The US National Venture Capital Association is suing the government after it delayed a rule which would have protected the rights of immigrants that establish unicorns and other large scale start-ups.
A week before its enforcement, the Trump administration pushed back the International Entrepreneur Rule, which would allow a foreign-born founder to remain in the US for up to five years if they created a start-up with potential for rapid growth and job creation, among other requirements. The rule may be rescinded altogether.
“We were profoundly disappointed with the decision and we also believe the delay was unlawful. The Administration ignored the usual requirements to take public comments and delayed the rule using dubious legal reasoning,” the NVCA said in a statement.
Immigrants have founded more than half of America’s unicorns, one-third of US venture-backed start-ups that went public between 2006 and 2012 had at least one immigrant founder, and more than 40 percent of Fortune 500 companies have at least one founder who either immigrated to the US or was the child of immigrants, the NVCA said.
NVCA members include Accel Partners, which invested in Facebook, Slack and Dropbox; Silicon Valley-based Kleiner Perkins; and Menlo Park-headquartered Sequoia Capital.
Among those named in the lawsuit are Atma and Anand Krishna, two brothers from the UK who founded payments start-up LotusPay. The pair planned to continue building their company in the US but the delay to the IER has jeopardized their ability to continue hiring and raising money, the suit says.