Oct 09,2017 | 3 min read

Y-Combinator Funded Startup Fight for VISA, Move US Court

India-origin brothers, Atma and Anand Krishna, co-founders of LotusPay, a digital payment platform in India, had received $120,000 funding from Y Combinator, an early stage investor based in Silicon Valley.

A US holding company (which controlled the entire business) was set up in in the US state of Delaware in May 2017. Setting up of a US holding company, was a pre-condition for participating in the Y Combinator programme and receiving funding from them. LotusPay was also actively planning to start operations in the US and had pitched to US investors for additional funding. But as the IER was not introduced, plans to enter the US market fell apart. "The US market is very attractive to LotusPay, and its platform would be a boon to US-based companies and the economy," the petition said.

The brothers have been unable to obtain any other form of lawful status in the US. This makes it far more difficult for them to launch their platform in the US, and hire or work in the same location as US-based employees. Further, US-based investors have a comfort level if founders are based in the US, the petition explains.

A group of entrepreneurs, including some from India, along with US-based National Venture Capital Association (NVCA), filed a lawsuit last month against the Trump administration for delaying the International Entrepreneur Rule (IER), that would have enabled foreign entrepreneurs to operate in the US. In common parlance, IER is referred to as the 'startup visa'.

On September 29, this group of plaintiffs also filed a motion for a preliminary injunction in a federal court in Washington DC. The objective was to compel the US Department of Homeland Security (the Citizenship and Immigration Services wing falls in its ambit) to implement the IER and begin processing applications from entrepreneurs, pending disposal of the lawsuit.

Omni Labs, which provides clients digital platforms for data visualisation and analytics, had set up a US entity in 2015.Yet two of its founders--Nishant Srivastava and Vikram Tiwari--couldn't obtain work visas. Both finally got Canadian work visas. The petition that has been filed points out that as these co-founders cannot come to the US, the company was forced to set up an office in Canada. Aside from costs involved in setting up the Vancouver office and obtaining Canadian work permits or the challenges relating to obtaining future US funding, operational challenges arise. "Omni's US employees must either work with these founders remotely or travel to Vancouver, which they do roughly once every two months," adds the petition.

India-origin brothers, Atma and Anand Krishna, co-founders of LotusPay, a digital payment platform, had set up a US holding company in the US state of Delaware in May 2017.

This was a pre-condition for participating in the Y Combinator programme, which could result in funding from this early stage investor. LotusPay obtained $120,000 from this investor and attracted interest from other US investors besides a list of prospective customers. But as the IER was not introduced, plans fell apart.

"The US market is very attractive to LotusPay, and its platform ...would be a boon to US-based companies and the economy," the petition said. The brothers have been unable to obtain any other form of lawful status in the US. This makes it far more difficult for them to launch their platform in the US, and hire or work in the same location as US-based employees. Further, US-based investors have a comfort level if founders are based in the US, the petition explains.

In addition to the NVCA, the Krishna brothers, and Omni Labs, another company--Peak Labs is also a plaintiff.Its chief architect, a Dutch national, was unable to obtain a work visa and is forced to work from the Netherlands. Paul Hughes, a partner at Mayer Brown LLP--one of the firms involved in representing the plantiffs-explains: "The Department of Homeland Security suspended the IER six days before it was to take effect.Hundreds of entrepreneurs would have benefited from the programme."

NVCA in its statement says the US economy has thrived on innovations of immigrant entrepreneurs. A 2016 study by the National Foundation for American Policy states immigrants have started more than half (44 of 87) startups in the US valued at $1billion or more.

The lawsuit is intended to get IER back on track. NVCA 's statement says: "Because DHS did not solicit advance comment from the public on the delay, it violated clear requirements of the 'Administrative Procedure Act'. As a result of the suspension of the IER, immigrant entrepreneurs that intended to use the rule have been and will be harmed. The US economy will miss new businesses and jobs that would have been created but that unfortunately will now be created overseas. To remedy this unlawful action, the plaintiffs are asking the court to compel DHS to implement the IER ... so that they can come to the US on a temporary basis to grow their businesses."

"If the court grants the preliminary injunction, it will require the government to begin processing applications. The government's deadline to respond to this motion is October 13, and oral argument will be held on October 20," Hughes said.

(This article was originally published in The Times of India)

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