Dear Sophie: Can a startup sponsor a graduating co-founder?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

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On Tuesday, April 26 at 2:30 p.m. PDT/5:30 p.m. EDT, Sophie Alcorn will answer questions about immigration law for startups during a Twitter Space hosted by Senior Editor Walter Thompson.

The conversation is open to everyone, so please submit your questions on Twitter and click here to get a reminder when the chat begins.

Dear Sophie,

What are the visa options for an advanced-degree graduate from a U.S. university who wants to co-found a startup upon graduation?

Can the newly minted company or other co-founders sponsor the recent grad?

— Forward-Looking Founder

Dear Forward-Looking,

A founder completing an advanced degree has several options! Let me take your second question first: Yes, it’s possible for a newly minted company that exists in good faith to sponsor a recent grad. For most student founders, the straight line is from OPT to STEM OPT, while getting ready to qualify for an O-1A. Once on O-1A, it’s possible to initiate the green card through EB-2 NIW or EB-1A for individuals born in India or China.

All work visas and most employment-based green cards require a sponsoring company (or in the case of an O-1A, an agent). The EB-1A green card and EB-2 NIW (National Interest Waiver) green card are the exceptions (they both allow an individual to file an application on their own, or an employer can sponsor an employee and file an application on the employee’s behalf).

Often, employer sponsorship requires the company to demonstrate that an employer-employee relationship exists between the sponsoring company and the individual being sponsored for the visa or green card. One way to demonstrate this can be if the co-founder who is seeking a visa or green card owns less than 50% of the startup and if there’s another person at the company offering the individual a job, such as an executive or a director. Talk to your immigration and corporate attorneys as there are multiple ways to legally structure this depending on your specific desired immigration pathway.

In order for a company to be able to successfully sponsor a co-founder and other prospective hires for visas and green cards, founders should be aware of all options available to them. Founders will also want prospective investors to feel comfortable investing in the company as they complete due diligence, so the proper initial company structure and legal compliance are important. I recommend you consult both a corporate attorney and an immigration attorney for assistance with charting the path forward for the startup and the upcoming graduate.

OPT

Most F-1 graduates are eligible for at least one year of employment authorization called Optional Practical Training (OPT). If the founder qualifies and receives their EAD card, or work permit, they would be eligible to work at the newly minted startup for 12 months. F-1 students may apply for OPT up to 90 days before completing their degree, but no later than 60 days afterward.

Students must request that the designated school official (DSO) at their academic institution recommend them for OPT by endorsing their Form I-20 (Certification of Eligibility for Nonimmigrant Student Status) and updating their record in the Student and Exchange Visitor Information System (SEVIS). Once that’s done, students must file Form I-765 (Application for Employment Authorization) with U.S. Citizenship and Immigration Services (USCIS), which is now available for electronic filing online.

Obtaining OPT will give the co-founder more time to figure out the next steps, which could mean:

• The newly minted startup sponsors the co-founder in the March 2023 H-1B lottery.
• The startup secures investments that meet the awards criterion for an O-1A extraordinary ability visa or the investment criterion for International Entrepreneur Parole (IEP) so the founder can apply for alternative options.
• Green cards.
• And/or STEM OPT, below.

Keep in mind that competition for an H-1B visa in the annual lottery continues to intensify: USCIS received 483,927 H-1B registrations for this year’s lottery in March, a substantial increase from the 308,613 received in 2021. Each year, only 85,000 H-1B visas are available in the annual lottery, with 20,000 of those reserved for individuals holding an advanced degree from a U.S. college or university.

STEM OPT

If the upcoming graduate’s degree is on the STEM Designated Degree Program List, then the graduate can apply for a 24-month extension of OPT, which is called STEM OPT. Earlier this year, the U.S. Department of Homeland Security, which oversees USCIS, added 22 fields to the list of qualified STEM degrees, including business analytics, environmental studies and financial analytics. (Yes, we are still excited over here!)

For STEM OPT, your startup must be enrolled in the government’s e-Verify system, demonstrate an employer-employee relationship exists and create a training program by completing Form I-983 (Training Plan for STEM OPT Students.) Your immigration lawyer can support you with this process. The form must be submitted to the STEM OPT beneficiary’s DSO, who must enter a recommendation for STEM OPT into SEVIS. The STEM OPT recipient must submit Form I-765 up to 90 days before the current OPT work authorization expires and within 60 days of the date the DSO enters the STEM OPT into SEVIS.

STEM OPT will give your co-founder two more chances to be selected in the H-1B lottery or more time to build up their qualifications to be eligible for an O-1A visa or even an EB-1A or EB-2 NIW green card. Take a listen to this podcast for backup plans if you weren’t selected in the H-1B lottery.

O-1A visa

Compared to an H-1B and IEP, an O-1A visa is the quickest option but has tougher eligibility requirements. The O-1A requires company sponsorship and O-1A candidates must meet three of eight criteria, which include winning a major national or internationally recognized award, serving as a judge in their field and doing press coverage of the co-founder or co-founder’s startup.

Earlier this year, the government began considering a Ph.D. scholarship and a doctoral degree in an approved STEM field as internationally recognized awards, which was tremendous news. Previously, these accomplishments did not meet the O-1A awards criterion, according to USCIS. Listen to my chat with my colleague Nadia Zaidi about these improvements and more.

E-2 visa

The international co-founder of your startup may be eligible for an E-2 visa for treaty investors if they:

• Are a citizen of a treaty country (China and India are not treaty countries).
• Have at least a 50% ownership stake in the startup or at least 50% of the startup is owned by citizens of the treaty country.
• Make a substantial personal investment in the startup of at least $100,000, intellectual or physical property.

Keep in mind that if the E-2 beneficiary’s ownership stake in the startup is diluted, the individual will need to find another visa option.

Entrepreneur parole

Based on my experience, IEP takes at least a year if not longer. I recommend that individuals who pursue this route have an alternative work visa or work authorization for at least a couple of years to avoid having to leave the U.S. while an IEP application is pending.

To qualify for an initial three-year stay in the U.S. under IEP:

• The startup must be a U.S. company founded in the last five years.
• The international co-founder must have at least a 10% ownership interest in the startup.
• The co-founder must be central to the startup and actively operate it.
• The startup has received at least $264,147 from qualified U.S. investors or at least $105,659 in government grants or shows potential company growth and job creation through other means.

Concurrent cap-exempt H-1B

An employer and an H-1B candidate, like a co-founder who has at least a master’s level of education, can apply for an H-1B specialty occupation visa at any time of year and forgo the risk of the annual random H-1B lottery by getting concurrent cap-exempt H-1Bs. This requires working with an H-1B cap-exempt nonprofit organization to get an H-1B that is exempt from the lottery. Once that’s done, a private employer, such as a startup, can sponsor the individual for another (concurrent) cap-exempt H-1B. I covered this option in more detail in a previous Dear Sophie column.

Keep in mind that getting a concurrent cap-exempt H-1B is an expensive option compared to the others I’ve mentioned because it requires the company to pay for two H-1Bs.

Options abound for student founders. Ensure you’re maintaining your eligibility for OPT and STEM OPT. Work on your accomplishments for O-1A as this will also lead to the shortest path to a green card down the road.

You’ve got this!

Sophie

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