How ‘start-up’ visa could boost investmentBy Robert Gray
El Paso entrepreneur Javier Zepeda, a senior in the undergraduate business program at the University of Texas at El Paso, is looking for investment capital so he can hire employees and start his own small business in El Paso when he graduates.
But it’s not his business plan or concept for a new restaurant that concerns him most. It’s this: Zepeda is not a U.S. citizen.
The Juárez native is in the United States on a student visa, which he will no longer qualify for once he graduates.
An increasing number of entrepreneurial-minded immigrant students like Zepeda – faced with the grim prospect of opening a small business in Juárez, a city beleaguered by drug-related violence – are choosing instead to navigate the murky waters of the visa process so they can open businesses in the U.S., says Gary Williams, director of the Center for Research Entrepreneurship and Innovative Enterprises at UTEP.
The university’s Office of International Programs helps immigrant students who want to work in the U.S. maintain their visa status. But foreign entrepreneurs like Zepeda are referred to local lawyers who specialize in investor visas, assistant director Carol Martin says.
The Greater El Paso Chamber of Commerce offers similar assistance to immigrant entrepreneurs.
“We direct them to a list of our members who are experts in those particular disciplines and who have a good track record,” chamber CEO Richard Dayoub says. “Once that is done, we can move forward to help them with whatever they might need to be a viable business.”
The chamber doesn’t keep an exact count, but Dayoub says they have seen an increase in the number of inquiries from immigrant entrepreneurs.
So has Kathleen Walker, an immigration attorney with Cox Smith Matthews law firm in El Paso. She says qualifying for a visa as someone who wants to open a small business is no easy task and, given the level of investment required, the system favors large corporations.
“You need to make it easier if you want to encourage people to invest in small businesses here,” Walker says, “and small businesses are usually the ones who employ the most across our country.”
The typical path for immigrant entrepreneurs are the various “EB” investor visas – EB-1, EB-2, etc.
About 90 pages of the U.S. Department of State’s Foreign Affairs Manual is devoted to the process of getting one of these visas.
But the bottom line, Walker says, is the an immigrant investor has to invest anywhere from $500,000 to $1.5 million. The size of that investment depends on the area’s need for new employment. Such an investor must also create 10 new jobs in two years.
Specifically for Mexicans who want to do business here, the visa is good for a year, then has to be renewed, according to Walker.
Senators John Kerry, D-Mass., and Richard Lugar, R-Ind., introduced legislation in February to make a new class of visa that is more accessible, called a “start-up” visa. The legislation proposes giving immigrant entrepreneurs a two-year visa if they can drum up $100,000 in investment and create five new jobs in two years, according to a press release.
“Would it provide more avenues for students? Sure it would,” Walker says.
There’s nothing new about foreign entrepreneurs, and historically, they have played a major role in the start-up sector.
Thomas Stephenson is managing general partner of Verge Fund, a venture capital firm headquartered in Albuquerque, N.M. He points to Silicon Valley, where he says about a third of the companies were started by first-generation Americans.
Verge plans to open an office in El Paso and has forged a partnership with the local Camino Real Angels to create a $5-million fund that will invest in start-ups in El Paso.
“We certainly don’t see any red flags associated with foreign nationals participating in start-ups,” Stephenson says.
Right now, he says, Verge is eyeing a couple of proposals put forward by first-generation Americans.
Beto Pallares, the man who manages El Paso’s new multimillion-dollar venture capital fund Cottonwood Capital Partners says, “To me it is a no-brainer. If you have an entrepreneur from Mexico who wants to start a business in the U.S., El Paso would be a great place – the cultural context, maquiladoras and university to partner with.”
Since 2005, TechBA, an organization that focuses on helping Mexican technology companies enter the U.S. market, has proved a boon to Austin’s economy, says marketing coordinator and analyst with TechBA Adam Bates.
The concept of TechBA in the United States is to increase revenue and employment in Mexico and in the United States by helping Mexican companies work in the U.S. Market, Bates says.
It’s a model that some in El Paso would like to emulate.
TechBA, a program of the Ministry of Economy of Mexico and the United States Mexico Foundation for Science, also works in Arizona, Michigan, Silicon Valley, Seattle, Madrid, Montreal and Vancouver.
The 45 companies that have come through the TechBA accelerator in Austin generated a collective $40 million in revenue last year, according to Bates.
But that’s in Austin.
Until Cottonwood Capital Partners opened up shop a bit over a year ago and Verge Fund began working with the angels, any entrepreneur in El Paso, much less those immigrant entrepreneurs, had to take their ideas to venture capital firms in Austin or Albuquerque.
Now that pre-seed and second stage funding is flowing locally, the next step is the development of a business incubator.
Innovate El Paso executive director Eli Velasquez says he would like to see the incubator also include a business accelerator similar to the model used by TechBA, but designed specifically to help immigrant entrepreneurs apply for the appropriate visas, navigate a different set of regulations, and learn the local culture with the goal of turning their ideas into viable businesses here.
“I’m glad that El Paso is working hard to open up new opportunities to foreign investors,” UTEP business student Zepeda says. “I see it as a worthwhile challenge to set up something here.”