A solution for entrepreneurs struggling with the uncertainty and limitations of the visa system
“The Global Entrepreneur in Residence program seemed too good to be true, and we were skeptical at the beginning. But a couple of months after we engaged, we had the visa we needed. Now we are full of excitement about the prospects of our endeavor…”
MIT Media Lab grad Hasier Larrea – Founder, Ori Systems
The Massachusetts Global Entrepreneur in Residence (GEIR) program was created to assist you to get a visa to move to or remain in Massachusetts and work for your newly created company. You might be transitioning from F-1 after graduating from a university; B-1 after participating in a startup accelerator; J-1 after completing an education exchange program; or you might be seeking to transfer your H-1B from another employer to your startup company.
Because there is no startup visa for entrepreneurs in the immigration system, entrepreneurs seek an H-1B, O-1 or EB-2 visa usually in that order. The H-1B is popular since it lasts for three years, but can be extended for another three years for a total of six years, more than enough time to establish a growing venture and apply for an O-1 or EB-2 visa.
However, in seeking one of these magic tickets, entrepreneurs face a chicken and egg problem. They need their business operating to sponsor their visa, but they cannot work for the business to get it started without a visa. “Operating” means the company has more than enough money (companies that have less than $150,000 are unlikely to qualify) to pay the entrepreneur at least part-time wages, challenging for a pre-seed investment stage company; and that the entrepreneur will be acting as an employee and not as an owner of their company, complicated when the entrepreneur holds equity in the company.
To make matters even more challenging, H-1B visas are capped at 85,000 per year, but two to three times as many apply for the visa, necessitating a lottery to determine the lucky 85,000 winners. The company has to wait for the next April 1st to file, hope it wins the H-1B lottery, and then wait until October 1st for the employee to start.
Smoothing the path from education to employment
The GEIR program, pioneered by the University of Massachusetts Venture Development Center in Boston, was created in 2014 by the Massachusetts Legislature as a creative solution to the uncertainty and limitations of H-1B visa system, providing a smoother path for entrepreneurs from education to employment. U.S. universities are exempt from the annual H-1B quota to ensure they have reliable access to international specialists when filling professional positions. By working part-time contributing their specialized expertise to faculty, students and others who are trying to turn their ideas into action, entrepreneurs can obtain a cap-exempt H-1B visa anytime during the year. They spend the rest of their time developing their company until it can independently sponsor their visa. Haiser’s case demonstrates how the program works.
While at the MIT Media Lab doing research, Haiser and Ori co-founders Ivan and Chad, engineers, came up with the idea of a robotic furniture company. A floor-to-ceiling unit would incorporate a bed and a closet on one side, and a home office and an entertainment suite on the other, transforming a tiny apartment into one that feels two to three times the size.
The team undertook preliminary activities necessary to start up Ori that are not considered “work” for which a visa is required under U.S. immigration law. As part of their educational program, the team developed the actuators, electronics and software that enable the heavy furniture units to glide and change shape, and then began meeting with and presenting their business idea to potential funders and customers.
Shortly after graduating from MIT, Haiser was able to secure seed investment ($750,000) from an angel investor. Seed investment triggered the formation of a board of directors with power to control the company. Although qualified to sponsor an H-1B visa, Haiser’s company faced another challenge. One of the co-founders, Ivan, needed an H-1B visa right away to keep the founding team intact after graduation. The startup company’s investor funding was received in November, but the H-1B lottery wasn’t until the following April and if his co-founder was selected, the visa would not be issued until October.
Ivan turned to the GEIR program, under which a university can step in any time during the year to facilitate an entrepreneur’s visa until the company can independently seek one. Haiser moved the company to the Venture Development Center. It was a win-win collaboration, as the university was actively seeking highly skilled mentors for a new engineering program. Haiser’s company filed an H-1B visa a petition and it was granted. The Venture Development Center had written a letter describing how the work performed by Ivan furthers the normal, primary, or essential work performed by the University of Massachusetts.
The visa kept the founding team intact and focused on developing the business. The following April, the company filed an H-1B petition in the lottery, and was notified in September that it had been granted. The company then “graduated” and moved from the Venture Development Center, with an H-1B visa independent of the University of Massachusetts. The company was at the Venture Development Center for about one year, during which it completed pilot projects and raised additional funding to manufacture and distribute more furniture units.
Ivan’s case is one where the timelines of the H-1B system did not match the needs of the startup company. GEIR bridged the gap. Similarly, GEIR also helps entrepreneurs who missed out in getting an H-1B in the lottery and must re-apply for the lottery in the following year.
GEIR also solves a chicken and egg problem. It gives entrepreneurs more time to raise funding for their startup company so it can qualify to sponsor an H-1B, O-1 or EB-2 visa. Let’s look at the chicken and egg problem to further illustrate how GEIR works. While on OPT approved by their university, an entrepreneur started building a minimum viable product, and continued to seek feedback from potential investors and customers. U.S. immigration rules are fairly simple–the majority of work (paid or unpaid) they will be doing during OPT must be related to their major field of study.
When the first year of OPT ends, however, the entrepreneur will no longer be able to work for their business unless it is qualified to employ them. Many promising startups are not far enough along to qualify because of lack of funding, so entrepreneurs must seek an alternative means of work authorization. GEIR gives them more time to raise funding.
A similar scenario is an entrepreneur transferring their H-1B visa from a larger company to their startup company. These are entrepreneurs who entertained job offers from larger established companies believing that only they have the credibility to sponsor their H-1B visa. They thought, maybe I can work on my start-up on the side, and then transfer my H-1B visa to my company. Once again, their startup may not be far enough along to qualify to sponsor the visa because of lack of funding. These candidates may begin working for the university as soon as the university files the H-1B petition, and then spend the rest of their time raising funding.
