entrepreneur visa, says Suman, he wouldn’t have taken a salary initially, and would have had more funds to invest in the growing business.

Can the Startup Act 3.0 Get Passed?

Though the timing of Startup Day on the Hill and the recent introduction of the Startup Act was merely “serendipitous,” Michael McGeary, the co-founder of Engine Advocacy, the organizer of the event, says that “the general feeling is that we have an incredible moment where we can make key changes to a broken system – and we’ll be able to get it done this year.”

“The more that we in our [startup] community keep the pressure on … I think we can have a real impact,” he adds.

Sen. Moran is also optimistic that the Startup Act 3.0 can get passed even without comprehensive immigration reform, though Fox News reports that many Democrats want to wait for broader reforms of the entire immigration system.

“While I’ve been in the Senate for two years, seven countries have changed their rules with regard to startups,” Sen. Moran says. “There is a global battle for talent … We don’t have the luxury of time.”