The Startup Visa Bill Debate

I'm on vacation this week skiing with my family. I got back from the mountain yesterday afternoon, checked in on email, made a few phone calls, and took a quick look at Techmeme. I saw a headline that said "The Startup Visa Act Must Be Stopped" and I noticed that the post was written by a member of the AVC community, Pascal-Emmanuel Gobry, and that is was running on Business Insider.

I know Pascal. We met once briefly and I engage with him regularly here and also on Tumblr. He's a smart and thoughtful person. So I read his post carefully, thought about it, and slept on it.

Pascal's arguments against the Startup Visa Act are:

1) You have to find investors to get a Startup Visa

2) Once you've obtained a Startup Visa, your personal founder's risk goes up

3) It's bad for investors because the best foriegn entrepreneurs will self select out of this program

Those are all valid arguments and I appreciate that he is raising them. But to suggest that the Startup Visa Act "must be stopped" because of them is ridiculous.

Let me tell you a story. In the summer of 2008 I met one of the founders of Zemanta in London. I heard the story about how two of the founders had won 2007 Seedcamp and how they had started a company in Ljubjiana Slovenia with the funds they secured from Seedcamp. I was by that time already a Zemanta user and really liked the product. Seedcamp and the other seed investors offered our firm the opportunity to join the seed round and we did in the fall of 2008.

In early 2009, I suggested that the two founders move, at least temporarily, to the US so that they could build out the business side of the company here. They did so, but only on a tourist visa. And when that tourist visa ran out, both of them had to go back to Slovenia and wait a long time to get a more permanent visa. Both are now back in the US building the business, but the time they were kept out of the US was a critical time in the business and the company suffered from having them away. Time was lost and you can't get that back.

Had the startup visa act been the law of the land, they could simply have applied for and been awarded a startup visa right after securing their seed funding. None of this would have been an issue.

The startup visa is not just for entrepreneurs, like Pascal, who are thinking of starting a company in the US. It is also for the entrepreneurs who have already started a company and want to build their company, or part of it, in the US.

Pascal is thinking about this a binary choice and it is not. We have a suboptimal visa system here in the US for entrepreneurs. The startup visa will not solve all the problems. It is not a perfect solution. But it is a very good idea and it should not be "stopped." It should be made into law. Then entrepreneurs like Pascal can decide if they want to take advantage of it or not.

While I do not appreciate the headline that Business Insider put on Pascal's post (much as I don't like the headlines they sometimes put on my posts when the re-run them), I do appreciate the debate over the Startup Visa Act. Anything that is going to become the law of the land should be subject to debate.

So in the spirit of debate, here are some more posts on the startup visa act:

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#Politics#VC & Technology

Comments (Archived):

  1. J. Pablo Fernández

    Hello Fred,If I remember correctly, the amount of investment that the startup visa is targeting is very high. Would that seed founding have been enough for a visa?Thanks.

    1. fredwilson

      the amount required is $250,000. the seed round in Zemanta was a lot more than that.

      1. paramendra

        I might argue for a smaller round 1 amount, and a smaller round 2 amount, but I would NOT argue against the startup visa itself.

        1. George A.

          why not, it would appear that you like to argue!I was fascinated by this post, and I generally sympathize with both sides of the argument and really The critical issue is the issue of visas. If there is a finite amount of available visas and you are now ensuring that visas will be granted to a cohort of applicants that have let vc’s into their kitchen, then I see Pascal’s point as there are less visas around for the other guys.that said, certain types of applicants should be fast tracked as they have potential to contribute to meaningfully to our society. A “funded” test feels like a pretty good indicator of their potential to make an impact to the business community. Furthermore, the impact that it would have on innovation is pretty obvious.Pascal, I think you lost me. sorry man.

    2. Pascal-Emmanuel Gobry

      It’s $250K in the first round, and then $1M for the second round, which isn’t too high. The problem isn’t the dollar amount, it’s that the criterion is money raised, not the company itself.

      1. fredwilson

        in a perfect world, there would be no investment required. that’s where we started. but the opponents argued that that would create a gaping hole for anyone to get a visa. it’s not perfect but its better than not having something like this at all

      2. CJ

        I’ll grant you that, but without some sort of qualifying condition how do you get around those would would incorporate a non-existent business to qualify for the visa?

        1. Pascal-Emmanuel Gobry

          Focus on objective metrics such as revenues or employees.

          1. CJ

            Except that not every startup will employee anyone right away nor will necessarily produce any meaningful revenue immediately. Yet, that doesn’t mean that it won’t a year or two years from now. You could be forcing companies to hire or launch before they’re ready to qualify for a visa which could be great for them short-term but disastrous long-term. I know that those two were just examples so I’m just pointing out that you’ll find flaws with every qualification you attach to the visa. I personally see both sides of this issue but agree most strongly with that we shouldn’t let perfect be the enemy of good.

          2. Pascal-Emmanuel Gobry

            What you said about employees is just as true for fundraising, but employees don’t give outside people so much leverage over the Founder.PEG

          3. paramendra

            Revenues and employees alone don’t cut it in the startup world. There is a good reason why entrepreneurs look for investors. Startup 101.

