US President Donald Trump’s plan to charge $100,000 for an H-1B visa application disproportionately harms American startup spaces, founders and venture capitalists told CNBC.
H-1B Visa – Companies were able to temporarily hire foreign workers in skilled professions such as IT, healthcare and engineering, but with limited annual quotas it was already difficult for US startups to secure.
Over the past year, HR CEO and co-founder Desmond Lim, Payroll and Employment Technology Platform Workstream, said that all of his startup’s H1-B applications have been rejected.
But a year ago, Workstream secured several H-1B jobs that CNBC told Lim “changes life both in the workforce and in the company.”
“As an early stage startup, all employment is valuable and we only choose the best one to go through the H-1B program because this is not only expensive, but time consuming,” he added.
Now, securing this talent is set to become even more difficult. The White House plans to require businesses to pay $100,000 in fees when filing a new H-1B visa petition, but many details remain unclear.
Lim said the fees are too expensive to justify for an early-stage company like him, complicating the recruitment strategy.
Uncertainty and panic
Lim is not alone in his concerns – startups across the country, along with H1B visa workers, remain concerned about the impact of the new fees.
Alma, a San Francisco-based legal high-tech startup, has provided immigration advice to experts and other startups, telling CNBC that it has seen a 100x surge in the survey since the White House declaration on Friday.
“Over the past few days, our clients have been scared and anxious because the size of their company suggests that they can’t compete in paying $100,000 and paying,” said Alma founder and CEO Isada Marat.
Not only will Alma advise companies to hire H-1B talent, but will also hire candidates under the program itself.
“The main question is, if this international talent is gone, is there sufficient local supply to meet the demand?” Marat asked. Startups often rely on finding “undiscovered” foreign talent and gaining an edge over their larger competitors, she added.
Marat said he advised businesses to make changes to H-1B visas more clear before changing their employment strategies.
Startups hit the most violently
Venture capitalists and innovation experts agreed that Startups will be hit hardest with H-1B visa fees.
Alexandre Lazarow, managing partner at Fluent Ventures, told CNBC in an email that the $100,000 fee “disproportionately hurts early startups.”
He added that startups often struggle to hire the locally needed engineers and experts, but have chosen to import talent through immigration rather than building remote teams abroad.
Meanwhile, Robert D. Atkinson, president of the Washington, DC-based Information Technology and Innovation Foundation, argued that only a few talented employees overseas are often the determinants of a startup’s success.
Foreign talent also helps startups establish a stronger overseas network and customer base, he added.
Are you less venture capital?
Opponents of the H-1B Visa program claim to remove employment opportunities for American citizens. However, the unintended consequence of a $100,000 fee could result in a wider reduction in entrepreneurship and venture capital funding.
A 2020 survey found that startups employing workers through the H-1B visa process are associated with an increased likelihood of gaining external funding and being publicly acquired or acquired, as well as an increased number of innovative breakthroughs.
Manish Singh, chief investment officer at Crossbridge Capital, told CNBC on Monday.
Singh added that changes to the visa program could instead create stronger cases for investors to deploy capital to markets such as the UK, Canada and Europe.
“While US startups may have diminished funding momentum, Europe can see relative uplifts in both talent influx and investor attention,” he added.
Brain drainage reversal?
Many markets, including Europe, have reported issues with “brain drainage” in recent years, referring to the phenomenon in which skilled, educated workers are migrating and seeking better opportunities in countries like the United States.
The movement is often linked to the development of high-skilled industries and the entrepreneurship of host countries.
The uncertainty surrounding US immigrants, including the development of the H-1 B, can now be a real turning point for the technological talent that has appeared on the fences about moving to the US, says people and talented Laura Willming of Octopus Ventures, one of Europe’s most active venture capital investors.
She added that talented individuals who once saw the US as an obvious destination are now seriously considering other markets, such as the UK and Europe, to build a career.
– CNBC’s HughLeask and Ernestine SIU contributed to this report
