Startup Founder Parole FAQs: Common Entrepreneur Questions
The International Entrepreneur Rule (IER) provides a tremendous 5 year immigration solution for foreign founders to enter and run their funded U.S. startup as detailed here. As this rule has various nuanced requirements there are many common questions that go beyond the language in the criteria you might see listed on other websites. We wanted to provide a list of these common questions to help you in understanding the application of the rules. We will be updating this page often.
As discussed in our introductory article, foreign founders and their angel and venture capital investors finally have a modern immigration solution to help somewhat reduce the extra hurdles faced by foreign founders compared to their U.S. counterparts.
Entrepreneur immigration parole also alleviates some of the headaches often faced by non-immigrant visa holders trying to define where the line is between allowable activities to test their startup ideas and what is considered employment requiring specific immigration status. Our Forbes article touching on these challenges is also helpful to consider. Let’s take a look at some of the common questions geared towards furthering your understanding of the International Entrepreneur Rule parole requirements.
Founder Parole FAQs
check back often as we keep adding to FAQs to guide founders and their startup teams through International Entrepreneur Rule applications
What are the Critical Requirements for my Initial 30 month (2.5 year) Founder Parole?
The main focus of the I-941 entrepreneur parole application will require you, as a founder, to prove that your startup has been legally established in the U.S., within the last 5 years, and that the startup has the potential for rapid growth and job creation.
This can be shown by a combination of various forms of evidence including already having raised, or having partially raised, $250,000 in funding from qualified U.S. investors or $100,000 from qualified government grants and awards. If you have only partially satisfied this requirement then you must have additional reliable and compelling evidence to prove significant public benefit to the United States. This additional evidence can relate to:
(a) Already proven rapid growth in the number of users or customers of a product, revenue numbers, investment that has been raised outside of investments that qualifying under the founder parole rule and more;
(b) The social impact nature of the startup business;
(c) How far reaching and national in scope the startup is;
(d) The total positive impact of the startup in a particular locality or region;
(e) Additional forms of reliable and compelling evidence proving that the startup entity has a substantial potential for rapid growth and job creation.
It is also necessary to show that a founder applicant, or up to three co-founder applicants, each have a 10% equity stake at the time of initial parole application. This equity stake can decrease after initial parole but can never drop below 5%. It is worth noting that this is far more reasonable than the challenges faced under the E-2 visa where ownership often has to remain over 50%.
How Much Equity Must I Own to Qualify for Founder Parole Immigration Benefits as a Startup Entrepreneur?
For the initial parole application the founder must have at least a 10% equity stake. Remember also that up to three co-founders can apply for Parole related to one startup. Each founder must show a 10% stake initially which can then be reduced after initial parole to a level of at least 5% thereafter. This has to be proven at the re-parole stage when applying for the second allowable period of 30 months on the parole program. This is another example of how this founder parole rule is much more in line with modern startup practices whereas an E-2 visa for example requires the entrepreneur or E-2 treaty investor group to hold at least 50% of the business at all times. These and other challenges that exist with non-immigrant visa options outside of the international entrepreneur parole program are discussed in this Forbes article.
Can I be a Passive Owner of a Startup or Must I have an Active Role?
The rules require each entrepreneur parole applicant to prove that they play a central and active role in furthering the business growth of the startup. The founder should evidence his or her knowledge, skills, or experience that is applicable and will help the startup fulfill its growth potential. The government invites founders to submit the following type of evidence in the I-941 application:
Expert Attestations: Statements by qualified investors, government agencies, or other business associations who have knowledge of the startups products or services as well as the founder or co-founder groups knowledge, skills or experience that will contribute to advancing the startup’s growth.
Media Coverage: Media coverage, such as through newspaper articles, discussing recognition that has been received by the entrepreneur and/or the startup entity. The more significant the recognition and acclaim verified by the media outlet the better.
Incubator or Accelerator Participation: Evidence of acceptance and participation in renowned accelerator or incubator programs. It is recommended to provide supporting evidence of the standing of programs to verify their reputation.
