U.S. President Donald Trump’s administration has proposed a significant $100,000 fee for H-1B visa applications, a move that could potentially stifle innovation in America’s startup ecosystem, according to discussions with founders and venture capitalists reported by CNBC. H-1B visas are crucial for companies that wish to hire foreign workers in specialized fields like IT, healthcare, and engineering. These visas are already challenging to obtain for U.S. startups due to strict annual quotas.
Desmond Lim, CEO and co-founder of the tech company Workstream, shared his frustrations after all H-1B applications from his startup were rejected over the past year. He emphasized the importance of securing top engineering talent, highlighting that past hires through the H-1B program have been “life changing” for both the employees and the company. Recognizing the complexity and cost involved in the visa process, Lim argued that the proposed fee would create an even steeper barrier for early-stage companies like his.
Concerns permeate the startup landscape, with companies grappling with anxiety about the potential implications of the new fee structure. Alma, a San Francisco-based legal tech startup offering immigration advice, reported a staggering 100-fold increase in inquiries following the announcement. Its CEO, Aizada Marat, pointed out that many clients fear their smaller companies would struggle to pay the hefty fee, which might hinder their ability to compete for top talent.
Marat also raised critical questions about local talent availability if international workers become scarce due to these fees. Startups, she noted, frequently leverage global talent to gain competitive advantages over larger firms. She advised companies to await further clarification on the H-1B changes before adjusting their hiring strategies.
Experts in venture capital and innovation echoed these sentiments, cautioning that the $100,000 fee could disproportionately impact early-stage startups that lack the financial resources of larger enterprises. Alexandre Lazarow, managing partner at Fluent Ventures, highlighted the reliance of startups on international recruitment, stating that they often cannot find the skilled engineers needed locally.
Robert D. Atkinson, president of the Information Technology and Innovation Foundation, noted that a few skilled foreign employees could be pivotal to a startup’s success. Access to international talent can help these companies forge stronger networks and customer relationships abroad.
Critics of the H-1B visa program argue it adversely affects job opportunities for U.S. nationals. However, the new fee structure could inadvertently diminish entrepreneurship and venture capital funding overall. A 2020 survey indicated a strong correlation between startups employing H-1B workers and their likelihood of securing external funding or achieving groundbreaking innovations. The new fee could deter venture capitalists from investing in early-stage U.S. firms during a time when many might look abroad for talent and stability.
Manish Singh, Chief Investment Officer at Crossbridge Capital, cautioned that the changes could push potential investors toward markets like the U.K., Canada, and Europe, which might offer better opportunities for securing skilled talent.
Interestingly, the proposal comes at a time when certain European markets are experiencing a “brain drain,” where educated individuals leave their home countries for opportunities in the U.S. Now, the uncertainty tied to U.S. immigration policies—including the proposed H-1B fee—could prompt many skilled professionals to reconsider their options. Laura Willming, head of people and talent at Octopus Ventures, remarked that those who once viewed the U.S. as the premier destination for their careers are increasingly considering opportunities in Europe and the U.K., signaling a potential shift in the global talent landscape.
