Startup Visa And The Impact on Indian Startup Ecosystem [BrainDrain 2.0]

US Startup Visa, the much debated legislation that aims to slow down the exodus of skilled workers US and incentivizes them to create startups (and American jobs) has been updated to be more friendly to H1B visa holders as well as foreign student studying in US.

Precisely, the updates are:

1. Entrepreneurs living outside the U.S.—if a U.S. investor agrees to financially sponsor their entrepreneurial venture with a minimum investment of $100,000. Two years later, the startup must have created five new American jobs and either have raised over $500,000 in financing or be generating more than $500,000 in yearly revenue.

2. Workers on an H-1B visa, or graduates from U.S. universities in science, technology, engineering, mathematics, or computer science—if they have an annual income of at least $30,000 or assets of at least $60,000 and have had a U.S. investor commit investment of at least $20,000 in their venture. Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or be generating more than $100,000 in yearly revenue.

3. Foreign entrepreneurs whose business has generated at least $100,000 in sales from the U.S.  Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or be generating more than $100,000 in yearly revenue. [via: Vivek Wadhwa’s article on TC]immigrant-founded-companies

Before I share my view, let me share a few stories here.

Story#1: One of the most respected entrepreneur-turned-angel-investor (his four lettered first name starts with M and ends with C) was willing to invest in a Bangalore based startup. The deal fell off because he wanted the team to move to Silicon Valley, which the startup wasn’t willing to (the cost of moving to US wasn’t justified for them).

Story#2: As I write this article, quite a few Indian startups that are building global products from India are in Silicon Valley to promote their startups and open up funding channels. The founders eventually would like to stay in Silicon Valley as it offers the right mindset/talent and business opportunities.

With startup visa becoming more friendly to global entrepreneurs, why would these startups stay in India then? In fact, in some (or most?) of the cases, founders are willing to move to Silicon Valley asap, as Indian landscape doesn’t really offer them the right market opportunity (loaded with uncomfortable infrastructure issue like blocking Paypal etc).

So startup visa is probably the best visa for these entrepreneurs, as it enables them to get access to the market plus investors and a much friendlier government.

But what about the impact on Indian startup ecosystem?

We need technology product culture in India and so far, most of this has come from professionals who have stayed in Silicon Valley, learnt the art and are now spreading the art via their startup. Given that the startup visa also targets H1B visa holders (and is a sweet deal for them), will this result in lesser number of “skilled’” entrepreneurs coming back to India?

The impact of such legislations aren’t felt over weeks, months or years. It takes a decade to really see the results and while Silicon Valley needs a much needed refresh in innovation, Indian ecosystem too needs skilled entrepreneurs driving the (broken) ecosystem.

Fair point. But is brain in drain more important than brain drain?

Well, this is an argument that an entrepreneur made to me while we were discussing the implications of startup visa.
Keeping the country love aside, it’s important that Indian ecosystem grows up really fast, otherwise we will cease to have InMobi, TringMes from India and the fun of building a global product business from India will be a thing of the past (to be seen only in UnPluggd Videos!).

What’s your take on startup visa’s impact on the Indian ecosystem? Will that result in fewer people coming back to India? Will this create lesser competition in the local market?

Assuming that startup visa legislation is approved in the coming weeks, why would a technology startup building global product from India will stay in India? For cost measures? So back to outsourcing story?

The impact, as I mentioned earlier won’t be seen so soon, but will take 5-10 years to see the real results. Silicon Valley/US Government has the vision to look ahead and plan, but Indian government hasn’t opened its eyes yet.

What’s your opinion? Is this Brain Drain 2.0?

For sure, an ecosystem needs to deserve it’s entities (startups in this case) and Silicon Valley knows it. What about India?

Recommended Read: Entrepreneurs In This Part Of The World [Valley Or No-Valley]

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