The International Entrepreneur Rule: A Pathway to the US for Global Innovators
Source: Marc Hoag via Midjourney
This is educational material and does not constitute legal advice nor is any attorney/client relationship created with this article, hence you should contact and engage an attorney if you have any legal questions.
This is an overview of the International Entrepreneurship Rule, offering a high level understanding of its requirements and general process. For full detailed information, be sure to visit the official U.S. Citizenship and Immigration Services website here.
Understanding the International Entrepreneur Rule
Since December 2017, the International Entrepreneur Rule (IER) has provided a unique opportunity for noncitizen entrepreneurs to build and grow their startup businesses in the United States. Under this rule, DHS may grant a period of authorized stay in the U.S., known as “parole,” on a case-by-case basis to eligible entrepreneurs.
This parole period is initially granted for up to 2.5 years and can be extended for an additional 2.5 years, allowing a maximum stay of five years.
To qualify for parole under the IER, entrepreneurs must demonstrate that their stay will provide a significant public benefit. This is assessed based on several criteria, including the potential for rapid business growth, job creation, and substantial capital investment.
Eligibility Criteria for Entrepreneurs
⚠️ Note that investment and revenue thresholds discussed below are set to begin triennial updates effective October 1, 2024; details available here.
Entrepreneurs seeking parole under the IER must meet specific requirements related to their startup entities and personal qualifications:
Startup Entity Requirements
There are several strict criteria for a startup to qualify for the International Entrepreneurship rule
The startup must be a U.S. business entity formed within the past five years.
The entity must demonstrate substantial potential for rapid growth and job creation by showing either or both of the following investments within the prior 18 months:
(a) at least $264,147 in qualified investments from qualified U.S. investors (see below); or
(b) $105,659 in qualified government awards or grants.
Alternatively, entrepreneurs can provide other reliable and compelling evidence of the startup’s potential, such as rapid growth in the number of users or customers, additional investments or fundraising efforts, significant social impact or national scope, success using alternative funding platforms (potentially Reg CF “crowdfunding”), and the entrepreneur’s academic degrees or prior success in operating startups. Participation in reputable startup accelerators or incubators is also considered strong evidence of potential.
Entrepreneur’s Role and Ownership
At a human level, the entrepreneur needs to be own a substantive interest in the startup and be actively engaged in its business. Specifically:
The entrepreneur must have at least a 10% ownership interest in the startup at the time of the initial application and must play a central and active role in the company’s operations.
They must be well-positioned, through their knowledge, skills, or experience, to substantially assist the startup with its growth and success.
Qualified Investors
In order for satisfy the investment requirements of the International Entrepreneurship Rule, the startup needs to raise qualified money from qualified investors:
Investors must be U.S. citizens, permanent residents, or organizations majority-owned by U.S. citizens or permanent residents.
They must:
(a) have a history of substantial investments in successful startups, including investments of at least $633,952 in startups over the past five years in exchange for equity, convertible debt, or other security convertible into equity; and
(b) at least two such entities each creating five qualified jobs or generating $528,293 in revenue with 20% annual growth.
Crucially, the following are not considered qualified investment sources:
Bootstrapping, i.e, one’s own money, or immediate relatives’ money;
Any organization in which the entrepreneur or immediate family have a direct or indirect ownership interest;
Anyone who is prevented from making investments for any reason, or otherwise being associated with any entity involved in the offer or sale of securities; or
Anyone who has been involved in the offer or sale of securities in violation of law.
Applying for Parole
Be sure to visit the official U.S. Citizenship and Immigration Services website here for full details.
The general application process for parole under the IER involves several steps
Filing Form I-941: Entrepreneurs must file Form I-941, Application for Entrepreneur Parole, along with the required fee ($1,200 as of July 2024) and supporting documentation. If the application is conditionally approved, entrepreneurs outside the U.S. must visit a U.S. embassy or consulate to complete the parole processing and obtain travel documentation before appearing at a U.S. port of entry. The final parole determination is made by U.S. Customs and Border Protection at the port of entry.
Biometrics Collection: All applicants, including the entrepreneur and their dependents, must submit biometrics (fingerprints and photograph) for identity verification.
Employment Authorization: Entrepreneurs granted parole are authorized to work for their startup entity. Their spouses, upon being paroled into the U.S., may apply for employment authorization by filing Form I-765, but children are not eligible for employment authorization under the IER.
Family Members: Spouses and unmarried children under 21 can apply for parole by filing Form I-131 along with the required fee ($630 as of July 2024), either concurrently with the entrepreneur’s application or separately.
Re-parole Process
After the initial 2.5-year period, entrepreneurs can apply for re-parole for an additional 2.5 years. To qualify, they must retain at least a 5% ownership interest in the startup and continue to provide a significant public benefit. This can be demonstrated by additional qualified investments, grants, or awards of at least $528,293, the creation of at least five qualified jobs, or annual revenue of at least $528,293 with at least 20% annual growth.
Compliance with Immigration Laws
While under parole, entrepreneurs may apply for other immigrant or nonimmigrant statuses if eligible. However, as parole is not admission, they may need to leave the U.S. to apply for a visa before seeking admission under a new status.
If you are in need of immigration assistance including obtaining a visa or green card, you should contact an immigration attorney with a focus on tech founders such as Alcorn Law.
Conclusion
The International Entrepreneur Rule provides numerous benefits for both entrepreneurs and the U.S. economy. By allowing foreign entrepreneurs to establish and grow their businesses in the U.S., the IER fosters innovation and technological advancements, contributing to the country’s competitive edge in global markets. Startups led by noncitizen entrepreneurs have the potential to create significant employment opportunities for U.S. workers, thereby boosting the local economy. The influx of qualified investments and government grants into startup entities under the IER stimulates economic growth and development across various sectors.
The International Entrepreneur Rule is a vital tool in attracting and retaining global entrepreneurial talent in the United States. By providing a pathway for noncitizen entrepreneurs to build and scale their businesses, the IER enhances the U.S. economy through innovation, job creation, and sustained economic growth. For aspiring entrepreneurs worldwide, the IER represents a unique opportunity to contribute to and benefit from the dynamic U.S. business environment.
If you are an entrepreneur looking to leverage the International Entrepreneur Rule to establish your startup in the United States, it is essential to understand the detailed requirements and prepare a robust application demonstrating your venture’s potential for public benefit. For more information and guidance, consult the comprehensive resources available on the USCIS website or contact us here.