Will Donald Trump’s decision shatter Indian start-ups’ American dream?

Priyanka Pani Mumbai | Updated on January 11, 2018


US plans to delay ‘start-up visa’ programme that allows foreign entrepreneurs to set up shop

With US President Donald Trump proposing a new visa rule, the dream of aspiring young Indian entrepreneurs to set up a base in Silicon Valley, the Mecca of tech start-ups, may be difficult to turn into reality now.

In a recent announcement, the Trump administration is mulling a plan to delay the ‘start-up visa’ programme that allows foreign entrepreneurs to set up companies/businesses in the US.

This announcement has come as a dampener for several Indian entrepreneurs who want to tap the US market to get access to large venture capital and private equity firms besides getting access to “high-quality” talent.

Every year many Indian tech entrepreneurs look for various opportunities to set up shop in the US.

According to a recent data by Tracxn, there are about 195 well-funded start-ups in the US with Indians as their founders. Of this, about 14-odd companies have the Unicorn status (companies with billion-dollar valuation), according to a report released by the National Foundation for American Policy last year. This includes companies such as Mu Sigma and InMobi.

Calls made to these companies did not elicit any response on how the new rules are going to impact the Indian start-up ecosystem and their current business in particular, since many of these companies need skilled manpower from India to work in their US entities.

IT industry body Nascomm, which works towards the development of start-up ecosystem, also declined to comment on the issue. The visa rule for start-ups known as the International Entrepreneur Rule was initiated by former US President Barack Obama to ease movement of immigrants and help them set up business in that country to boost their economy.

The programme only allowed foreign start-ups that won $100,000 in government grants or received $250,000 in venture capital investments.

BusinessLine spoke to several Indian start-ups and investors, who were of the view that while the new visa rules would hurt the individual entrepreneurs, who wanted to settle down in the US, it would, however, help the Indian start-ups in the long-term.

Sanjay Mehta, a member of Indian Angel Network, said that, “It (the new rules) is good for the Indian economy as the flight of capital will stop. It is good from Indian economy perspective.”

Domestic opportunities

He further added that it will also force the Indian government to further make it easier for entrepreneurs to start a business in the country, which is an important reason why Indian entrepreneurs want to move to markets such as Singapore and the US.

Many argued that it could open up potential opportunity for start-ups in finding unique differentiated talent, which earlier might have been hard to find in India. It could also witness a reverse brain drain with entrepreneurs moving back from the US.

Published on July 12, 2017

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