  2. Matt Mireles

    Ahh yes, the inflammatory rewrite that SAI does to the headlines of bloggers they syndicate. I too have had this happen to me. On one hand, it does in fact get people’s attention and eyeballs, which is their goal. On the other hand, it often times changes the meaning or at least the tone of a piece––and that is quite annoying. I wish they at least would run the new, rewritten headline by the author before they publish it.I understand this is the internet and all, but I pick my words carefully and care a lot about my personal brand. Changing or distorting a headline can have a big impact. I wish they were a bit more careful with how they did that.

    1. fredwilson

      totally. i’ve told Henry that it pisses me off. it simply wrong to rewrite a headline. i hate it and it reflects very badly on them. they are becoming the of the blog world and its sad to see

      1. ShanaC

        100% I have friends who don’t read here and do read there and the headline rewrites make it a tabloid rewrite- STOP IT!!!!! If I wanted a tabloid, I’ll go find a fashion or art tabloid….I want to read business meat.

    2. Pascal-Emmanuel Gobry

      Sometimes the new headline is funny, and sometimes it’s better than the original. But I agree with you that by and large it annoys the author, and rightfully so.That being said, it’s their style (ours, I guess I should say, since I write for TBI), they’re in your face, they grab attention. But on top of all the aggregation which doesn’t always add value, they also have some of the smartest people in the industry deliver great investigations and opinions that you don’t really find elsewhere.

      1. Matt Mireles

        Agreed. I’m not saying we should torch TBI. Hardly. But when you’re a non-compensated blogger, i think the standard should be a little higher in terms of how your posts are represented. In fact, a simple email saying: “Hey Matt, here;s the new headline. You cool with that?” would be fine.

      2. fredwilson

        when you make smart people, like you, look dumb, that’s just stupid

        1. Nicholas Carlson

          Yes, “The Startup Visa Bill Debate” and “The Balance Sheet,” are *genius* headlines. Riveting!

          1. ShanaC

            Oh stop being an Ass. They are informative. We want you to clean up your act. I’m getting emails from other people, I prefer my inbox doesn’t look like a frat boys playhouse. Can you at least sound like you publish a respectable publication?

          2. kidmercury

            lol, for real? you got called out for sensationalism. that’s clearly your strategy, you should own up to it. fred’s headline strategy is to tell a simple truth. let’s see what wins over the long run, sensationalism or simple truth.anyway, thanks nicholas for giving me the easy opportunity to pounce on you. although after morgan’s beatdown on yochai benkler yesterday i need to up my game, lol, that was brutal, i ain’t ever pummeled anyone that badly before

          3. fredwilson

            i don’t need to act stupid to get traffic. sadly you do

          4. andyswan

            I’m going to try my hand at this:”Wilson vs. Carlson deathmatch throwdown””Carlson to Wilson: It’s the headline, stupid!””Hands off my Headline!”

          5. steveplace

            On Techcrunch tomorrow:”Fred Wilson eviscerates his audience!”

          6. kidmercury

            “Wilson Embarrasses Carlson in Headline Beef””RUMOR: Carlson Caught Crying After Embarrassing Defeat to Wilson”

          7. andyswan

            “SHOCK: Kidmercury 6 straight Comments Without 9/11 Reference!”:)

          8. kidmercury

            pfft, check the avatar. 9/11 truth is embedded in all comments!

          9. Mark Essel


          10. paramendra

            That same sensationalism was driving Arrington’s 22 posts on “scamville.” The truth is Farmville might be more of a media savior than the iPad. 99% of the users will not pay you, but the 1% that will pay you will be more than enough. That is the real Farmville story. But instead look at the tangent that Arrington went out on.

          11. paramendra

            Thanks Shana. Informative is the word that sprung in my mind as well. The idea with these headlines is to inform, engage. The headline tells you exactly what you will find in the blog post. So I know to click on it or not.

      3. ShanaC

        Oh it was so funny for your Chatroulette headlines…. *snickers*

        1. Pascal-Emmanuel Gobry

          Yeah. I didn’t write that one — Nicholas Carlson did — and I thought it was a really good one.

          1. ShanaC

            It was hilarious. I wonder if he is that funny in person (I don’t even know who he is-he sounds like if he makes one liners like that all the time though, that would be fun to hang around)

    3. paramendra

      Hello Matt Wireless. See you some day. Come to the NYTM.

      1. Matt Mireles

        Wanna grab coffee on Friday?Cheers!-Mat

        1. paramendra

          I shall see you Friday. Looking forward to it.

  3. kidmercury

    this post just got me thinking about a business idea. are there any international investors/funds that target US entrepreneurs and try to recruit them? that would be a huge opportunity, i think. US has many talented entrepreneurs and the depression here is just starting, far from done. but where is better? i read an article today that liked canada (well, not really liking canada, but more like “canada sucks less than everyone else”). not sure about that. i still bet eastern hemisphere. helping western entrepreneurs leverage opportunities in eastern economies….that might be hot, IMHO. but, we may need to see further transformation in the global economy before we are really ready for that opportunity. and, it may help to start with a focus on economic hubs in other countries that already have a relationship with economic hubs in the US.

    1. fredwilson

      competition ftw kid

      1. kidmercury

        indeed. market-based competition reveals truth, and thus brings justice.looking forward to it.