Prior Startup Success: If you have played a critical role in prior successful startup ventures this evidence will provide useful support.
Other Education, Skills, and Experience: Relevant educational background and work experience, applicable to the business of the startup can be submitted if useful to the furtherance of the startup.
Intellectual Property: Any patents or other intellectual property in which the founder played a role should be included.
Detailed Job Duties: A detailed description of the active role that each Founder applying for entrepreneur parole will be charged with is key in a thorough filing. Explaining how this role furthers the growth of the startup business is also critical.
The government will also accept any additional forms of reliable evidence that may reveal a founder’s active and central role with the startup.
Does the Entrepreneur Parole Rule have a Quota like the H-1B?
No! There is no limit set on the number of founders who are allowed to apply for and enter the U.S. under the parole power granted to the Department of Labor. As long as you can satisfy the requirements you are eligible to attempt to enter the U.S. after I-941 application approval and obtaining a parole foil outside the U.S.
It has been estimated that there will be roughly 3,000 IER applications each year under this program as there is such a significant need for a more modern immigration solution for the real-world of technology startups and their unique funding models, equity allocations, and growth cycles.
Can I Personally Invest in my Startup to Satisfy the $250,000 Qualified Investment for Founder Parole?
No. The rules are very clear that an investment, whether directly or indirectly made, from the entrepreneur or even any family members including parents, spouse, brother, sister, son, or daughter will not count towards the investment thresholds. Additionally, the investment will also not be counted towards the investment requirements if made by a corporation or other entity in which the entrepreneur or any family members have any ownership interest.
Is my IER Startup Limited to only Accepting Funding from Qualified Investors as Defined in the Founder Parole Rules?
No. The program clearly contemplates scenarios where Founders will raise capital from angel, venture capitalists, or other individual sources that are not used to satisfy the $250,000 initial parole level or the subsequent $500,000 re-parole amounts. This also goes for Startup using the $100,000 qualified government award or grant pathway to prove the necessary potential for the Startup to grow and create jobs.
Can all my Startup Co-Founders Qualify for the Immigration Entrepreneur Parole Program?
Up to three co-founders can attempt to qualify under the founder parole program. The Department of Homeland Security (DHS), during the notice and comment period of the rule, declined to increase the number beyond three co-founders as they expressed concern whether a larger group would actually impact the ability of the Startup to grow and succeed enough to satisfy the ‘significant public benefit’ requirement that is the underpinning of the parole power. The DHS also expressed concern over potential fraud if the number of co-founder parole applicants were any larger.
Does a Founder have to be paid a certain wage or salary to qualify under the International Entrepreneur Parole Rule?
No. There are no wage requirements as you might see in the H-1B program however there is a financial support element to the rule. The rule contemplated that this requirement would ensure that the paroled founders would be able to focus on growing and developing their startup and make a net positive benefit to the U.S. The DHS also provides that they want to ensure that International Entrepreneur Rule startup founders and their families do not draw on the social welfare programs such as Federal public benefits.
The founder parole rule requires that:
…a parolee must maintain household income that is greater than 400 percent of the federal poverty line for his or her household size as defined by the Department of Health and Human Services.
The federal poverty line that is used for this calculation can be found here.
Can My Spouse Work in the U.S. while I am a Startup Founder under the International Entrepreneur Parole Rule?
Yes! This is a major benefit over many non-immigrant visa status types such as the O-1 and H-1B in most cases. Note that your spouse will have to apply for work authorization once in the U.S. however to be eligible to accept work.
It is important to note that the above discussed income requirements of the Entrepreneur Parole rule mentions household income. Therefore it appears that it will be possible to satisfy the 400% of the federal poverty line rule through a spouse’s work in the U.S. working via an approved employment authorization document.
More FAQs are on their way! In the meantime feel free to watch our video series and read our in-depth breakdown of the Entrepreneur Parole rule.