Get the latest market trends in your inbox

Stay on top of the latest market trends and economic insights with the Axios Markets newsletter. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

AP

Start-ups could bear the brunt of the impact from President Trumps' executive order reforming the H-1B high-skilled visa program.

What we're hearing: Startups already have a tough time accessing the current lottery system because their small number of visa applications are dwarfed by the high volume filed by bigger firms. But new direction toward a merit-based system favoring higher salaries will also be detrimental to startups, according to some entrepreneurs, investors and immigration attorneys.

1. Foreign-born founders will have a harder time getting visas to start companies in the U.S.

  • "Immigrants and startups are inextricably linked," said National Venture Capital Association CEO Bobby Franklin, noting the founders of iconic companies like eBay, Google, Intel, Tesla and LinkedIn are foreign-born.
  • Vivek Ravisanker, CEO of developer hiring site HackerRank, came to the U.S. on an H-1B visa after landing a spot in the YCombinator incubator program. He now has a green card, but his business partner was denied a visa, so they have to operate the company jointly from the U.S. and India.
  • "Companies will now have access to fewer talented immigrants worldwide, which could further exacerbate the skills gap that the H-1B visa serves to help fill," he told Axios.

2. Start-ups will head to other countries instead.

  • Reaz Jafri, head of the global immigration practice at the law firm Withers Bergman, said some of his start-up clients are opting to head back to their home countries to start their companies.
  • "For foreigners, the most stressful part of being an entrepreneur is not funding, not ideas, not access to technology — it's immigration," Jafri said. "Our loss will be other countries' gain."

3. Investors will also go abroad.

  • Kate Mitchell, co-founder and partner at Scale Venture Partners, said the new H-1B restrictions would limit her firm's investment opportunities.
  • "A huge number of founders in Silicon Valley are immigrants," she said. "If the U.S. turns away foreign-born entrepreneurs, VCs will need to look for investment opportunities abroad."

4. Raising the salary requirements will hurt startups more than big tech firms.

  • "Any attempt to raise the minimum salary for H-1B workers would have, in my opinion, a serious negative consequence to startups," Jafri said. "They don't have unlimited funds but they do need talent —and not all of it is American."
  • Startups often compensate employees at least partly in equity and don't have as much cash on hand for salaries, says NVCA's Franklin.

Go deeper

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Coronavirus cases rose 10% in the week before Thanksgiving.
  2. Politics: Supreme Court backs religious groups on New York coronavirus restrictions.
  3. World: Expert says COVID vaccine likely won't be available in Africa until Q2 of 2021 — Europeans extend lockdowns.
  4. Economy: The winners and losers of the COVID holiday season.
  5. Education: National standardized tests delayed until 2022.
3 hours ago - Health

Standardized testing becomes another pandemic victim

Photo: Edmund D. Fountain for The Washington Post via Getty

National standardized reading and math tests have been pushed from next year to 2022, the National Center for Education Statistics (NCES) announced Wednesday.

Why it matters: There’s mounting national evidence that students are suffering major setbacks this year, with a surge in the number of failing grades.

4 hours ago - World

European countries extend lockdowns

A medical worker takes a COVID-19 throat swab sample at the Berlin-Brandenburg Airport. Photo by Maja Hitij via Getty

Recent spikes in COVID-19 infections across Europe have led authorities to extend restrictions ahead of the holiday season.

Why it matters: "Relaxing too fast and too much is a risk for a third wave after Christmas," said European Commission President Ursula von der Leyen.