Parole for Entrepreneurs Revisited

For foreign nationals, the Entrepreneur Parole Program represents a chance to participate in the US economy..

In my April 2017 contribution to LBT, we alerted readers to a program that was due to come on line, entitled the Entrepreneur Parole Program.

Regulations were duly issued on January 17, 2017. Just prior to the new program becoming operative, the Department of Homeland Security (“DHS”) published a notice delaying implementation of the applicable regulations.

The likely unstated justification for the delay was the new Administration’s hostility to immigration, in general. A lawsuit was thereafter filed challenging the legality of the delay (in National Venture Capital association, et. al v. Duke, et. al.) .).

On December 1, 2017, the Federal District Court for the District of Columbia, in Washington DC, ruled that the delay was unjustified and ran afoul the Administrative Procedure Act. The Court ruled that the immigration service was obliged to begin accepting applications for parole. 

As described previously, in the very bleak immigration landscape confronting foreign nationals, the Entrepreneur Parole Program represents a brighter patch.

To recap, the program purports to allow qualified entrepreneurs, who are developing businesses that would provide a “significant public benefit” to the U.S., to be admitted, under USCIS’s parole authority, to develop their enterprises for up to a maximum of ten years.

To remind readers what the program is all about, I have taken the liberty of re-capitulating my earlier article focusing on this program with some additions.

These are seven core highlights of the program:

1. An Entrepreneur by any other Name

To qualify as an entrepreneur under the Entrepreneur Parole Program, a candidate needs to demonstrate a “substantial ownership interest” in a “start-up” enterprise. 

This means that an entrepreneur must control initially at least a 10% stake in the start-up enterprise and be in the position of taking a central and active role in its operations. The entrepreneur must hold at least a 5% stake in the enterprise at the time an application for the extension of parole is adjudicated.

A start-up enterprise is defined as a “U.S. business entity” that has been formed within 5 years preceding adjudication of the application for entrepreneur parole, or formed within 5 years preceding the date a government award or grant is received in furtherance of the prospective venture.           

2. What is a Qualified Investment

A “qualified investment” is an investment derived by lawful means and can involve the purchase of equity and/or convertible debt. Significantly, the definition of “qualified investment” does not include an investment directly or indirectly made by the entrepreneur, herself, or made by family members of the entrepreneur.   

3. Parole Qualifications

If the candidate is an “entrepreneur” who intends to develop a “start-up enterprise”, the next requirement is that, within 18 months prior to the filing of the request for parole application, the enterprise has received at least $250,000 in investment funds from qualified investors, or at least $100,000 in government grants and awards, or otherwise can show, through alternative evidence, “substantial potential for rapid growth and job creation.”

“Rapid growth and job creation” means generating over a 5-year time horizon at least $500,000 in revenue, showing, on average, 20% revenue growth annually, and the creation of at least 5 full time jobs available to U.S. citizens, permanent residents, and certain qualified non-immigrants.

Finally, it is mandated that the start-up enterprise show that it has received, over the five-year initial parole term, at least $500,000 from qualified investors and/or in government awards and grants.

Next page- Program highlights 4 through 7 and takeaway