U.S. start-ups concerned over immigration curbs

Community fears Trump administration’s protectionist stance may affect innovation in their sectors

Out of bounds: Those not meeting the ‘highly-skilled’ mark will find it much harder to move to the U.S. Gettyimages/istock

The start-up community in the U.S. is concerned about the increasingly protectionist stance taken by the Trump administration on immigration, saying that this would detrimentally affect innovation in their sectors.

U.S. President Donald Trump recently unveiled a new merit-based immigration system that “protects American wages and safety net programs”, which will see the emphasis on highly-skilled immigrants allowed to enter the U.S. increase from the current 12% to 57%. In other words, those not meeting that ‘highly-skilled’ mark will find it much harder to move to the U.S.

Apart from this, last year, the Department of Homeland Security proposed a regulation that sought to scrap the International Entrepreneur Rule, an Obama-era programme that made it easy for entrepreneurs to do business and grow in the U.S. This move, coupled with the Trump administration’s clamping down on H1-B visas, has meant that an increasing number of potential tech immigrants are looking at other countries now.

“It is an extremely worrying trend, and the start-up community is quite concerned about this,” Eric Belcher, who has been the CEO of and is on the board of several technology and marketing start-ups, said. “Historically, a lot of the talent for truly innovative companies in the U.S. has come from abroad and this protectionist policy is going to have an adverse impact on that.”

H1-B visa rejection

Data from the United States Citizenship and Immigration Services show that the rejection rate for H1-B visas — the ones that allow tech companies to bring in highly-skilled workers from abroad — climbed to nearly 25% in the October-December 2018 period, and about 17% in the January-March 2019 quarter. This is significantly higher than the 7.7% averaged over the same months at the beginning of President Trump’s term in 2017. According to some estimates, about 75% of all H1-B visa holders are Indians. “Broadly, there is a challenge,” Arun Bhatia, senior programme director at Matter, a healthcare start-up incubator, said.

“Companies are realising that to break out of the mould of having the same kinds of people, ideas and biases, they need to be more innovative and look outside their own walls and even outside the borders.” “So, ultimately, for certain areas of healthcare where innovation is really important, such as drug therapies, new device opportunities, and new diagnostic technologies, there is a need to have a free flow of exchange of people and ideas. So, it’s certainly a little concerning.”

While there is some optimism about the limited nature of the impact of the U.S. government’s conservative immigration policy, others believe that this could in fact be the start of a longer-term trend. “I tend to believe that the free movement of goods and services provides a greater benefit than not having that,” David Cohn, founder and CEO of Regroup, a venture-backed company in the mental health care delivery space, said. “I am all for the free market, but in the healthcare services sector, there will probably be a limited effect. There will perhaps be an effect on durable goods and procurement, but not on the service delivery.”

“All of these things move in waves and so over time, people will realise that to be more innovative, we will need to be more open,” Mr. Bhatia said.

Others in the start-up community are of an opposing view, saying that there are indications that this trend of tightening borders could be here for a while.

“The idea should be to attract talent and nurture it here so that even if it leaves, it knows it is welcome back at any time,” Mr. Belcher said. “But there is uncertainty about that future. There are indications that this new policy will be here to stay for the medium term, even past Mr. Trump.”

“There is some indication that this policy will outlive President Trump, and that is concerning,” Rich Gallun, co-founder and CEO of Bswift, a cloud-based technology start-upsaid. “We need fresh inputs from around the world and fresh thinking to keep them agile. You don’t get that without looking beyond your walls.”

(The correspondent was in the U.S. at the invitation of Foreign Press Center, U.S. Department of State)