Today, Senators Jerry Moran (R-Kan), Mark Warner (D-Va), Chris Coons (D-Del), and Roy Blunt (R-Mo) introduced the third iteration of startup-friendly legislation that would make it easier for foreigners to start companies in the US, and for science, technology, engineering, and math graduates to stay on beyond university. But before you get too excited, you should know this: It’s not going to pass in 2013.
Still, that’s not quite the point.
Called Startup Act 3.0, the bill comes at a time when congress is considering sweeping immigration reforms that could create paths to citizenship for illegal immigrants and raise the quota on visas for high-skilled immigrants. For the first time since President Obama came to power, there is widespread bipartisan support for such reforms. However, to the consternation of the startup community, there is so far no provision for a “startup visa” among the proposals that have the most traction: the Immigration Innovation Act, which is often called “I-Squared,” and a bill put forward by a Gang of Eight senators. Startup Act 3.0 is a response to that shortcoming.
The main purpose of Startup Act 3.0, according to PolitiHacks executive director Craig Montuori, is for its sponsors to signal how serious they are about the startup visa. Montuori says there are essentially three kinds of bills introduced in DC: ones that have traction, like “I-Squared”; ones that are intended to strongly state a congressman’s position on a particular issue; and ones that are basically nothing more than press releases intended to draw attention to an issue.
Startup Act 3.0 falls into the second category. For I-Squared to pass, its authors need to enlist the support of important Republican senators. In this case, that’s Moran. However, Moran is probably reluctant to support any proposal unless it includes a provision for a startup visa. So for Moran, Startup Act 3.0 serves as a strong stake in the ground, even if it won’t pass this year. President Obama has said he will formally oppose any immigration reform bill that isn’t comprehensive – but if for whatever reason comprehensive reforms fail this year, then Startup Act 3.0 will be well placed to become a leading piece of immigration reform legislation in 2014.
The bill would create 125,000 new visas, up to 75,000 of which would be allocated to foreign-born entrepreneurs, and 50,000 of which would go to foreign graduates of American universities with advanced degrees in science, technology, engineering, and math (STEM). People who would qualify for the entrepreneur visa would have to hold a H-1B visa, for high-skilled immigrants, or an F-1 student visa. They would need to have investment of at least $100,000 and employ at least two full-time staff who weren’t part of their family. The STEM visa would be available to graduates who hold a master’s degree or higher in STEM fields, and it would be valid for five years, after which time the holders could become permanent legal residents.
The bill also includes tax breaks and incentives for startups. According to Sen. Moran’s press release, it:
- Makes permanent the exemption of capital gains taxes on the sale of startup stock held for at least five years – so investors can provide financial stability at a critical juncture of firm growth;
- Creates a limited research and development tax credit for young startups less than five years old and with less than $5 million in annual receipts. This R&D credit is designed to allow startups to offset employee taxes – freeing up resources to help these young companies expand and create jobs.
The bill enjoys broad support from startup advocates such as Steve Case, who sits on President Obama’s Council on Jobs and Competitiveness, Engine Advocacy, and the Silicon Valley Leadership Group, among others. More encouraging, perhaps, is that Moran, Warner, Coons, and Blunt have emerged as champions for the tech industry and startup community and are proving willing to fight for the issues important to them.
And, given, that the Valley is still learning the ins and outs of Washington DC, it can never hurt to have friends in high places.