Many in the industry feel that the raft of immigration restrictions imposed by the Trump administration has hampered opportunity among immigrant entrepreneurs. But if Joe Biden captures the White House, those concerns may ease.
“Over the past four years, it has been harder for immigrants in this country to be optimistic about building the next world-changing company,” said Lex Zhao, partner at One Way Ventures, which provides seed and early-stage funding to tech companies founded by immigrants.
Immigration and the startup ecosystem have long had a symbiotic relationship. The sector, in part, depends on foreign-born founders coming to the US to launch startups with innovative ideas. And those new companies often need to attract overseas talent to help develop their products and scale their growing companies.
The spate of immigration reform by the Trump administration has cast doubt on whether this pipeline can continue. And its future will largely depend on who prevails in this week’s historic vote.
“This election brings the question of how competitive America will be on the world stage,” Zhao said. “Talented people are eventually going to find new places to do great things if restrictions persist.”
Two years ago, the National Foundation for American Policy concluded that 55% of the private companies in the US with a valuation of more than $1 billion had at least one foreign-born founder.
There has been an array of actions and executive orders during Trump’s tenure intended to reduce both legal and illegal immigration. Those include restrictions on asylum-seekers, narrowing the requirements for skilled workers to qualify for H-1B visas and banning people from 13 predominantly Muslim countries.
“It is like choosing between the most restrictionist administration since the 1920s and the Biden administration, which has openly supported immigration and thinks that it has economic and social values,” said Exequiel Hernandez, a professor at the Wharton School of the University of Pennsylvania.
Immigration laws haven’t really changed under the Trump administration, but a plethora of significant reforms introduced frictions in the immigration system, he said.
Hernandez said that if Biden wins, it would be hard to quickly undo Trump’s immigration orders, but the expectation would be to eventually reverse some of them.
The National Venture Capital Association has been at odds with the Trump administration over its move in 2018 to rescind the International Entrepreneur Rule, an Obama-era initiative that allows foreign-born founders to stay in the US for up to five years to grow their companies.
Jeff Farrah, general counsel at NVCA, said he assumes that the fight will continue if Trump is reelected.
Since 2019, the trade group has also advocated for a startup visa, which would grant permanent residency to foreign-born entrepreneurs who have raised capital to start new companies. If Biden is elected, Farrah hopes that he’ll focus on immigration reform in his first year in office, potentially paving the way for a US startup visa.
“We really need to get our act together and find a way to get these individuals to come here to launch these companies,” Farrah said.
Several other countries, such as the UK, Denmark, Sweden and Canada, have startup visa programs. And as the US has been less immigrant-friendly in recent years, its neighbor to the north has seen an influx of foreign-born entrepreneurs.
“Canada is benefiting tremendously from a surge of incredible immigrant innovators that [the US] should be benefiting from,” said Nihal Mehta, founding general partner at Eniac Ventures.
Whatever the outcome of the election on Tuesday, the winning candidate’s policies over the next four years will have long-lasting effects on the VC industry.
“This election has the power to impact entrepreneurial and venture capital activity in the long term, as well as determine who gets to be a venture capitalist in this country,” Hernandez said.
James Thorne contributed to this report.
Featured image via Kelilah King/PitchBook and Getty Images