Give Me Your Entrepreneurs, Your Innovators: Estimating Employment Impact of a Startup Visa

Abstract

One proposed version of a Startup Visa would make 75,000 visas available for current holders of H-1B and F-1 visas. To remain eligible, Startup Visa companies must employ two full-time, non-family employees after one year, and raise or invest $100,000. After three subsequent years, Startup Visa companies must employ five full-time, non-family employees. At the end of four years, Startup Visa holders may apply for permanent residence.

A Startup Visa would release considerable pent-up entrepreneurial energy in the United States. Consider the following scenarios:

• Using the legislative minimum requirements, and applying company and employment survival rates from Census data, we estimate that four-year- old Startup Visa companies would create nearly 500,000 new jobs after ten years.

• Using Census data on average employment per firm, we estimate that four-year-old Startup Visa companies would create nearly 900,000 new jobs after ten years.

• Assuming that half of the Startup Visa companies would be technology and engineering companies, we use data on immigrant-founded technology companies in the United States. We estimate that, in this scenario, Startup Visa companies would create nearly 1.6 million new jobs after ten years.

For various reasons, we consider these three scenarios to be conservative, low-end estimates.

None of these estimates take into account potential high-growth and scale firms or the continued growth of Startup Visa companies after they age out of the program. Nor do they account for a Startup Visa’s impact on innovation, GDP, and productivity.

The current proposed design has two potential shortcomings. First, the 75,000 Startup Visas it would create are a fixed number, so new slots become available only as companies fail. Second, the Startup Visa may actually penalize failure, and care should be taken to build tolerance for failure into the design and execution.

Keywords: immigration, startup act, Startup Visa, employment, jobs, entrepreneur, innovator