I'm a foreign entrepreneur in South China who has taken advantage of similar existing provisions in both Hong Kong and PRC law to sponsor my own work visas. The result has been a profitable business that employs Chinese, and happy founders and shareholders. If I was a Chinese in the USA instead of an American in China, I never would have passed the start line.
The USA is a horrible place for foreign entrepreneurs who aren't already Green Card holders. There's no way for you to stay in the country legally without a full time job from a large employer eligible and willing to sponsor a work visa, if the lottery allocates one.
The Startup Visa movement promises that they will change that by offering temporary work visas to foreigners who raise certain amounts of money from US-based VCs or angel investors.
However, it seems to be written specifically to give US VCs and professional angels and the companies in which they invest an advantage over firms like my own funded by non-professional (and several non-American) angels and our own profits.
What's with the arbitrary restrictions and thresholds for amount of capital that must be raised or number of jobs created? If a business only creates 4 jobs and generates $480,000 in revenue after 2 years, do we not want that business? Or is the founder of that business supposed to start running around at the end of his 2 years to try to raise an additional $500k he may not need to protect his visa status? Businesses don't grow according to legislatively mandated schedules.
I agree with Vivek Wadhwa that venture capital is not necessary and that the USA should be open to anyone who wants to create jobs. What VCs don't tell founders (but real entrepreneurs will) is that the more capital you raise the harder you make it to succeed, if by succeed, you mean creating a profitable, self-sustaining business. VCs aren't interested in merely self-sustaining profitable businesses that grow organically. They're only interested in "grand slams"...get big or go bust. This may be fine if you have a portfolio of companies, but if you're a founder where your business is your life, you're probably not so interested in going bust.
The proposed act distorts incentives for foreign entrepreneurs to take on more capital investment (and more risk), than they may otherwise need merely in the hope of keeping their visa status and puts professional VC and angel investors in a stronger negotiating position with foreign founded startups by making them the gatekeepers to a visa to the USA.
It's actually not hard to create a bill that doesn't have fixed dollar amounts and arbitrary restrictions on from where money can be raised without encouraging fraud. Hong Kong has done it with their class of employment visa called the "Visa permit to enter the HKSAR for investment to establish/join in a business." The defining criteria is that the applicant must be "in a position to make substantial contribution to the economy of the HKSAR."
At the time I sponsored my own investment visa to become Appartisan Limited's first Hong Kong-based employee, we would not have qualified under the standards of the proposed Startup Visa Act in the USA. Our capital raised was not high enough and nor was our revenue. However, the Hong Kong Immigration Department was simply concerned that I would benefit Hong Kong by being a positive part of the economy whether that be through tax revenue generated or employment opportunities for locals.
Immigration Department officials requested our company financials, evidence of my personal financial position, proof of business (our start up had already begun trading), personal references and a personal guarantee from a Hong Kong Permanent Resident (I asked a friend) that if I were to become destitute, that they would be be responsible for buying me a ticket back to the USA and putting me on a plane so that I wouldn't become a burden to society.
If the Hong Kong government can figure out how to apply such a standard without massive fraud, I am confident that US Customs and Immigration with its considerably greater resources could as well.
If the USA adopted a similar visa entry scheme, the Americans who would be employed by such businesses and the US Treasury would be thankful. Just ask the PRC and Hong Kong residents who are employed as a result of my business if they're glad I could start my business and the Hong Kong Inland Revenue Department & China Taxation authorities if they like the tax revenue I generate.
The Startup Visa movement is yet another example of a well-intentioned US political movement hijacked by the finance industry interested in improving their own market position at the expense of those who aren't in their club.