    2. harrisgoodman

      Its a great idea. I am currently working and flying a lot between NY and Israel. I am involved with several early stage tech/med device companies in Israel. Many of the teams have a mix of US and Israelis – this actually makes things easier for traveling and work flow so we haven’t had many problems with visas but we have spoken about this idea of leveling the playing field “world is flat” so that start-ups and entrepreneurs can all gain from a friendlier more open environment. The need is definitely their to help facilitate a more global network for start-ups to interact. Right now for US and Israel only the Bird Foundation exists. Anyway would love to hear if any one knows of any other projects trying to help bridge the chasm.

      1. fredwilson

        i like that model too. many of our companies have a mix of US and int’l talent; boxee, infongen, clickable, zemanta, covestor, etc, etc

    3. paramendra

      Happens all the time. A recent, big example, those Russian investors in Facebook.

      1. kidmercury

        No, that’s non-US investors coming to the US. I am talking about US entrepreneurs going out of the US.

  4. Sean Kaye

    I think the middle ground is the best approach. As Pascal points out, there is already a EB-5 visa, perhaps the best idea is to modify it to lower the amounts for self-funding to say $250k, the same as Angel Investors. Same rules about creating jobs and generating revenue should apply. It should also require the applicant to be directly involved in the business.The Startup Visa movement is the right one, but I think you need to make it possible for overseas companies to come to the US without investors. For example, a couple of founders in say Australia put together a working product, get it online, start generating some revenue. To take the next big step in their business, they may need to go to the US for access to talent or market opportunity. If these guys can pull together $250k of their own, why should they be excluded?I think this is a Startup Visa movement, not an Angel or Series A investment opportunity visa.

    1. Pascal-Emmanuel Gobry

      Exactly. Plenty of great innovative startups become profitable without outside investors and the US would be lucky to have them.

      1. paramendra

        You need to retract your xenophobic article.

        1. Pascal-Emmanuel Gobry

          And you need to stop trolling. How can I be a xenophobe (someone who fears foreigners), pray tell, when I am a foreigner myself? Disagreements are fine. Insults are not.

          1. paramendra

            To be fair to you, I did read your article. You are a foreigner. True. And you do say you want the best for entrepreneurs. You say you see the startup visa not living up to its promise and instead screwing the entrepreneurs. So you are for the startup visa, but you would like amendments to it, right? Well, instead of suggesting what those amendments ought be, why do you propose the bill be rescinded? Granted it might only help about 5,000 foreign entrepreneurs a year, but that is a start, and that might be an important element of a much more comprehensive immigration reform bill Barack is now set to work on.

    2. fredwilson

      there are other ways to get a visa. this is not the only way. it’s just another way. yes, we should modify the EB-5 to lower the amounts. yes, we should make it easier to get an exceptional person visa. maybe we should address the student visa as well to make it easier to stick around and start a company. we should do all of that. but to shoot holes in the idea that getting investors is one way to get a visa is making perfect the enemy of the good

  5. Pascal-Emmanuel Gobry

    Fred, thanks for the compliments and the spirit in which you’re responding to my post. As I said in the post and elsewhere, I have the same goals as the Startup Visa people — to make it easier for entrepreneurs to set up in the US. I just don’t believe the Startup Visa does that right, but (again, repeating myself), I really really want to be proved wrong. I also go to lengths to propose alternatives so that the current, broken status quo evolves.My main beef with the Visa is that it gives the investor too much power in the investor/entrepreneur relationship, by making even more depend on landing an investment. Obviously since you’re an investor and I’m an entrepreneur we might have different takes on it. ;)The story about the Zemanta founders is great and illuminating. Again, no argument from me on whether the current system is screwed up and crazy. If the startup visa had been a reality I’m not sure it would have been as straightforward as you say, given that the system would still be very bureaucratic. Also, if I’m not mistaken (but you probably had much better informed lawyers look at this), but for frequent business trips, they could’ve gotten a B-1/B-2 business travel visa. This wouldn’t have allowed them to set up but wouldn’t have kept them out of the US either.The example I use of how the Startup Visa changes the dynamic is how an early stage investor would approach the same startup he wants to invest in, if that startup is “ramen profitable” or if it’s close to running out of cash. The dynamic is completely different, the relationship is completely different. Just ask Mark Pincus, who had access to A-list investors and nevertheless insisted on having his company be profitable before he went to investors.Now imagine the same situation, but the stakes aren’t just the company, but the entrepreneur himself, his life, whether he can set up (even temporarily!) in the US. There’s no way that won’t affect how entrepreneurs are treated by investors. Maybe not A-list investors like you who understand it’s best to treat founders right and that reputational risk is important. But most investors? I honestly doubt it.Again, it’s great to have your thoughts on the subject. The goal is to have productive debate and move forward together towards a better system.

    1. Sean Kaye

      I think the element you are stressing is very valid, Pascal.It is very challenging for new startups to raise money. The dynamics between potential investors and hopeful entrepreneurs is fragile. If you now throw immigration possibility into the mix, I think, as Pascal is saying, it has the potential to upset the balance. It is one more negotiating card in the hand of the investor.Imagine I have a great idea, a working prototype and I’m pitching. I have one investor interested and my plan is to move from Sydney to the valley. If I don’t get this investor over the line, that’s a dent in my plan because I just can’t pick up and move to the valley anyway and keep plugging away. This could mean the difference of a few extra percentage points of equity and that’s not the intention of this movement as I understand it.

      1. Pascal-Emmanuel Gobry

        Yup. That’s my fear. And I haven’t seen much so far to assuage it.

        1. fredwilson

          the startup visa is not even law yet. once it becomes law you will see much to assuage it.

