Give graduates green cards to fuel startup growth

Hiring the right talent for your spinout is crucial. If you’re lucky, you’ll find that talent locally, but what do you do when all the experts live in another country? That’s the situation a UK-based photonics spinout found itself in a few years ago when its founders told investor Desmond Cheung that there were about five people in the world who could do what the startup needed them to do.

The spinout’s challenge highlights the importance of a flexible immigration policy that allows the free flow of skilled labour. Yet the reality is very different: restrictive immigration policies that make it hard to hire foreign talent are the norm in places like the UK and the US.

“The United States is the only industrial democracy on the planet that does not have a visa category specifically designed to attract and retain foreign-born entrepreneurs,” says John Dearie, founder and president of the Center for American Entrepreneurship, who called the country’s restrictive immigration policy “insane” on a recent episode of the Beyond the Breakthrough podcast.

Despite this, Dearie remains optimistic. He says the situation could be changing in his country because of “the recognition on the part of US policymakers of the competitive and strategic threat from China, [which] is changing even orthodox thinking on the Republican side of the aisle”.

The passage of landmark US legislation such as the CHIPS and Science Act, which authorises $280bn in new funding to boost domestic research and manufacturing in semiconductors, has highlighted the growing need for high-skilled immigration reform to implement these laws, he adds.

Graduate green cards could be a solution

The US has a visa tied to employment, called H1-B, but the number of such visas is capped for the whole country and only 65,000 are issued each year. Dearie argues that a graduate green card would be a solution: if graduates choose to stay — and Dearie is open to limiting it to, for example, students from STEM fields — once they complete their degree, they automatically get a green card.

“Between 2012 and 2020, one million foreign-born graduates of American colleges and universities left the country. I submit to anybody that that is the height of insanity if you’re trying to be an innovation economy and innovation country,” he argues.

Alice Li, executive director of Cornell University’s commercialisation arm, Center for Technology Licensing (CTL), adds that a university should be as flexible as possible in supporting spinout founders. CTL, for example, runs an innovation fellowship to work for the tech transfer office for up to three years. The fellowship is classed as an academic position and therefore open to international students.

Li adds that incubators should expand their curricula to talk founders through recruiting international talent, especially for the core team where the level of unique expertise will matter most.

Talent exchange should go both ways

Dorian Haci, founder and chief executive of neural implant developer MintNeuro, says that bilateral trade visits should also be seen as an opportunity for international talent exchange. Haci, who moved to the UK from Italy, having originally emigrated from Albania, says these kinds of talent exchange programmes would allow UK researchers, for example, to become more aware of startups in other countries. Such talent exchanges could also allow British researchers to go and lend their expertise to startups overseas (and increase the UK’s soft power at the same time).

VC investors should talk to founders about budgeting for hires

Although VCs will usually not dictate who founders can hire with their funding, Cheung says in the case of the photonics spinout, where the right expertise was rare, “the priority to make that recruitment is extremely important”. It is a conversation investors should have with founders around budgets because it is not just the cost of the visa itself, it is also the peripheral costs like hiring an immigration lawyer — which can “cost thousands of pounds” and bringing in the worker’s family (which can quickly spiral to tens of thousands of pounds).

In the UK, recruitment has become even more difficult since Brexit, because it ended freedom of movement from the country’s closest neighbours. The UK introduced a so-called Global Talent visa, but it is restricted to researchers or leaders in arts and culture or digital technology. Another visa option, the Skilled Worker visa, requires a company to sponsor an employee (and the visa is tied to that employment) and pay a minimum salary of £38,700 ($50,000), higher than the country’s median wage of £34,963.

Cheung, who moved to the UK from Hong Kong and now works for investment management firm Foresight Group, knows first-hand how difficult this is for startups. “Small startup companies had extreme difficulties hiring me as one of the very first employees because they simply lack the bandwidth and resources to properly investigate and sponsor a visa for an international graduate.” He adds that “startups are being crowded out of accessing the best talent possible”.

It’s not just an issue for existing startups, it’s also an issue for would-be founders who move somewhere new on a visa that is tied to an employer. It makes switching jobs very difficult and, in turn, a complex challenge for “aspiring entrepreneurs to get the relevant multifaceted work experience before they become a founder,” says Cheung. That is even though immigrants make great founders: they have already demonstrated that they are willing to take great, calculated risks by leaving behind everything and everyone they know. It’s true not just for small companies: 43% of Fortune 500 companies were founded by immigrants.

Despite the barriers, Dearie believes that in the US at least, positive change will happen within the next two years as the need to attract high-skilled people grows in bipartisan support. He argues that once a new border security bill, which is sitting in the US Congress, has passed, “it opens up the opportunity for high-skilled immigration reform because Republicans’ insistence to secure the border first will have been achieved.”