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My story and support for the Founders Visa

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In the past few days there has been a lot of discussion on the topic of a Founders Visa. The credit for starting this fire goes to Paul Graham from Y Combinator, who wrote a great essay titled The Founders Visa in April 2009. Brad Feld (Brad is an advisor to K9) from the Foundry Group was instrumental in keeping the flame alive by posting about it on his blog (The Founders Visa Movement) in September. More recently, Eric Ries and Dave McClure added fuel to the fire (See Eric Ries’ blog post: Support the Startup Founders Visa with a tweet) and helped kick off a campaign on @2Gov. As an immigrant founder, this is a topic that I can relate to and care about. This was one of the biggest hurdles I had to overcome when I was starting up, and if I hadn’t been fortunate to find ways around it, my story would have been very different. I figured I would share some of the background of this story here, as it may help make a case for the Founders Visa movement.

I came to the United States in 1992 at the age of 17 (so there, now you know exactly how old I am!) to attend Carnegie Mellon University. My interaction with what was then called the Immigration and Naturalization Service started earlier that year to get an F-1 (Student) Visa for my undergraduate studies. Fortunately, my application for the F-1 visa was very smooth, and I was granted a 5-year visa to study at Carnegie Mellon. I completed my Bachelors in 3 years (another story for another time) and so was able to go directly into a professional Masters program (also at Carnegie Mellon) and complete a masters degree without having to apply for a new visa. During that time, I did one three month long internship — actually it was closer to 2 months, but it used up three months of my 12 month F-1 OPT window.

In December 1996, while I was still a student in the Master of Software Engineering program at Carnegie Mellon, I got bit hard by the entrepreneurial bug. I always knew that I would someday start my own company. It was only a question of when, where, and how. I decided that I was going to do it right then. The first step to figuring out whether this was even possible was to determine if I could start a company while I was on a student visa. After some research, including speaking with lawyers who were kind enough to answer my questions, the conclusion was that any person, whether a US citizen or not, whether in the US or not, can own assets in the US. What that meant was that I could start a company, own the company, but under the terms of the F-1 visa, I couldn’t work for the company (i.e. couldn’t draw a salary). The latter was fine by me since there was no money in the company for me to draw a salary any way. I formed SneakerLabs, Inc. in December 1996, while on a student visa.

I graduated from Carnegie Mellon in 1997 and decided to use my OPT to give the company a proper shot. I knew that in the worst case scenario, if things didn’t work out, I could always fall back to the traditional route of looking for a job. So this was a great time to take a chance on myself and see what I could do. The F-1 optional practical training (OPT) is one of the best things about the student visa program as it affords the flexibility to work for any company, provided it is in your field.

I was bootstrapping the company and started with $5,000 that I had saved up from a prior summer internship. I spent $2,500 on the first computer and let’s just say that there were lots of tomato sandwiches consumed for a while :) (I guess the tomato sandwiches were my healthier version of PG‘s Ramen noodles.) To bring in some money into the company, I started consulting through the company (to pay the company bills) and teaching at Carnegie Mellon as a lecturer (to keep the tomato sandwiches going!). At the same time, I was also working on the product. I hired my TA as my first employee and paid him $12.50 an hour to come to my apartment and hack code with me in my living room, which I converted into an office.

Towards the end of my OPT (mid 1998) is when the H1-B visa cap issue hit. The US issues 65,000 H1-B work visas every year. And it so happened that that year, all of the 65,000 visas had been issued and there would be no more visas available till October of that year. I was within weeks/months of being “out of status.” The options were to either go back home to New Delhi, India, or, risk getting myself into an immigration nightmare. Fortunately, I had advisors who helped me come up with creative solutions. They suggested I go back to being a student. I applied to a PhD program at Carnegie Mellon so that I could return to a F-1 (Student) visa while I was waiting for the next round of the H1-B visa quota. Fortunately, I was accepted into the program and that allowed me to legally stay in the United States. I took myself off the payroll of the company and went back to being a student.

When it came time to apply for an H1-B there was a genuine concern that my fledgling company may not be able to show that it had the financial resources to pay the prevailing wage for me. This meant that I had to either show enough revenue, or find investors who would be willing to put money into the company. There were a sum total of three or four “venture capital” funds in Pittsburgh at the time, and none of them had done much with this new fangled thing called the Internet. Besides I was a young, first-time entrepreneur at the age of 23. Raising money in Pittsburgh was not going to be easy.

In my attempt to build credibility and recruit people for my little company, I had started the Pittsburgh Java Users Group (the PittJUG today has close to 500 members!). By a stroke of luck, I met a visiting professor at one of the PittJUG meetings who offered to introduce me to his friends who were looking at investing in startups. I engaged in conversations with these angels investors and they provided a letter that I could use in support of my H1-B application. Some of you may have already caught on to this by now, but it is rather unusual for someone to start a company and then have an H1-B sponsored through that same company. My second employee signed the H1-B petition on behalf of the company so that I could be hired by my own company!