          1. Pascal-Emmanuel Gobry

            Again — I hope you’re right.

          2. paramendra

            No, you don’t. You are on the wrong side of the debate. You are trying to work this debate to what would be a wrong outcome.

      2. fredwilson

        that happens all the time in the US today. plenty of entrepreneurs have upped and moved from NYC in order to secure investment capital from VCs in silicon valley.

        1. Berislav Lopac

          But moving from one part of the States to another, however different they might be (yes, I’ve seen “The Sex and the City” 😉 ), is not the same as moving to another country or even continent altogether.

    2. fredwilson

      you don’t have to use the startup visa if you don’t want to pascal. it’s not the only way to get a visa. it’s just a new way. if you can raise a small amount of investment capital, you can get a visa and work in the US. that’s a new idea and a good are taking paranoia about investor behavior, which i understand but i also think is grossly overstated, and using it to paint a good idea in a bad color.

      1. Pascal-Emmanuel Gobry

        I’m not trying to paint anything anything, Fred. I’m trying to get the bestoutcome for immigrant entrepreneurs, just like you.I also happen to believe that *incentives* are one of the most powerfulforces on Earth. With the right incentives bad people will do good things,and with the wrong incentives good people will do bad things. Now what kindof incentives does this create for investors? It creates the incentive toabuse their leverage. Period.And I’m not an investor paranoiac. I advise several startups in Paris andwork with VCs all the time. Investors are awesome, they are an indispensablepart of the ecosystem, and one of the reasons why I start companies is sothat one day I can be an investor too. But investors, like entrepreneurs,like all of us, respond to incentives and look out for their self-interestfirst. People like you understand that their self-interest in the long termis to do the right thing by entrepreneurs. But you’re not in the majorityFred and I think you know it.If you create a situation where it’s just too damn easy for person A toscrew person B, that’s what’s going to happen. Not always. But often.Look what happened with H-1Bs. In theory, there’s no better idea than H-1B:if a company wants you, you can come work for them, and after a few years ifeverything goes right you get a greencard. In practice it’s becomeindentured cubicle servitude. The workers are stuck in these jobs for lowpay because if they don’t like it their employers fire them and they getdeported. I don’t believe the people who set up the H-1B had that intention,I believe they had the best intentions, but that’s the incentive it createdand that’s what it became in the long run. And I wouldn’t be surprised if,even today, plenty of H-1Bs work as advertised. But when you look at therecord of experiments like H-1B I think it’s legitimate to say, whatincentives does this create? How is this going to work in practice?

        1. Immigrant

          Sorry I am running anonymous, but when it comes to immigration issues, I don’t feel comfortable publicly speaking about it. Too hot of the topic and I am yet to get over hell I went through with INS (though some years have passed)Background: I came to this country as a student. Really did not care to stay, since I liked EU a lot more. But I ended up getting into couple of companies, went through hell of O1 visa and later ended up with a GCWhy I don’t care for startup visa? Two major points: 1. It is way too heavily lobbied by Angels and A series folks 2. Investors already have a lot of control, this visa will turn entrepreneur into an indentured servant, just like what H1B does in employer/employee relationship.I chose to go and pay myself for the 01, instead of allowing my employers to push me into H1b, because I saw literally the slavery H1b creates. You can tell me what you want, but majority software people I have seen on H1b were not free individuals. Hell of switching companies under H1b, sub-human treatment by INS, ability of the employer to literally kick you out of the country, if you did not submit to their whims, is not why many of us came to the “land of the free”. That is not what was sold to us.If we genuinely want more entrepreneurs coming here, use only one qualifier – jobs created. Anytime you drop below the threshold – you are out. Financing sources should not be the qualifier.The claim that there are other visas other opportunities to come here is just not true. Fred, I respect you, but you never had to go through INS (USCIS now), you have never been treated like some criminal, talked to like you are trash, so you have no idea what is going on in that house of disfunction. US is one of the most closed countries out there.

          1. paramendra

            You have made a strong case for immigration reform, which is what Obama will work on now, now that health care reform is done, but you have not made a case against the startup visa or the H1-B. If anything, the H1-B needs to tripled in quota.

        2. paramendra

          ” I’m trying to get the best outcome for immigrant entrepreneurs…”Is this guy kidding me or what? So you have started a campaign against the startup visa because you have the best interests of the immigrant entrepreneur in mind? Get out of town.”Look what happened with H-1Bs.”So now we should repeal the H1-B regime as well? Get out of town.

    3. paramendra

      You are obviously opposed to the startup visa for all the wrong reasons. So because the startup visa gives leverage over the entrepreneurs, we should not go for it? We might as well drain the money away from the VCs. They use money to bargain with entrepreneurs.

  6. OurielOhayon

    i also know a little Pascal but i would disagree with his thoughts. I would look at it differently: IF you found a US investor interested in your company (and i so that case many times), it is unlikely they would consider proceeding because they know in advance the nightmare of getting a visa, even with an investment. With the startup visa in place, i believe this “potential deal breaker” goes out of the way. If you find an investor interested in your project, they will be more likely to invest in your projectThis is as simple as that. Not perfect. but good enough to create a new deal flow not accessible until now to US investors and investment flow not accessible until to non-US entrepreneurs

    1. Pascal-Emmanuel Gobry

      Now that is a VERY good point, one I hadn’t heard before.Merci beaucoup Ouriel.

