On January 17, 2017, USCIS published a 52-page final rule in the Federal Register, 82 FR 5238, titled the International Entrepreneur Rule. The final rule amends Department of Homeland Security (DHS) regulations to implement the Secretary of Homeland Security’s discretionary parole authority to increase and enhance entrepreneurship, innovation, and job creation in United States. The final rule adds new regulatory provisions guiding the use of parole on a case-by-basis with respect to entrepreneurs of start-up entities who can demonstrate through evidence of substantial and demonstrated potential for rapid business growth and job creation that they would provide a significant public benefit to the United States. This final rule will be effective from July 17, 2017.
The final rule is being issued by the USCIS under its discretionary statutory parole authority (for urgent humanitarian reasons or significant public benefit) provided by Section 212(d)(5) of the INA or 8 U.S.C. 1182 (d)(5).
Under this final rule, DHS may grant Parole, on a case-by-case basis, to eligible entrepreneurs of startup entities, who meet the following definitions/criteria:1. Entrepreneur: An entrepreneur should possess a significant ownership interest in a start-up entity (at least 10 percent) at the time of adjudication of the initial grant of parole and has an active and central role in the operations and future growth of the startup entity. Such an applicant cannot be a mere investor;
2. Start-Up Entity: A start-up entity maybe considered recently formed if it was created within the past five (5) years immediately preceding the date of filing of the initial parole application;
3. To qualify for Parole, the applicant needs to validate the start-up entity’s substantial potential for rapid growth and job creation. An applicant may be able to satisfy this criteria in one of several ways:
a) Minimum Investment from US Investors: Receiving investment of capital totaling $250,000 or more from established US investors (such as venture capital firms, Angel investors, or start-up accelerators) with a history of substantial investment in successful start-up entities;
b) Time Frame for Investment: 18 months immediately preceding the filing of an application for initial Parole;
c) Government Grants: Receiving monetary awards or grants totaling $100,000 or more from government entities that typically provide such funding to US businesses for economic, research and development;
d) Alternative Criteria: Partially satisfying one or both above criteria (c or d) related to capital investment or government funding maybe considered for parole under this rule, if he/she provides additional reliable and compelling evidence that they would provide a significant public benefit to US.
Initial Parole Validity: Total Parole duration shall be 5 years (2.5 years of initial Parole and 2.5 years of re-parole). Under the final rule an applicant who meets the above criteria (and his or her spouse and minor, unmarried children, if any) generally maybe considered for a discretionary grant of initial parole lasting up to 30 months (2.5 years) based on the significant public benefit that would be provided by applicant’s (or family’s) parole into the US.
Re-Parole Requirements: A subsequent request for re-parole for an additional period of up to 30 months (2.5 years), may be granted, if and only if, they can demonstrate that their entities have shown signs of significant growth since the initial grant of parole and such entities continue to have substantial potential for rapid growth and job creation. Applicants can demonstrate continued substantial potential, in the following ways:1. Additional qualifying funding of at least $500,000 were received during initial parole period
2. Entity reached at least $500,000 in annual revenue with average annualized revenue growth of at least 20 percent (Revenue for purposes of re-parole must be generated in the United States;
3. The start-up entity must have created at least 5 qualified jobs during the initial parole period;
4. As with Initial Parole, alternative criteria related to capital investment, revenue generation, or job creation may also be considered.
In summary, the purpose of the Rule is to provide qualified entrepreneurs of high-potential start-up entities in the United States with the improved ability to conduct R&D in the U.S., create jobs for U.S. workers, and benefit the U.S. economy through increased business activity, innovation and dynamism. DHS has also reviewed all the public comments that were received (approximately 51 percent of commenters supported the rule and nearly 46 percent of commenters expressed general opposition to the rule).
As with any new provision, the devil is always in the details. We have tried to present a concise summary of this complex rule and in the process we have not been able to address all the elements sufficiently and fully. Should you have additional questions, please contact GLF, so we may setup an appointment for an in-depth discussion on the various complex provisions of this Rule.