In the meanwhile, I had also been teaching more at Carnegie Mellon. The Director of my Masters program, the late Dr. James Tomayko, agreed to hire me on full-time at CMU and file for a second H1-B visa through Carnegie Mellon. This was great as it provided me with a backup option in case the petition through my own company was rejected.

In October 1998, I was excited beyond belief when I received an approval notice for an H1-B visa through my own company! I could now legally stay in the US and work for my own company. This also eliminated the big risk for my potential investors that I wouldn’t be able to stay in the country, and so I was able to close the financing round for the company in November 1998. I was elated to have overcome one of the biggest hurdles of my entrepreneurial career and ready to build my company.

In a startup cash is king. Under the terms of my H1-B visa, the company was required to pay me a prevailing wage of $60,000. However, I didn’t need that much to survive. I would much rather leave more money in the company and have a longer run way ahead of us. The workaround was that the company would pay me at the prevailing wage rate of $60,000 per annum, but then I would take a part of what I received in-hand, and loan it back to the company. The loan would be senior debt on the company’s books. If the company failed, I would lose it all. If it succeeded, I would get paid back. Fortunately, things worked out and the repayment of my loan to the company is what allowed me to buy my first new car.

I should emphasize that there were multiple points at which I came very close to having to leave the United States because of the visa issues. Though in the end it all worked out and the above story reads like it was all smooth, I can tell you that it wasn’t. I couldn’t go out and raise money for the company when I started because the risk of my having to leave the US hung over my head as the sword of damocles.

My journey with the INS by my side continued as my companies grew and became successful. Over the years, I held multiple H1-B visas (for SneakerLabs, Carnegie Mellon, Octane/E.piphany and iMeet). Every corporate transition we went through meant that I had to re-file for my visa under the new company.

After the success of SneakerLabs, I wanted to try and get legal permanent resident status, so that I could end the immigration hassles once and for all. My immigration attorney (Robert S. Whitehill, now a partner at Fox Rothschild) suggested that we shouldn’t use the typical path to a greencard under the EB-3 (Skilled worker/professional) category. The EB-3 greencard could take up to 5-6 years to be approved since it required labor certification. For anyone coming from India (like me) or China, this mean a protracted waiting period. Instead, we opted to go for the EB-1 (Alien of Extraordinary Ability) category. While it would take several months for me to assemble the dossier in support of an EB-1 application, there was no waiting period for EB-1s (no labor certification required) and it could be a faster path to getting a greencard. Bob’s advice was fortuitous since the EB-3 is also employer-sponsored and so if you change companies (which I of course did) the application would have to be refiled and would lose its position in the queue. The EB-1 on the other hand is self-sponsored and not tied to any company, which turned out to be the right choice for me.

I got my greencard approval in 2001, a few months after 9/11. By this point, I had already sold my first company and founded two additional companies. My first company employed about 20 US citizens (I was the only “alien”). My second company at its peak employed about 80 people — also almost all US citizens.

Technology leadership and innovation knows no bounds. There are smart people all over the world. What has worked for the United States for so long is that these people gravitate towards the United States. Some, like me, come to the United States for their higher education and advanced degrees. The definition of entrepreneurship is ‘insane perseverance in the face of complete resistance.’ Therefore, I fundamentally believe that true entrepreneurs will find a way regardless of how difficult or complex the system may be. I’ve used my own experience as a prototype to help the founders of two of my portfolio companies obtain their legal permanent resident status by going through the EB-1 (Alien of Extraordinary Ability) and EB-2 (National Interest) process respectively. However, in both cases, these founders had advanced degrees (PhDs) from Stanford, and were already amazingly accomplished in their field. Therefore, they could make the case for their legal permanent residency under these categories. That doesn’t however account for the thousands of other highly qualified individuals who would otherwise make for brilliant entrepreneurs.

I have chatted first hand with founders of companies that are from Singapore, Ireland, India and various other countries who have to contend with visa issues. These visa issues often become one of the significant hurdles to pursuing their entrepreneurial dreams here in the United States. I am now a bonafide citizen of the United States and as a US citizen, I feel strongly that the best thing the United States can do is to attract and retain the smartest people from all over the world. Having a Founders Visa would not only encourage the formation of new ventures that would create jobs and prosperity in the United States, but would be one more way for the US to attract and retain top talent from all over the world. PG, Brad and others have already addressed how the vetting and qualification process can work to ensure that the right people are allowed into the US. Modifying the criteria for the EB-5 visa category such that the investment dollars can come from US-based venture capital firms seems to be the most efficient way to make a Founders Visa happen.