      1. paramendra

        Oh really?Well, then, put out an article in support of the startup visa now, now that you have been enlightened.

  7. RichardF

    Whilst I agree with Pascal that there is the potential for a VC to try and leverage the terms of an investment because of the Visa element, in the grand scheme of things I really do not think it’s that important. If you are a foreign national and you want to get to the US to do a start up, this is a great route in.It cannot come fast enough for me, I’d love to start up in the US, to get access to the market, the VC’s and the start up culture that just doesn’t exist in Europe at the same level. I just don’t have a problem with the criteria, sure you might want to tweak it in a perfect world but guess what…..Everything about start up is risky, doesn’t matter if it’s in the US or Europe. Sorry but if you haven’t met the criteria in two years then you probably have not turned out to be the investment that your investors hoped for anyway. Two years is a lifetime in start up years.It won’t put many hungry or talented entrepreneurs off if it’s the way into the US.

    1. Pascal-Emmanuel Gobry

      I appreciate that argument. Maybe you’re right.

  8. ShanaC

    Actually, I think the competetion element is the most interesting of all. If it weren’t the US doing it, but some other country, what would we be thinking?For whatever my reasons, I thought about this when looking over the most current version of the Sal Klita (Immigration Absorbtion benefits) for Israeli Immigration. There happens to be no extra benefits if you are coming with your baby company to Tel Aviv and are raising money, no easing the process of Immigration. And I bet Korea, Japan and Signapore are the same way..This is largely a post about the larger issues surrounding immigration in the US. We’re worried about it. We want to bring talented smart people, while also keeping an “American Charachter” (whatever that is) in an increasing global society. By increasing global, we have someone located in France who is credibly able to analyze American law, who is not an international law. And yet people want to come here. I would say, the meaning of what it means to be American that has changed radically.This is something very new…Pascal- you sound pretty American right now to me. I would give you and your wife a visa. But you and your wife would have to pass the citizenship test on your own (and no cheating with the interwebs!!!)

  9. William Carleton

    Fred, this is just a bit off topic, but definitely related to startups and public policy. The Senate Banking Committee just yesterday approved a bill, the effect of which, according to BusinessWeek, would take 77% of currently active angel investors and tell them they may no longer invest in startups (no longer be accredited investors). There is another section in the bill that would make it much, much more difficult and expensive for startups to raise seed financings (it includes a 120 day wait period while the SEC reviews the Form D filing — currently you just follow the law and make your filing within a few days after first closing). ComplianceWatch on WSJ Online yesterday had a good overview.

    1. ShanaC


    2. William Carleton

      Here’s a link to the BusinessWeek article with the data on angel investors and the impact from the Dodd bill:…And here’s an overview from DowJones, published yesterday (sorry, I think you have to subscribe maybe to see the whole thing?):

    3. fredwilson

      all that has to get fixed and i suspect it will as the bill works its way through congress. you’ve shared that with me before and i appreciate it. i’ll see if anyone is leading the charge on this for the venture and angel community (i suspect the NVCA is on the case) and if not, i’ll see what i can do.

      1. William Carleton

        Thanks, Fred. Marianne Hudson of the Angel Capital Association is a big leader in opposing these proposals and in poss. finding counterproposals as well.

        1. GraemeHein

          It’s called extortion. Some lawmakers don’t feel that Fred et al have donated enough. Same reason noises are made about changing carried interest from equity into income.

          1. William Carleton

            Graeme, you are the third person I’ve heard with that view. I’m innocent in the ways of political power, so I defer to you on that. I do think the state regulators, though, have real concerns, and apparently have Sen. Dodd’s ear — and I’ve assumed that that explains this attack on Reg D. But the “reform” is off target. Even the president of the state securities administrators’ organization, Nasaa, admits that the 120 day pre-closing waiting period for Reg D filings (in Dodd’s bill) is too much for legit issuers (see yesterday’s WSJ Online article on that point).

    4. andyswan


    5. JLM

      Typical pendulum swinging too far effect!

      1. William Carleton

        No doubt. I’m worried, though, we may have a “perfect storm” (to add yet one more metaphor) where the partisan impasse means fewer fora for compromise, less opportunity for rationale discussion of amendment, more pell-knell hurdling toward an “up or down vote” of a “whole package” rather than risk failing to achieve financial reform altogether. I’m not against reform, which is needed. But startup financing ain’t broke such that Reg D should be gutted, angels sent to the sidelines. I think those watching this bill were a little breathtaken that it was reported out of committee in about I think a half an hour after the initial hearing on it had commenced. No doubt tactics afoot here, many looking to amendments from senators from the floor, but I’m concerned the issue may get lost in the bigger fights over financial reg reform. If so, startups will face a very, very diff. legal landscape.

        1. JLM

          I am not so sure that we have a “perfect storm” as much as I am convinced we have a woefully inexperienced and uninformed administration which knows less than nothing about the implications of small business and entrepreneurship and the business of coaxing small businesses out of the cradle and into life.I am as discouraged as I have ever been on the future of the US — not on the truly big things — but on the little things.You cannot punish the productive class of America, you cannot tax and punish success and then sound the siren call for job creation. When you ears are bleeding you cannot hear the siren call.Having said that I am aggressively working to take advantage of the imbalances which this chaos creates.

    6. Keenan

      Are the Dem’s trying to make me switch?

