On February 22, 2012, USCIS held an Information Summit on its recently instituted Entrepreneurs in Residence (EIR) initiative. This past week, USCIS released an Executive Summary on the Information Summit. Several principle themes were addressed at the summit, which the EIR Tactical team will work on addressing in the months to come.
Demonstrating the Legitimacy of Startups through Investments
USCIS acknowledged that many of the unique characteristics of startups and small businesses are also traditional indicators of fraud or ineligibility and asked stakeholders for input on what evidentiary criteria could help USCIS evaluate the legitimacy of startups. Several stakeholders commented that researching the investors of a startup venture can provide reliable information on the startup’s legitimacy. An investor will not invest if he or she doubts the founders and their organization. One stakeholder suggested creating a database of accredited investors to provide reliable information to USCIS. Other stakeholders recognized that it is easy to conduct a background check on domestic investors, but that it can be very difficult to conduct checks on foreign entrepreneurs who provide their own equity. When discussing the
subject of investors, stakeholders asked USCIS to provide further guidance as to how much equity the entrepreneur can own in the enterprise.
Understanding the Organizational Structure of a Startup
USCIS acknowledged that it is less familiar with the organizational structure of a startup than traditional large businesses. Several participants offered several common features of a startup enterprise, and suggested that USCIS could benefit from visiting the work locations of startups and other small business ventures. Several participants noted that a lack of office space had raised concern in their adjudications process. These participants explained that many startups are run out of more informal spaces such as a coffee shop or a living room, and that a lack of office space should not raise immediate concerns of illegitimacy. One participant explained that a startup company should be easily located on an internet search engine, and that internet searches were a reliable way to prove a small business venture’s legitimacy. Another participant explained that the roles and titles in a startup are more fluid. A startup can often lack the features of a big business such as a CEO and a board of directors, and one stakeholder explained that these features are often not established until funding is obtained. Participants emphasized that partnerships with big companies are easier to document than organizational structure. One participant reflected that most early stage companies do not create an organizational chart until USCIS asks for one. Another participant asked USCIS to provide information on how to structure small businesses and startups, and that venture capitalists and entrepreneurs will try and work within these standards.
Continue reading