I’d encourage you to participate in the Founders Visa Movement by voicing your opinion on your blog, in the comments below and most of all by sending a tweet for the cause at @2gov.

Update: There is now a new website for the Founders Visa at http://www.startupvisa.com – please visit and chime in. Also, I’d be happy to continue the discussion on twitter — I can be reached at @manukumar.

Update 09/27/2009: Slightly updated the post to explain why the choice of an EB-1 over and EB-2/EB-3 (protracted waiting period for labor certification since I am originally from India).

Update 03/12/2010: Vivek Wadhwa pointed out that the Startup Visa is something the Kauffman Foundation has been looking into for a while, possibly pre-dating PG’s blog post. Kudos to the Kauffman Foundation for doing so and kudos to PG for bringing it to the foreground with his blog post.

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20 Comments

  • Posted April 8, 2014 at 12:53 am | Permalink

    I recently did a startup by going on H4 (dependent visa) to work full-time on this. However, my co-founder couldn’t take the same risk. I have seen atleast 4 dozen entrepreneurs decline to pursue their startup in the US because of visa. Most decided to stay at their jobs until the green card came through, and a few went to their home country or Canada to build their company.

    I am now working on solving this very problem which is curbing innovation – how can we help entrepreneurs-on-visa work full-time on their startups without worrying about losing residency? The answer is Unshackled – our version of a startup visa, without waiting for the policy makers who have shown very little concern for this issue. Unshackled is an incubator that will back startups with founding teams where one or more founders are on a visa and want to work full-time on their startup. Unlike traditional seed investing, we will invest in the founding teams by hiring them and giving them the opportunity to innovate. This will maintain the immigrant founders’ residency, while they work with full dedication on solving critical problems with technology. We believe that these founders will bring a new wave of innovation, growth and job creation.

    Would love your thoughts on this.

  • Posted February 23, 2014 at 9:20 pm | Permalink

    Has there been any update on the FoundersVisa since?

    • Posted February 24, 2014 at 12:33 am | Permalink

      @Karan, it is part of the immigration bill that was proposed at one point, but between the healthcare, funding the government and overall gridlock in congress, it’s gotten caught up in the overall immigration reform. I’m still hopeful that as and when immigration reform does happen, it will include the founder visa and STEM visa.

  • WoodyWorkingPlans
    Posted September 6, 2011 at 3:14 pm | Permalink

    Great post you got here Manu. Truly, a lot of people will be inspired by just reading your post. I admire the story of your life regarding your experiences. A lot of people here in our country our wanting to get the Visa to enter a certain country whether this would be for employment or residency. I believe that all aspirants must have the right to know the process; they must know their qualifications and must get the assistance they need. Thank you for giving us the opportunity to voice what we want to say.

  • hary197
    Posted March 22, 2011 at 4:16 am | Permalink
  • Natali
    Posted January 26, 2011 at 6:05 am | Permalink

    Hello friends,this is a nice site and I wanted to post a note to let you know, good job! ThanksBest regards, Natali, CEO of [url=http://www.http://iscsi.nameclariion iscsi[/url]

  • Natali
    Posted January 26, 2011 at 6:04 am | Permalink

    Hello friends,this is a nice site and I wanted to post a note to let you know, good job! ThanksBest regards, Natali, CEO of <a href=”http://www.iscsi.name”>clariion iscsi</a>

  • animesh_kanabar
    Posted October 28, 2010 at 12:52 pm | Permalink

    Truly inspiring!!!

  • Posted June 9, 2010 at 1:16 am | Permalink

    Hello Manu ,

    Thanks for the wonderful read. It was just what I was looking for. I still have 2 to 3 years more to go for my PhD program (yes I am a F1 visa holder), and I have an American friend who is willing to partner with me on a startup. Now as you have mentioned that F1 visa holders can own businesses as long as they don’t draw a salary, my question would be that what kind of a company should we try to start ? In my search for answers some forums have discussions about LLC type corporations. What are your opinions ?

    Thanks

  • Posted June 6, 2010 at 10:45 pm | Permalink

    Manu, thank you for sharing your story. I love your definition of entrepreneurship (insane perseverance in the face of complete resistance) and am very inspired by your post. Look forward to staying in touch!

  • Posted February 24, 2010 at 10:38 pm | Permalink

    Great writeup Manu. A very inspiring story for many aspirants.

    Especially these days (this is Feb 2010) many talented (future Entrepreneurs) people are struggling for the status and loosing the focus on what they want to create. In the 6 years of H1-B no one knows who would fire them and if at all they will get another Job. If this bill passes, US will definitely see more and more innovation and start ups for sure.

    For all that matters US is land of opportunity. Founders VISA should pass.

