Ask Sophie: Does the H-1B visa require founders to give up equity and control?

Sophie Alcorn, attorney, author and founder of Alcorn Immigration Law in Silicon Valley, California, is an award-winning Certified Specialist Attorney in Immigration and Nationality Law by the State Bar Board of Legal Specialization. Sophie is passionate about transcending borders, expanding opportunity, and connecting the world by practicing compassionate, visionary, and expert immigration law. Connect with Sophie on LinkedIn and Twitter.

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Dear Sophie,

I’m currently in the U.S. working for my employer on an H-1B. I’ve been wanting to start my own company, but I’ve been working on boosting my accomplishments for the O-1A because I’ve read in your past columns over the years that transferring an H-1B to a startup comes with a lot of downsides for startup founders, including giving up control and equity. How has that now changed?

— Future Founder

Hey Future!

The future is now! I appreciate your entrepreneurial spirit and your great question! In October, the U.S. Department of Homeland Security (DHS) published a new proposed rule that removed the downsides of the H-1B specialty occupation visa for startup founders that you mentioned.

“If more entrepreneurs are able to obtain H-1B status to develop their business enterprise,” the proposed rule states, “the United States could benefit from the creation of jobs, new industries, and new opportunities.”

After reading this column, I urge you and others to make your voice heard about the rule. The DHS is accepting public comments on the rule through December 22, 2023. After the comment period closes, the DHS will go through the comments, possibly make changes to the rule based on the comments, and then issue a final rule and effective date, which I’m anticipating will be in place in time for the next H-1B lottery in March. You can submit a comment at the top of the proposed rule by selecting the “SUBMIT A FORMAL COMMENT” link.

Comments must be made in English. However, business owners and non-citizens are eligible to comment. You can even file a comment anonymously!

Retain control and equity

As you know, an employer sponsor must file an H-1B petition on behalf of an employee as is the case with all work visas. There’s no self-sponsorship available for work visas, and your H-1B is tied to the employer who sponsored you and the job and location specified in the petition.

The clarification in the DHS’ proposed rule provides more flexibility to founders by already eliminating the need to reduce their majority stake in their startup and the freedom to grow their startup without limitations on their ability to do so (without the need for a future regulation on this point).


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