  10. Satish Mummareddy

    I agree that the startup visa solves some of the problems that exist today: helps companies started outside the US move their operations here if there are investors funding it. The bigger problem is that legal immigrants on H1B visas are not able to start companies from 22 – 28 years because they are waiting for 6/7 years in the green card process. These smart engineers are working for Microsoft, Google, amazon etc in the peak of their productivity (and age to take risk) because they are not allowed to start their own companies. 🙂 If this problem was solved you would see a lot more innovation and startups. 🙂

  11. Stefano Bernardi

    Fred, just curious.What Visa are the Zemanta founders on at the moment?

  12. arthurpeterson

    The Startup visa seems an interesting opportunity for startups get their business up and running. It should not be stopped but it should be fair enough for startups don´t get into financial issues. I´d like to get more insights about it.BTW, thanks for the valuable information!Startups could also start the conversation on Q&A and lead to a wider exchange of opinions and data there!

  13. sigmaalgebra

    The Startup Visa idea runs into some old issues so far not much mentioned, so I will mention them here:First, there is an old, major, long in place theme in the US of high level, deliberate, powerful, efforts for ‘national technical manpower management’. At times encouraging immigration has been a major part of the efforts. The results for the lives and careers of the associated US ‘manpower’ have been on various points widely mixed from quite good down to bad and disastrous. In addition, the efforts have been heavily quite hidden, manipulative, and deceptive. The situation has been a case of, say, the not nearly new”oftentimes to win us to our harm the instruments of darkness tell us truths, win us with honest trifles, to betray’s in deepest consequence” (‘Macbeth’, Act I, Scene iii, lines 122-126).People have had their careers and lives ruined. People have died.Uh, suppose Joe has a Master’s in EE, an MBA, and business startup experience and from some limited partners raises a $200 million venture fund.Then six months later down the street Sam suddenly starts a venture firm with a $500 million fund, and Sam is one of 10,000 new such venture partners in the US and 2000 on the same street as Joe. The limited partners are all the US Treasury, but this fact is secret. The effort is ‘national technical economic management’, and the start of the effort was largely secret.As an unfunded Web 2.0 entrepreneur, could I like this? Sure!But there are poor Joe and his limited partners: The fund and the limited partners lose money, and Joe’s career is toast. Joe can wish he could swap his EE degree for an electrician’s license (save the 8 years of apprenticeship) or that after high school he had just continued and grown his lawn mowing service, careers where there are no such sudden, hidden ‘national management’ efforts. Literally. No joke. Not a small thing for Joe.Generally US citizens are beginning to catch on: A lawn mowing service, etc., has a geographical barrier to entry so that there is no competition more than 50 miles away so that compete well in a radius of 50 miles and can do well. When a friend used to take me to his favorite yacht clubs, I didn’t see many technical club members.Uh, in a 101 level view of economics, there is land, labor, raw materials, technology, and capital, and a larger supply of one of these can mean lower returns on that one and higher returns on the others. Yes, some of the people in the “manpower management’ effort were staff economists at the NSF thinking just this way.Second, a good piece of general advice is “look for the hidden agenda”. Similarly, beware of side effects or unintended consequences. For the Startup Visa program, so far there is little information that lets us be careful about such agendas, effects, or consequences.So, once burned, twice shy. Fool me once, shame on you. Fool me twice, shame on me. Always look a gift horse in the mouth. Beware of Greeks bearing gifts.So with the history of deceptive, destructive manipulations of the careers and lives of US citizens heavily from various cases of ‘encouraged’ immigration, on the Startup Visa program, “I’m reticent. Yes, I’m reticent”.Really my position would be, heck no; don’t jab a dirty stick into the economy and the careers and lives of US citizens; there is economic value in stability; turbulent seas ruin nearly all the fishing; leave good enough alone. Without stability, business is less predictable, there is more risk, and there is a ‘risk premium’ that slows business.Or, when a person selects their higher education and pursues their career, they have made an investment and accumulated an ‘asset’ that is crucial for them. Really they get to make this investment just once in their lives. Now if some deliberate, national economic manipulation ruins that asset, then the person loses that asset, and NO ONE is going to make it up. Investment doesn’t like risk: A US citizen making their one and only investment in their education and career doesn’t like risk, either. If there is high risk, then US citizens will stay away or insist on a large ‘risk premium’.The careers and lives of people are not like water that can be turned on and off or redirected without consequences. Jabbing a dirty stick into the status quo and, thus, ruining assets of US citizens, assets that they are depending on for their financial security for the rest of their lives and that are irreplaceable, has a long history as ugly, destructive, dirty business.I would wish Web 2.0 people in Slovakia, Slovenia, Bulgaria, Romania, etc. well, but I don’t want to bring them to the US. Let the US be the US for the US, one team, with team players, and don’t have some people on the team trying to poke dirty sticks into the backs of others on the team.If there’s some powerful, valuable technology in Slovakia, etc. where the US is actually falling behind, then tell Courant, Cornell, the NSF, etc. to use funds of US taxpayers to get the US and US citizens, the US team, caught up and ahead. Actually, I believe that we are FAR ahead.Uh, winning teams have good teamwork. The remark, “I know that the boat is sinking, but ha, ha, as your end just went down, my end went up!” is not winning teamwork.

    1. RichardF

      Team US is principally made up of immigrants, apart from the ones that can trace their ancestry back to the Native Americans.