  • vijay
    Posted February 5, 2010 at 4:56 am | Permalink

    Very interesting and quite inspiring. You have been to hell and back, haven’t you!
    This founder’s visa thing might be abused, however. I mean, if i set up a laundromat, who’s to say otherwise? There’s already a business investor’s visa apparently (you need to start a business with greater than 10 people, and a lot of gujarati hotel owners and chinese laundromat types try to fit in this one).
    If you discriminate against would be laundromat owners, how could you tell? You might have read of Indians going off to australia to be hairdressers via a hairdresser’s academy or whatever, so that they can stay on as hairdressers there.
    I mean, you may have to fairly restrictive. The “founder” must have an advanced american engineering degree, or a degree from a “foreign distinguished institution” (designated as such by some body in the U.S) and the amount of Venture capital greater than X$ (i.e, Y!Combinator piggy/peanut banks not qualified).

    • Posted February 14, 2010 at 1:53 pm | Permalink

      @vijay: First, I have nothing against an entrepreneur or founder who wants to start a laundromat or a hotel. They are businesses in their own right, they still face a lot of the same problems for building a business and the entrepreneurs who do such business deserve the same amount of respect as the next tech startup.

      The Startup Visa proposal is contingent on getting financing from a) a qualified Venture Capital firm or b) a qualified super angel. In addition, it is also contingent on the company creating jobs. Can this be abused? Yes, it probably can — because people will always find loopholes in the system. Like they have with the H-1B or with the EB-5 already. The abuse for these categories has already been widespread. However, IMHO, the Startup Visa proposal stipulates conditions that the entrepreneurs must meet. If they meet those conditions, they it is a valid business that creates jobs here in the US. I don’t see any reason why anyone who meets those conditions should be excluded.

      That said, I am in favor of giving the top 10% of foreign students earning a bachelors, the top 25% of foreign students earning a masters, and 100% of foreign students earning a PhD from a US institution a visa/greencard stapled to their degree. As Eric Schmidt said (see my next post) we bring the smartest people to the US, educate them and then tell them to leave. How silly is that!?

      • Entrepreneur
        Posted February 8, 2012 at 6:41 am | Permalink

        I don’t mean to say that a degree doesn’t have any merit to it.

        I probably agree with your US Phd and a Bachelors too but not with a Masters as the school does matter then.

        In general, I think a degree is completely overpriced and overrated.

        There are tons of kids home-schooled, private tutored, self-taught and have done incredibly good in coming up with solving problems and creating employment through startups or not.

        A degree solely cannot be a requirement and there’s to be another alternative to it.

        Besides ones with requirement of a degree are already at a huge loss when it comes to recruiting or acquiring the right talent.

        It’s happening right now.

        Never repeat the mistake.

  • Posted October 21, 2009 at 1:19 pm | Permalink

    Hey Manu,

    Thanks for doing up this post about your story. Veyr profound and indicitve of the change that needs to happen….

    We did up some comedic relief about the startup visa. Looks like you’re one of the “good guys” – helping us elves and hobbits. Thanks!

    http://blog.vidli.com/startup-visa/

    Enjoy…

  • Posted September 29, 2009 at 3:34 pm | Permalink

    Manu – very interesting to read about your story. Quest for higher education and opportunities brought us to USA, inspite of the experiences with INS. What I found most interesting was that you had your own company sponsor your H1-B. If INS ever figured that out – I am sure there will be zillions of rules to make it more difficult for entreprenuers to do that!

  • Posted September 29, 2009 at 12:46 pm | Permalink

    Thanks Manu for the detailed post! Found it very inspiring.

  • Posted September 25, 2009 at 7:10 pm | Permalink

    Manu,

    Really an inspiring story. The startup visa will kindle more aspiring entrepreneurs to take the plunge. Many international students in US universities have all the motivation and desire to start on their own but the current immigration system stands as a big hurdle. Let’s hope the government approves the startup visa and it would also be interesting to see how they set the terms and other legal conditions.

    My only fear is if people misuse the opportunity. The govt should ensure that people don’t misuse this visa just by starting a company for name sake so that they can obtain a valid visa.

  • Posted September 24, 2009 at 6:48 pm | Permalink

    Manu – great story.

  • Posted September 24, 2009 at 6:13 pm | Permalink

    Manu, this is a very inspiring post.

    Although I personally am a US Citizen (I was born in Detroit after my parents moved here so my father could get his Masters degree from Wayne State), I have a lot of extremely smart and motivated friends who are not. I think what many don’t realize is that as a country we are losing these amazing people to other countries. Each one has the potential to add millions, or in come cases billions to our economy.

    Maybe instead of all these bullshit visa restrictions they should have a “smart person” visa, where people that are smart get to come here with no string attached. Perhaps a corresponding “lazy, dumb person exit visa” should also apply to kick those people out of the country even if they’re born here =).

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