US passes new Act to make it easier to start ups, PhD holders to gain residency


On February 4, 2022, the House of Representatives passed the American Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength Act (known as the America COMPETES Act of 2022). The bill is aimed at “outcompeting China and the rest of the world in the 21st century.” Title III of the COMPETES Act adds immigration provisions to the bipartisan US Innovation and Competition Act that was passed in the Senate in June 2021.

The House Rules Committee has added a significant element missing from a Senate innovation bill—visas for people who will produce innovations. House Democrats addressed that oversight by adding two potentially game-changing measures for immigrant entrepreneurs and immigrants with Ph.D.’s in STEM (science, technology, engineering and math) fields. If these measures become law, their impact could be far-reaching

What is US Competes Act all about?

The America COMPETES Act authorizes the establishment of the Rebuilding Economies and Creating Opportunities for More People to Excel (RECOMPETE) pilot grant program at the Economic Development Administration to form and implement economic development strategies in distressed labour markets and communities to boost long-term economic growth and create lasting, quality jobs. 

The America COMPETES Act includes a substantial investment in funding for the National Science Foundation, directing investments to critical research-enabling infrastructure, including the Mid-Scale Research Infrastructure program.

W Nonimmigrant Visa

Title III creates a W nonimmigrant visa for entrepreneurs with at least a 10% ownership interest in a start-up that was formed in the 5-year period preceding application. Like the International Entrepreneur Rule (IER), the W visa has eligibility requirements regarding levels of investment from qualified investors and a showing that the applicant has knowledge and skills that would substantially assist the start-up.

The W visa would allow an initial validity period of three years with the possibility of 3-year extensions and 1-year extensions if investments and job creation meet certain standards. One important difference from the IER is that the W visa allows nonimmigrants to have dual intent, meaning that W nonimmigrants would be able to apply for LPR if the enterprise meets additional investment and job creation levels. Unlike the proposed W nonimmigrant visa, there is no direct route to LPR from IER status, as IER admission to the United States is only a type of parole.

The Act will amend the Immigration and Nationality Act for providing start-up visas. The ‘W’ category visa will be classified into three categories namely W-1, W-2andW-3.

W-1 visa will be given to foreign nationals who have ownership interest in start-ups,

W-2 visa is for staff critical for operation of the start-up and

W-3 visa for the spouses and children of W-1 and W-2 visa holders.

Eligibility for temporary W visa:

An individual qualifies for a new temporary W visa for an initial three years if:

“(1) the alien possesses an ownership interest of not less than 10% in a start-up entity;

“(2) the alien will play a central and active role in the management or operations of the start-up entity;

“(3) the alien possesses the knowledge, skills, or experience to substantially assist the start-up entity with the growth and success of its business; and

“(4) during the 18-month period preceding the filing of the petition, the start-up entity received at least $250,000 in qualifying investments from one or more qualified investors; or at least $100,000 in qualifying government awards or grants.”

The bill allows for an extension of the W (temporary) status for an additional three years if the individual possesses at least a 5% ownership stake, will continue to play a “central and active role” in management or operations, has received at least $500,000 in “additional qualifying investments,” created “at least 5 qualified jobs” or “generated not less than $500,000 in annual revenue in the United States and averaged 20% in annual revenue growth.”

Immigrant Start-up Visa: 

The lack of a start-up visa costs America talent, according to the National Security Commission on Artificial Intelligence. In its final report, the commission members said the absence of a start-up visa places the United States at a disadvantage compared to other nations like Canada in retaining and attracting foreign-born entrepreneurs. Many innovations are realized through entrepreneurship, and, according to a 2018 National Foundation for American Policy (NFAP) analysis, more than half of the billion-dollar start-ups in the United States had at least one immigrant founder. The list included some of America’s most innovative companies, such as SpaceX, Stripe and Moderna.

Benefits for STEM Ph.D.’s

STEM refers to Science, Technology, Engineering and Mathematics.
Foreign nationals with Ph.D.’s STEM degrees, whether from the United States or foreign equivalent degrees, would be exempted from the annual green card limits. This would allow Ph.D.’s to circumvent the immigrant visa backlog that so many Ph.D.’s, especially those from India and China, face.

Applications for the W nonimmigrant visa, the W immigrant visa and the STEM immigrant visa would require an additional $1,000 supplemental fee that will be used to fund scholarships for U.S. STEM students.

The immigration provisions in the House bill could be transformative for entrepreneurs and those with Ph.D.’s in STEM fields. But it must be reconciled with the Senate version. If the immigration provisions make it through that process and are passed by the Senate, the United States would take a big step toward increased competitiveness for foreign talent with other countries that make entry and permanent residence for select individuals much easier. Passage of the bill by the Senate would also be significant, as Congress has not passed major immigration reform in decades.

Benefits for STEM Ph.D.’s

The US House of Representatives has passed the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science (Competes) Act of 2022, which is expected to make it easier for start-ups and PhD holders to gain residency in the United States.

The House version of the Act differs considerably from the one passed by the US Senate – The US Innovation and Competition Act of 2021 – last year. This will therefore have to be cleared by a bipartisan conference committee composed of members from both houses before it becomes law.

The Act proposes making it easier for start-up founders to gain residency in the United States, bringing it at par with countries like Canada and Australia which have dedicated routes to citizenship for start-up founders.

America loses out to countries like Canada for want of a tailored start-up visa. The Act aims to fill the gap and strengthen America’s start-up culture. The Act will be beneficial for countries like India.

Novaturient is a Licensed Immigration consultant that offer Visa services in acquiring Permanent Resident Visa, Student Visa and Visit Visa for countries such as Australia, Canada, New Zealand, Schengen Countries and the UK.

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