      1. Cracker Head

        Yes. It’s been a fundamental American practice of importing cheap workers for a very long time. In the high tech industry it’s called the H-1B visa. Employers have used it to flood the market with cheap foreign labor, hold down wages, and displace qualified American workers from jobs they could easily do. And, oh yes, to push the costs of this policy onto the public treasury.Businesses just abuse whatever benefits you give them. I’m convinced this will happen again.

      2. sigmaalgebra

        Uh, the NSF deliberately flooded the US with immigrant technical labor. The main way was to write into NSF research grants that so many graduate students had to be supported. Can’t get them in the US? Then try A, B, C, hint, hint.Why? Some people thought that the US technical experts were making too much money. So, take tax money from US technical workers and feed it to universities to make technical work no longer reasonable for US citizens unless they work for the US DoD on projects that need US citizenship. Who do we expect in the US to want their tax money spent this way? No one told me that when I got my Ph.D. I was supposed to work only where I needed a security clearance!Saying as you seem to want to that the US economy should be wide open to the rest of the world economy with no cohesive US ‘team’ is a double edged sword:(1) Okay, there is no cohesive team US. Fine with me. Then to heck with taxes for NSF for the US research universities. I’ve already got my Ph.D., heavily from NSF funding, but to heck with my paying taxes for anyone else. In the winter, I keep my door closed and do not try to heat the world; and I want to keep my wallet closed and not try to educate the world.(2) In my Web 2.0 project, there’s likely and apparently no one anywhere in the world in Web 2.0 who knows how to write the software nearly as powerful as I’ve already written to get results nearly as valuable as my results for my problem. Uh, the other guys didn’t take the right courses in grad school; nearly no one did; the courses are NOT in ‘computer science’. As I learned with surprise getting one of my research papers reviewed, it’s impossible or nearly so to find anyone at the top of US computer science who has the prerequisites.If I am correct and successful, my target market is big enough to make me the wealthiest person in the world, by a factor of several — Slim, Bill, Warren, beat all three combined. That’s not my goal, but this project is just about the easiest significant project for me to do, does happen to have that potential, and needs less capital than starting a lawn mowing service. Yup, the best of what I got in grad school is powerful stuff; my original ‘secret sauce’ building on what I learned was fun, fast, and easy for me to do and essentially impossible for anyone else in Web 2.0.Slovenia, Slovakia, beating me? Totally hopeless. Maybe if they hired Jack Schwartz at Courant, but he died about a year ago.So, net, my project CAN stand up to world competition.Open the gates: Fine with me. At this point the immigrants can’t hope to beat me, special case that no one in Web 2.0 can. So, my offer to be a good team player on team US was not good for me; I can withdraw the offer.(3) Further, actually I don’t need the US. My server farm can be nearly anywhere with a good Internet connection. A stack of DVDs, and I’ve got my crucial assets and can go. Have DVDs, can travel.Uh, want to rethink the idea of team US?

        1. paramendra

          “….In the winter, I keep my door closed and do not try to heat the world…..”Immigration, a constant flow of immigration over hundreds of years, is THE reason the US is the number one economy in the world.”….my target market is big enough to make me the wealthiest person in the world, by a factor of several — Slim, Bill, Warren, beat all three combined….”Then what are you waiting for to get started? Immigrant workers?”Uh, want to rethink the idea of team US?”Wait. Which side are you on?:-)

          1. sigmaalgebra

            paramendra:You wrote:”Immigration, a constant flow of immigration over hundreds of years, is THE reason the US is the number one economy in the world.”Finding causality in history is tough to do, so tough there is “History does not reveal its alternatives”. There is a lot to the history of the US, and there can see a long list of US advantages and good work.You wrote:”Then what are you waiting for to get started? Immigrant workers?”I’ve done the challenging software.No, I’m not trying to hire immigrants.For ‘team US’, I was suggesting that now the US should be a team and take on the world together. Else, it’s every man for himself, exposed to all the rest of the world and its disciplined teams, dog eat dog, and may the devil take the hind most. I can do that, too, but I don’t recommend it.

    2. paramendra

      If I needed reminding immigration reform is going to be as tough as health care reform.

      1. Andy Baio

        And likely the same people fighting it tooth-and-nail along the way.

  14. sfrancis

    I think the old software saw applies here: perfect is the enemy of good. Is the startup VISA net-negative or net-positive when compared to current state of the visa system? sure seems like it is a net-positive, though we might be able to improve upon it.Thing is, the improvements we might like may not be as easy to pass politically… sometimes you have to take what you can get and wait til the data proves it was a good idea, and then improve on it.

  15. Morgan Warstler

    Let me suggest a stronger alternative: Provide Green Cards to anyone who can buy their own house (with 20% provable income for monthly payments, etc.)This lets US tech companies easily import labor (far easier than the start up visa), it eases the illegal immigrant situation, and it makes large depressed housing markets obvious places to start companies.It doesn’t make it easy to bring immigrants to NYC, but who cares? NYC is expensive and just got massive bailouts.

  16. Andy Baio

    The Business Week URL shows what was likely the original headline: “Why the Startup Visa Is Actually A Really Bad Idea.”

    1. paramendra

      And why does it say it is a bad idea? Do you have the URL?

