Dear Sophie: What visa options exist for a grad co-founding a startup?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

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Dear Sophie:

What are the visa prospects for a graduate completing an advanced degree at a university in the United States who wants to co-found a startup after graduation? Can the new startup or my co-founders sponsor me for a visa?

—Brilliant in Berkeley

Dear Brilliant,

Thank you for your questions and for your contributions. The U.S. economy greatly benefits from entrepreneurial individuals like you who create companies — and jobs — in the U.S.

Let me take your second question first: Yes, it is theoretically possible for your startup to sponsor you for a visa, and for one of your co-founders to be your supervisor. Many visas and employment green cards require a company to sponsor you and for you to demonstrate that a valid employer-employee relationship exists.

Given your situation, timing will be key, particularly since one of your best visa options is the H-1B Visa for Specialty Occupations. The number of H-1B visas issued each year is typically capped at 85,000-60,000 for individuals with a bachelor’s degree and 25,000 for individuals with a master’s or higher degree. Because of the cap on H-1B visas and because the demand for them far outstrips the supply, U.S. Citizenship and Immigration Services (USCIS) holds a lottery once a year in the spring to determine who can apply for this visa.

However, there are also a few possibilities for cap-exempt H-1Bs for startup founders that avoid going through the lottery if you are contributing to the education of U.S. university students. With the spate of new rules impacting the H-1B, the complex H-1B eligibility and corporate structure requirements for startup founders, and timing issues, I recommend you work with an experienced immigration lawyer who can guide you, your co-founders and your startup through this process.

Changes to the annual H-1B digital lottery process during the past few years has made the process more affordable and less risky. Moreover, candidates holding a master’s or higher degree from a U.S. institution have a better chance of getting selected in the lottery than before a couple of years ago. For the first time, earlier in 2020, sponsoring companies registered each H-1B candidate for only a $10 fee in March, to be entered in the annual lottery. Before that, sponsoring companies were required to submit a complete H-1B petition for each candidate to be entered in the lottery.

In March 2020, USCIS received nearly 275,000 registrations, surpassing the previous record of 236,000 H-1B petitions in 2016. This year, almost half of the registrations were for H-1B candidates with advanced degrees from a U.S. college or university. The prior year, USCIS received 201,011 H-1B petitions during the lottery in April. What we also saw this year due to COVID was a decrease in the number of actual petitions USCIS received following the electronic lottery, so they held a second electronic selection process for additional candidates earlier this summer.

If you’re not selected in the H-1B lottery, you can try again the following year, but you will need to find an option that will allow you to create the startup with your co-founders and work for your startup. International students on an F-1 visa can apply for OPT (Optional Practical Training), which is the only student work authorization that allows you to start and work for your own business without a supervisor who controls the terms of your employment.

If your degree program is in a STEM (science, technology, engineering or mathematics) field, you’re eligible to apply for STEM OPT, which would give you a 24-month extension of your F-1 status and work authorization. Under STEM OPT, you must work for an employer that has independent control over the terms of your employment. So it’s a good idea to ensure your startup is structured so that one of your co-founders is your supervisor with the ability to hire you, oversee and evaluate your work and fire you, since you will need to show that an employer-employee relationship exists for STEM OPT Extension, work visas and employment green cards. OPT is available for a maximum of 12 months, and STEM for an additional 24 months, so you will want to keep that in mind when planning your immigration strategy and a backup plan.

Your startup could register you for the H-1B lottery next March while you’re in F-1 OPT or STEM OPT status and also pursue either an EB-2 green card for professionals with an advanced degree or the EB-3 green card for skilled workers and professionals on your behalf. Both of these green card options would require your startup to go through the PERM labor certification process before filing a green card petition. Holding significant equity in the company can limit your PERM prospects.

An alternative pathway may begin with another nonimmigrant (temporary) visa option, the O-1A Visa for Extraordinary Ability. For an O-1A, a candidate must meet at least three out of eight criteria:

1. Nationally or internationally recognized prizes or awards for excellence in your field.
2. Membership in associations, which require outstanding achievements or recognition as an expert in your field.
3. You and your work have been the subject of stories in major trade or professional publications.
4. Participation on a panel to judge the work of others in your field.
5. Original scientific, scholarly or business-related contributions of major significance.
6. Authorship of scholarly articles in your field, in professional journals.
7. Employment in a critical capacity for distinguished organizations.
8. You will command a high salary.

The O-1A can help set the stage for applying for an EB-1A extraordinary ability green card or an EB-2 NIW (National Interest Waiver for exceptional ability), which do not require an employer sponsor.

For those recent graduates and startup founders who are in the process of creating their company don’t yet have the work experience, credentials or achievements to qualify for an O-1A visa, we recently launched the Extraordinary Ability Bootcamp, an online course that takes a deep dive into the O-1A visa and the EB-1A and the EB-2 NIW green cards. Use code DEAR SOPHIE for 20% off the Bootcamp enrollment fee.

The E-2 Visa for Treaty Investors might also be a possibility for you depending on your country of citizenship and whether your co-founders share the same nationality as you. The E-2 visa allows foreign nationals whose home country has an investment treaty with the U.S. to come to the U.S. when investing capital in a U.S. business. If you are a citizen of a treaty country and at least 50% of the ownership of the shares of your company is by you and/or other citizens of the same country, you could be eligible for an E-2. This visa would also require your startup to invest a “substantial amount of capital” in the U.S. — whether its venture capital or intellectual property. Moreover, your startup would need to generate more than enough income to provide you a living and cover operating costs — or at least be able to do so within five years of you receiving an E-2 visa. There are also E-2 visas for employees who are not investors but have skills who are essential to the business.

Hope it goes great!

Sophie

Have a question? Ask it here. We reserve the right to edit your submission for clarity and/or space. The information provided in “Dear Sophie” is general information and not legal advice. For more information on the limitations of “Dear Sophie,” please view our full disclaimer here. You can contact Sophie directly at Alcorn Immigration Law.

Sophie’s podcast, Immigration Law for Tech Startups, is available on all major podcast platforms. If you’d like to be a guest, she’s accepting applications!

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