Following the Trump administration’s decision to introduce stricter terms for issuing H1B visas and delays over implementing the International Entrepreneurship Rule (IER), it is a trying time for Indian techies and entrepreneurs in the United States.
Even as the U.S. Citizen and Immigration Services is taking steps to bring back IER — a proposed regulation to promote entrepreneurship in the U.S. which allows foreign-born entrepreneurs to be considered for two-and-a-half year visas with the potential for an extension for another two-and-a-half years — following a court decision, several Indian startups are exploring options in other countries such as Canada and Estonia. Could these new stringent immigration policies be hurting the U.S.’s image as a global startup destination?
U.S. still a preferred destination
In a study titled America’s New Immigrant Entrepreneurs: Then & Now, nearly 25% of engineering and technology U.S. startups have at least one immigrant founder. A report by the National Foundation for American Policy titled Immigrants and Billion Startups, stated that India is the leading country of origin for immigrant founders of billion-dollar companies in the U.S. Specifically, California is a preferred destination for headquarters, with 32 out of 44 immigrant-founded companies setting up base there. This is mainly because of a thriving technology culture, access to capital and expertise to help scale startups to million-dollar ventures.
Indian entrepreneurs Raviteja Dodda and Yashwanth Kumar started an omnichannel marketing automation platform called MoEngage in California in 2014. With funding from marquee investors such as Exfinity Ventures and Helion Venture Partners, MoEngage was also supported by a U.S.-based accelerator called The Alchemist. “It’s the dream for any technology or product company to be present in the U.S., which is the leader in technology development and has the market strength,” said Dodda.
But while Dodda, like many startups, was able to set up its business in the U.S. before employment policies started becoming stricter on immigrants, its challenge now lies in hiring and retaining skilled workers. “It’s no longer easy for an Indian to run a startup in the U.S. Founders are hard-pressed to hire skilled technology professionals or justify the employment of senior-level executives, due to the existing visa limitations,” said Dodda. For instance, a B1 visa or a business visa doesn’t permit a visitor to stay in the U.S. for extended periods of time. While Indians use this visa to participate in conferences or short business meetings in the U.S, it isn’t a viable option for an entrepreneur who has to extend his stay in the country for professional reasons.
Watch on Forbes: What Is The H1B Visa and Why Is President Trump Targeting It?
Investors too recognize that smoother immigration policies for startups in the U.S. are essential for allowing Indian-based entrepreneurs to plan their business strategies better. Chinnu Senthilkumar, partner and chief technology officer of Exfinity Ventures, funds startups on the Indo-U.S. technology corridor and believes that Washington should bring the IER back into effect immediately. “Startup founders would prefer to set up base in the U.S. over any other place, but for this to happen, policies need to be open and inclusive for innovation to thrive,” said Senthilkumar, adding, “Silicon Valley’s startup ecosystem is entrenched, but for it to grow and expand into new territories, it has to work on building trade corridors with countries like India.”
As the Indo-US technology corridor expands, there are huge benefits to both countries. Startups, which can set up business units in the U.S. and product development units in Indian cities such as Bangalore, Pune and Chennai, offer compelling business advantages such as market access and intellectual property transfer, among others. While it may not be economical to place founders and key employees under the H1B visa scheme, the IER’s revival could be a step towards setting up Indo-U.S. focused startups and allowing ecosystems to thrive in both countries.
Canada, Europe beckon Indian entrepreneurs
Meanwhile, some Indian entrepreneurs and engineers are actively exploring opportunities in countries that provide attractive citizenship privileges and opportunities to expand businesses. Canada is one example, and Toronto is emerging as a popular destination. In his blog, former LinkedIn employee Vikram Rangnekar explains that he chose to give up his H1B visa due to its highly restrictive nature and the long wait for an American green card. The vibrant technology scene and simpler immigration procedure drew Rangnekar to Toronto instead.
Other countries are not too far behind in wooing Indian startups, including — perhaps surprisingly — Estonia. The small European country, with a population of 1.3 million, established its E-Residency program in 2014. In the last two years, its popularity among Indian entrepreneurs has exploded.
Read more on Forbes: Why Estonia May Be The Best Place For India’s Overlooked Startups To Flourish
“We already have more than 1,000 e-residents from India and it remains one of the fastest growing countries in terms of applications. Most entrepreneurs seek access to EU capital, clients and faster turnaround time to set up a company. They envision our program as a gateway to a diverse European business environment,” said Arnaud Castaignet, head of public relations for Estonia’s E-Residency program.
“Despite Brexit, Europe remains an attractive free marketplace with strong government policies in favor of startups,” said Castaignet.
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