[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
INVESTOR VISA PROGRAM:
KEY TO CREATING AMERICAN JOBS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
IMMIGRATION POLICY AND ENFORCEMENT
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 14, 2011
__________
Serial No. 112-54
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
U.S. GOVERNMENT PRINTING OFFICE
68-299 PDF WASHINGTON : 2011
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20402-0001
COMMITTEE ON THE JUDICIARY
LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina JERROLD NADLER, New York
ELTON GALLEGLY, California ROBERT C. ``BOBBY'' SCOTT,
BOB GOODLATTE, Virginia Virginia
DANIEL E. LUNGREN, California MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio ZOE LOFGREN, California
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana MAXINE WATERS, California
J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio MIKE QUIGLEY, Illinois
TED POE, Texas JUDY CHU, California
JASON CHAFFETZ, Utah TED DEUTCH, Florida
TIM GRIFFIN, Arkansas LINDA T. SANCHEZ, California
TOM MARINO, Pennsylvania DEBBIE WASSERMAN SCHULTZ, Florida
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
[Vacant]
Sean McLaughlin, Majority Chief of Staff and General Counsel
Perry Apelbaum, Minority Staff Director and Chief Counsel
------
Subcommittee on Immigration Policy and Enforcement
ELTON GALLEGLY, California, Chairman
STEVE KING, Iowa, Vice-Chairman
DANIEL E. LUNGREN, California ZOE LOFGREN, California
LOUIE GOHMERT, Texas SHEILA JACKSON LEE, Texas
TED POE, Texas MAXINE WATERS, California
TREY GOWDY, South Carolina PEDRO R. PIERLUISI, Puerto Rico
DENNIS ROSS, Florida
George Fishman, Chief Counsel
David Shahoulian, Minority Counsel
C O N T E N T S
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SEPTEMBER 14, 2011
Page
OPENING STATEMENTS
The Honorable Elton Gallegly, a Representative in Congress from
the State of California, and Chairman, Subcommittee on
Immigration Policy and Enforcement............................. 1
The Honorable Zoe Lofgren, a Representative in Congress from the
State of California, and Ranking Member, Subcommittee on
Immigration Policy and Enforcement............................. 2
The Honorable Lamar Smith, a Representative in Congress from the
State of Texas, and Chairman, Committee on the Judiciary....... 4
WITNESSES
William J. Stenger, President & Chief Executive Officer, Jay Peak
Resort, Jay, VT
Oral Testimony................................................. 6
Prepared Statement............................................. 9
Daniel J. Healy, Chief Executive Officer, Civitas Capital Group,
Dallas, TX
Oral Testimony................................................. 15
Prepared Statement............................................. 18
Jason Mendelson, Managing Director, Foundry Group, Boulder, CO
Oral Testimony................................................. 25
Prepared Statement............................................. 27
Shervin Pishevar, Managing Director, Menlo Ventures, Menlo Park,
CA
Oral Testimony................................................. 36
Prepared Statement............................................. 40
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Ranking Member, Committee on the Judiciary..................... 5
APPENDIX
Material Submitted for the Hearing Record
Prepared Statement of Patrick F. Hogan, President CMB Export,
LLC, and CMB Summit, LLC....................................... 57
Letter from K. David Anderson, President, Invest In the USA
(IIUSA)........................................................ 69
Letter from Randel K. Johnson, Senior Vice President, Labor,
Immigration, & Employee Benefits, U.S. Chamber of Commerce..... 75
INVESTOR VISA PROGRAM:
KEY TO CREATING AMERICAN JOBS
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WEDNESDAY, SEPTEMBER 14, 2011
House of Representatives,
Subcommittee on Immigration
Policy and Enforcement,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to call, at 1:35 p.m., in
room 2141, Rayburn Office Building, the Honorable Elton
Gallegly (Chairman of the Subcommittee) presiding.
Present: Representatives Gallegly, Smith, Gohmert, Lofgren,
and Conyers.
Staff present: (Majority) George Fishman, Subcommittee
Chief Counsel; Marian White, Clerk; and (Minority) Hunter
Hammill, USCIS Detailee.
Mr. Gallegly. I call to order the Subcommittee on
Immigration Policy and Enforcement.
Good afternoon, everyone. Almost 10,000 green cards a year
are available through the Investor Visa Program for foreign
businessmen who invest in American businesses and create jobs
for American workers.
If investors and their families utilize all these visas,
and each investor created the 10 jobs called for in the
program, tens of thousands of jobs a year would be created.
That is something I am sure all of us could rally around.
And yet the Investor Visa Program is presently
underutilized. DHS issued only 749 investor visas in 2006,
rising to 2,480 in 2010. The program has the potential to be a
far larger job creator.
The recent growth we have seen in the Investor Visa Program
has come from the Regional Center Pilot Program. A regional
center pools investments in defined economic zones. The
establishment of a regional center may be based on general
predictions concerning the kinds of commercial enterprises that
will receive capital, the jobs that will be created directly or
indirectly as a result of such capital investments, and the
other positive economic effects such investments will have.
