Are you an entrepreneur looking for a new home? Have you always dreamed of living and starting a business in the United States? If so, Uncle Sam wants you.
Yesterday, two U.S. senators introduced a bill that would offer visas to entrepreneurs who start companies in the country. According to the announcement, "The StartUp Visa Act of 2010 will allow an immigrant entrepreneur to receive a two year visa if he or she can show that a qualified U.S. investor is willing to dedicate a significant sum – a minimum of $250,000 – to the immigrant’s startup venture."
Success is rewarded with permanent legal resident status:
...if, after two years, the immigrant entrepreneur can show that he or she has generated at least five full-time jobs in the United States, attracted $1 million in additional investment capital or achieved $1 million in revenue, then he or she would receive permanent legal resident status.
The goal of the StartUp Visa Act is obvious: attract the best and brightest to build companies in the United States. Companies that will create jobs. Obviously, I'm sure there's a debate to be had as to whether this is really the best way to accomplish that goal, but that's another subject for another day.
As a foreigner who has done business in the United States, however, an interesting question occurred to me: why would an entrepreneur want to set up shop in the U.S.? Don't get me wrong: there's a lot to like about the U.S. It's hard to ignore the fact that so many great companies have been built there. And an entrepreneur looking for funding who has at least $250,000 sitting on the table will probably go just about anywhere to get it. But there are also some huge downsides to doing business in the U.S.
For one, the U.S. has one of the highest corporate tax rates in the world when federal and state taxes are combined. The tax code makes rocket science look like child's play, and the legal system is extremely costly to navigate. In the most popular cities, the cost of living is very high. Obviously, not all of these things are going to be of immediate concern to an entrepreneur who is being supported by investors, but in today's global economy, an entrepreneur isn't simply competing in the country his or her company is headquartered in. Most companies, whether they know it or not, are competing globally, and where you set up shop is very important. After, the cost of hiring a worker, the burdens of government regulations and the competitiveness of the tax code, for instance, all have a measurable impact on whether a company sinks or swims.
In short, entrepreneurs with mobility should shop around if they're considering going overseas to start a new business. Here in Chile, venture capital is available and we also have a program designed to lure foreign entrepreneurs, and on paper the incentives look far more appealing than those offered by the StartUp Visa Act. I don't personally know anybody who has taken advantage of this program, and I wasn't even familiar with the program before I read about it, but it just goes to show that those who are ready to start a new business are in the catbird seat. Given the desire of so many countries to spur new business creation, entrepreneurs should probably shop around.
Photo credit: David Paul Ohmer via Flickr.