  17. Berislav Lopac

    I’ll just copy from my comments to Brad Feld’s article on the same topic:From a point of view of someone outside the US this seems like a bad way to attract talent and take advantage of them. I know this is not the initiative’s intent, and I only hope that it — if passed –won’t mean that the US investors are closing themselves into a “splendid isolation” of sorts. All crises naturally inspire protectionist behavior, but we are living in a different world now, and the only solution is to think globally. I’m still convinced that investors from all over the world, not only the USA, should keep looking for entrepreneurial and technical talent around the globe.There are many excellent opportunities happening all around the world, but the capital — and *especially* seed-stage capital — is still confined to a handful of locations like Silicon Valley, Boston and London. While the investors keep expressing their interest to fund globally, in practice this is foiled by the fact that they don’t know much about the situation elsewhere — and I’m not talking about general business climate and political situation, but concrete, specific opportunities. I’m inviting you, and all other US investors (angels or VCs) to spend more personal time in traveling to such locations and check out the local startup scene.

    1. kidmercury

      great point berislav!!! i agree 100%.

    2. RichardF

      Berislav I agree it would be nice to see more US venture money flowing to other parts of the world. I don’t think that’s going to happen for a while if ever. Atlas announced they are pulling out of London not long ago.Without an overseas desk, a US VC or angel with a large portfolio is unlikely to be able to travel to Europe and beyond, looking at opportunities and servicing a portfolio outside of the US. You just need to look at Brad and Fred’s travel itineraries to know that they pushed as it is within the US.But the good news is that Atomico just raised $165m so hopefully Niklas and Janus will be spreading the love in Europe!

  18. Glenn Gutierrez

    I definitely agree that we need to push forward with some type of startup visa program. I think it a little ironic that we have a Visa program for Investors and not one for startup entrepreneurs. First of all, the Investor Visa program looks good on its face because an investor would have to fork over $1,000,000 toward a business venture (less if in an impoverished area of the US) and hire around 10 US employees (which the number leans largely toward manual labor businesses and not higher end type businesses like hedge funds or even software startups who utilize fewer employees), but in reality, the failure rate of these Visa Investor businesses are appalling. Largely because these individuals are openly buying green cards under the guise of promoting the economy (Ex pats from Hong Kong escaping Chinese control are an examble). Whereas in the case of a startup entrepreneur, there is at least, I believe, a greater tendency for the business to be successful and viable. A Startup Visa would thereby create greater economic reward and prosperity for the US as a whole, especially if this business is already up and running e.g., Zemanta.

  19. Mark Essel

    Having met Andraz and Bostjan and shared emails/messages with them from time to time, I’m very glad the Zemanta guys decided to build out some of their business here. I really appreciate their plugin while blogging, and have benefitted from their expertise on real time sematic extraction.Of course I’m betting on human tagging and learning systems to help tag/categorize information in social streams APIs get pricey if you want to tag many feeds + updates per day. Plus they’re very noisy or lossy for short text (like tweets, or article/post titles).I’ll have to read Pascal’s take, should be interesting 🙂

  20. Aviah Laor

    It’s the weakest argument against the visa. If founders would not take any investment at all they will be even more protected against investors.

  21. JLM

    At the end of the day, this entire debate is all about US immigration policy with a minor consideration of employment with just a smidgen of education thrown in for taste.Should immigration policy be fashioned with a weather eye toward attracting entrepreneurs because they might found companies which would create employment?Sure, why not?We should be open to educating the world’s top 5% and allowing them access to our economy as a means of driving the US economy. Create jobs in the US and keep their wealth in the US.How it is actually implemented is just details. Details are the hobgobblin of small minds.On a personal note, I would prefer entrepreneurs coming to the money rather than money being the bridge to entering the US. Sponsorship from within the US should be irrevocable for an extended period of time rather than creating an unfair advantage in a single employer-employee relationship.Driving the economy by access for enterepreneurs and students is a long term strategy which could create huge opportunities for our economy.

    1. sigmaalgebra

      As I outlined above, it’s not clear just why a successful Internet entrepreneur has to stay in the US. So, whatever they get coming here they can take away with them. No one washes a rented car.

      1. JLM

        I have no idea what you are saying and I am way too tired to puzzle it out; however, regardless of what it is supposed to mean, I love your statement —“No one washes a rented car.”That is very funny, I think. But I could be wrong.

  22. Life of F Bi

    unfortunately as an student who launched a startup but was asked to leave the U.S. (… i agree with pascal mostly on this … but have succumb to the reality fred states, i.e. i wish i could build a profitable business to $250k and that be enough to get the visa, but i’d probably rather raise money earlier than otherwise planned just to be able to get access to the U.S. startup ecosystem

    1. paramendra

      You were a startup guy who got kicked out of the country, and you agree with Pascal?

  23. paramendra

    To say the startup visa needs to be stopped is old school xenophobia, nothing less, nothing more. It is ignorant.

  24. gorbachev

    Fred, you just implied that the Zemanta founders conducted business in the US while visiting using a tourist visa.I’m not sure if you understand what that means. If the people at USCIS ever connect the dots (or some evilminded person tips them off), they can forget about ever visiting US again, never mind getting any sort of visas.

  25. Ron

    And then they will let these new generation of Green Card holder suffer and live a life of prisoner just like 1.5 million are doing so right now. And most of these 1.5 million made huge contribution to the US by working for Intel, IBM, NASA, Pfzer… just to know that they will be deceived and treated as a robotic labor and will be banned to be with their families:Read here: