Innovation Blog

 DANGER:   Entrepreneur Brain Drain?   America’s Super Visa Act

By Shlomo Maital

Business Week: US losing startup lead  A report in Business Week suggests that America may be trying to solve its jobs crisis [President Obama announced an $18 b. jobs package this week] by exporting it to other nations. [1]   Proposed legislation would offer visas to foreign entrepreneurs who succeed in raising $250,000 in capital in the US.

   This proposed act raises many questions.  As the fountain of entrepreneurship, why does America need to import foreign ones?   As the primary ‘mother’ of entrepreneurial capitalism, why is wealthy America seeking to pull entrepreneurs away from countries that are poorer (e.g. Israel, whose per capita GDP is roughly 40 per cent less than that of the US).    Why is America trying to make life even harder for its own entrepreneurs by importing competition?  Why is the US acting to ruin its own entrepreneurial engine by foreign ‘imports’, just as it ruined its own industrial economy by importing nearly everything  from Asia and specifically China?  * Why isn’t America fostering its own homebred “necessity entrepreneurship” rather than importing it?

  According to the Business Week report: 

     Last year 8% of U.S. residents founded companies, down from 12.4% in 2005, says the Global Entrepreneurship Monitor, a research consortium of the London Business School and Babson College. In 53 other countries that the group tracks, the percentage of residents creating companies rose to an average 11%, from an average 8.7%, over the same stretch. “The incentive for entrepreneurs to bring their ideas to the U.S. would be the prospect of becoming a resident of this country and the potential for a greater market,” said Lugar in an interview.

     The legislation is the product of an unusual collaboration between arch-conservative Republican Senator Richard Lugar and liberal Democratic Senator John Kerry.   They have proposed “a two-year visa for any immigrant entrepreneur who can secure $250,000 in capital from American investors. After the two years are up, the person could become a permanent resident if his or her business has created five full-time jobs in the U.S., raised an additional $1 million, or hit $1 million in revenue. The senators hope to pass the StartUp Visa Act this month as part of legislation aimed at helping small businesses add jobs.”

      With partisanship reaching new heights in Washington, one wonders how this particular idea merits bipartisan support.”

      How should other countries respond?   * Vigorously oppose the legislation, by every possible means. *Point out to America that the last time it ‘solved’ its business problem by outsourcing, the result was the hollowed-out economy and record Chinese trade surpluses, and a collapsing dollar.  * Offer generous capital (through government funds) to worthy entrepreneurs.   * Persuade US VC funds that US and Europe will have slow growth, and that starting businesses there may be less worthy than in the Mideast and Asia.

[1]  Visas for Foreign Entrepreneurs: The proposed StartUp Visa Act would open the door to foreign entrepreneurs who create jobs,  by Douglas MacMillan: Business Week, March 11/2010.