U.S. technology startups panic over immigration ban

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By Heather Somerville and Kristina Cooke | SAN FRANCISCO

SAN FRANCISCO Silicon Valley venture capitalist
Kate Mitchell said her startup companies have a message for
their employees who are foreign nationals: Don’t travel outside
the country right now.

“Common sense would say, why take the risk?” said Mitchell,
co-founder and partner at Scale Venture Partners.

Silicon Valley draws on a global workforce. These young
businesses depend on hiring quickly from every corner of the
world, traveling globally to find customers and having access to
Silicon Valley venture capitalists to raise funding.

President Donald Trump issued an executive order a week ago
that put a 120-day halt on the U.S. refugee program, barred
Syrian refugees indefinitely and imposed a 90-day suspension on
people from seven predominantly Muslim countries – Iran, Iraq,
Libya, Somalia, Sudan, Syria and Yemen. It triggered widespread
protests, and the chilling effect has spread far beyond citizens
of those nations.

“Here and now, today, we have businesses that are stopping
because their employees can’t travel in and out of the United
States,” said David Cowan, a partner at Silicon Valley firm
Bessemer Venture Partners, one of the oldest top-tier venture
practices.

“This will be the No.1 cause of missed business plans in
2017.” The immigration issue is still unfolding, but the broader and
potentially more injurious effects could include a blow to the
nation’s competitiveness in technology, hindering job growth and
sending more capital overseas to the detriment of the American
economy.

The extent of the impact on startups is still unclear, but
more than 15 venture capitalists and technology company founders
described immediate concerns about the consequences of the
travel ban.

“I’ve never seen something impact the day-to-day thought
process of CEOs so fast,” said Neeraj Agrawal, general partner
at Battery Ventures.

CRISIS MODE IN SILICON VALLEY

Immigrants have been behind many of Silicon Valley’s
high-flying companies. More than half of all “unicorns” – or
startups valued at $1 billion or more – have at least one
immigrant founder, according to a 2016 study by the National
Foundation for American Policy, a non-partisan think tank based
in Arlington, Virginia.

Since Trump’s order, some lawyers and venture capitalists
have been in crisis mode, fielding inquires from concerned
startup founders and their employees about travel and pending
visa applications. Concerns stretch beyond the seven countries
targeted by the order.

“There is a panic in the startup community,” said Bill
Stock, president of the American Immigration Lawyers
Association. “Startups are very concerned because of the
unpredictability of the order.”

Startup founders often lead sales deals, globe-trotting to
meet customers. The scrappy companies rarely have big
human-resources departments or the ability of larger
corporations to protect employees in immigration battles.

Adil Aijaz, a Pakistani immigrant, is considering sending
new hires of his software startup, Split, to Argentina, rather
than the Silicon Valley headquarters.

“I need to be able to hire the best and the brightest in the
world,” he said. “Any restriction on that, I’ll move the jobs
over to Argentina.”

Cowan sits on the board of a cybersecurity company in Israel
that has put the brakes on plans to move its headquarters to the
United States because its employees are “from all sorts of
countries,” he said.

A Pakistani founder has decided to start his artificial
intelligence company outside the United States rather than
incubate it with Bessemer in Silicon Valley, Cowan said.

Some entrepreneurs funded by startup accelerator and venture
fund 500 Startups have suspended plans to go to the United
States, where their offices are. Some had returned to their home
countries from the United States for the holiday season and are
now unsure if they can get back in, according to a 500 Startups
spokeswoman, who was informed of the situation.

Amin Shokrollahi, founder and chief executive of Kandou, a
semiconductor company, is rethinking his plans to open a U.S.
design center to employ at least 20 people.

The Iranian-German dual citizen is based in Switzerland, and
he and his Iranian colleagues canceled plans to attend a trade
show in Silicon Valley this week due to the travel ban. He was
supposed to receive an award.

‘GO TO HAWAII INSTEAD’

San Francisco-based immigration lawyer Gali Schaham Gordon
said an early-stage startup founder emailed her Wednesday
evening asking whether he should tell his foreign national
employees not to travel, regardless of their nationality or
immigration status.

Gordon has been warning people who are identifiably Muslim
or Middle Eastern against non-essential travel. “Now might be a
good time to go to Hawaii on vacation instead,” she said.

The travel ban is already threatening the bottom line at
Totango, a customer relationship software firm. The company is
holding a conference in February in San Francisco. But on
Monday, some attendees started backing out, said co-founder and
Chief Executive Officer Guy Nirpaz.

They cited the travel ban and asked for a refund.



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