Helping universities retain highly skilled entrepreneurial mentors
The benefits to entrepreneurs are obvious: a straighter path from education to employment. But what about universities? Why would a university be eager to welcome entrepreneurs in residence on campus? A university welcomes entrepreneurs under the “employed by” and “employed at” cap-exemption if as in the case of the Venture Development Center, part of its mission and/or objectives is to create an entrepreneurial environment where students can combine critical thinking with practical experience to create their own start-up businesses, and the university sees a nice fit between the entrepreneur’s presence on campus and the university’s mission and/or objectives.
Finding the right mentors can be difficult for a university. Company founders rarely want to divert their attention away from their companies. Even in entrepreneurship courses, it is challenging to find mentors who have the time to guide student projects during the entire semester. By partnering with immigrant entrepreneurs, universities can get access to these entrepreneurs’ experience in the startup world and highly skilled expertise to provide an educational resource for their students. The entrepreneurs hold office hours, give lectures, and mentor student projects as well as perform research and development in their fields while in residence at universities.
But where would a university get the funds to hire part-time entrepreneurs-in-residence? In Massachusetts, GEIR is a public-private partnership, where state grants pay for administration of GEIR, and sponsorships from investors, law firms, banks and if qualified, the startup company itself, pay for program costs.
Creatively using federal authorization of cap-exempt employment of entrepreneurs
The Massachusetts law establishing GEIR states its purpose as giving entrepreneurs “with the potential to create a high growth company” the opportunity to move to or remain in the Commonwealth to work on “assignments that further the university’s interests while developing skills required for organizing and establishing successful new business ventures.” Cap-exempt employment of highly skilled entrepreneurs “by” or “at” a university is authorized under U.S. immigration law. In 2000, Congress passed the American Competitiveness in the Twenty-first Century Act (AC21). Among other things, AC21 exempts most U.S. institutions of higher education from the annual H-1B quota in order to relieve pressure on the H-1B quota and ensure these employers have reliable access to international specialists when filling professional positions. Subsequent memos issued by US Citizenship and Immigration Services (USCIS) provided guidance on cap-exempt H-1B employment. The Department of Homeland Security (DHS) included the guidance in regulations issued on November 18, 2016 that went into effect on January 17, 2017.
Under the DHS regulations, there are two ways entrepreneurs and universities may collaborate:
1. “Employed by” a cap-exempt organization. USCIS regulations state that if an individual already is employed under a cap-exempt H-1B by a cap-exempt organization, then any other employer including the employee’s startup company may immediately petition for its own cap-exempt H-1B to be concurrent with the cap-exempt organization’s H-1B.
Thus, a university can sponsor an H-1B for the startup founder as a mentor for as little as 8 hours per week, then as soon as this cap-exempt H-1B is approved by USCIS and the founder is inside the U.S. in H-1B status, the founder’s company may piggy-back on top of this cap-exempt H-1B petition and file its own cap-exempt H-1B petition for the founder to immediately work full time for the company (concurrently with the part-time H-1B held by the cap-exempt organization). The law permits this even though otherwise the company would have had to wait for the next April 1st to file, hope it wins the H-1B lottery, and then wait until October 1st for the employee to start.
Employed “by” the university is best suited to an entrepreneur with a friends and family funded startup company that anticipates but has not as yet received seed funding for their company. They spend the rest of their time raising funds for their company so that it can sponsor their concurrent visa. The time gap between the two visas should be short, however, as the entrepreneur is not allowed to work for the startup without the second visa. Until getting that visa, the entrepreneur must limit their involvement in the startup to passive activities such as attending business meetings, and making presentations and negotiating with investors and customers in an effort to source funding for the startup.
1. “Employed at” a cap-exempt organization. USCIS recognizes that Congress chose to exempt from the numerical limitations of the H-1B cap certain foreign nationals who are employed “at” a cap-exempt organization, which is a broader category than foreign nationals employed “by” a cap-exempt organization.
Thus, USCIS allows all U.S. employers to directly file a cap-exempt H-1B petition if the foreign national worker is physically placed at a cap-exempt institution, and spends the majority of his or her work time performing job duties at a qualifying organization that directly and predominately further the essential purpose, mission, objectives or functions of the qualifying institution or organization, namely, higher education or nonprofit or governmental research. The U.S. employer directly filing a cap-exempt H-1B petition must be able to prove a logical nexus between the work performed predominately by the beneficiary and the normal, primary, or essential work performed by the qualifying institution.
Under the “employed by” and “employed at” pathways in the Massachusetts GEIR program, the entrepreneur must work in Boston at the Venture Development Center, the worksite listed in the H-1B, and in the job it was filed for. An entrepreneur cannot work in a different city or a different type of job. For example, if the company has a pilot in another city, the entrepreneur can travel to and from that city for meetings but can’t work there.
Graduating with an independent, long-term visa
How does an entrepreneur graduate from GEIR? In Massachusetts, most entrepreneurs spend 9-15 months in GEIR before graduating. GEIR graduates to date have successfully filed an H-1B petition in the lottery; filed an O-1 petition; or filed an EB-1 or 2. GEIR gives an entrepreneur time to document their talent and ability. While they wait for EB-1 or 2, as an H-1B holder, in many cases, they can get unlimited extensions of their H-1B for as many years at it takes to complete their green card application. GEIR helps entrepreneurs carefully plan their exit strategy.