Numerous regional centers exist in my State of California.
The Regional Center Program expires in a year. We will examine
today its level of success in generating jobs, the merits of
the reauthorization, and the appropriate length of
reauthorization.
We will also examine another proposal that has been made to
utilize unused investor visas. What if we were to make green
cards available, not just to foreign investors willing to
invest in American businesses, but to foreign entrepreneurs
with visions of new ways of doing business and whole new
industries.
For those businesses that pay off, we could be talking not
about 10 jobs, but thousands of jobs. This idea, called the
Start Up Visa, has gained a lot of support in recent years in
venture capital circles. A number of Members have introduced
legislation proposing such a visa program, including my good
friend, the Ranking Member, Ms. Lofgren. While I'm not prepared
at this time to declare my full support, this innovative
proposal deserves a lot of support and consideration from
Congress. We will be giving that consideration today.
And with that, I would yield to the gentlelady from
California, Ranking Member Ms. Lofgren?
Ms. Lofgren. Thank you, Mr. Chairman. We often disagree in
this Committee on the role that immigration plays in America,
but every once in a while we seem to find something we can
agree on. And today's hearing on the EB-5 Regional Center
Program and the Start Up Visa concept, I think will highlight
some of the ways that immigrants create jobs and will show
immigration can be used as a powerful tool for innovation and
job creation.
First, the existing EB-5 Regional Center Program provides
conditional green cards to immigrant investors who pool their
monies in projects that will create jobs in America. If a
sufficient number of jobs are created, the conditions are
removed and the investors earn permanent residency. The program
smartly incentivizes investing in areas of high unemployment,
focusing job creation in the areas where it is needed most.
This program seems like a no-brainer, but it is severely
underutilized, largely, I think, because of two problems that
make the program risky for potential investors.
First, the Regional Center Pilot Program is supposed to, as
the Chairman has said, to expire at the end of the next fiscal
year, which creates a pretty big uncertainty for investors.
Second, there has been a lack of consistency by the government
in adjudicating EB-5 petitions, and this, I think, in some
cases led to a lack of confidence among investors who question
whether they'll actually receive a green card when they put
their money at risk through the programs.
Now, I understand that USCIS is trying to address the
adjudication issues and will begin implementing new procedures
this very month to streamline the process, including premium
processing for the program and letting applicants directly
contact the agency giving them an opportunity to appear before
a panel to resolve issues. And those are positive steps. I
think they will fix most of the problems in the application
process. But until we get the Regional Center reauthorized for
hopefully a long period of time, if not permanently, that
uncertainty about the investment will remain and really
undercut our goals in the program.
There's another similar job creating immigration proposal
that we have enacted that the Chairman mentioned, and that is
the startup visa. You know, I thought a couple of years ago how
are companies really formed. And I thought about Google as an
example. Larry and Sergey did not come in with a million bucks;
they came in with a tremendous idea, and they got venture
capital funding. And now, they employ thousands of my
constituents in Silicon Valley, and they are hiring. That is
how companies get formed usually, not just with your own money
that you are investing.
And so, the startup visa really relies on that. If a
talented individual has an idea that attracts U.S. venture
capital financing, an idea that might lead to the next Google
or Intel or Facebook or whatever, the startup visa will allow
that entrepreneur to start the company here in the United
States rather than abroad. And alternatively, if an individual
starts a new commercial enterprise in the U.S. using his or her
own sweat equity, that new company creates jobs for U.S.
workers, and the promise of creating more of that would allow
also for a green card for job creation.
Now, the tremendous success of immigrants in the tech world
is something I know pretty well because my district is in
Silicon Valley. The National Venture Capital Association, NVCA,
found that 40 percent of U.S. publicly traded venture backed
companies operating in the high tech field were started by
immigrants. And if you take a look at those companies, they
employ 220,000 people in the U.S., 400,000 people globally.
That is a huge success.
But our immigration system today really does not allow that
virtuous activity to continue. And that is why we are here
today. As the Chairman said, I introduced the Immigration
Driving Entrepreneurship in America Act, the IDEA Act of 2011,
which includes a startup visa of the two types that I just
mentioned. It provides conditional residency to immigrant
entrepreneurs who secure at least $500,000 in venture capital
financing, and I am interested to hear if that is the right
number from all of you today at the hearing. And if we get that
funding from angel investors or the venture world and we create
jobs, then the visa would vest.
We also have self-sponsored entrepreneurs. And I think
about Marvell in my district, that was founded by a wonderful
engineer who was born in Shanghai, her husband a brilliant
engineer born in Singapore. They met while getting their Ph.D.s
at the University of California at Berkeley. They did not get
big VC funding; they struggled. I mean, they borrowed money
from their family, and they maxed out their credit cards. They
now have 3,500 engineers employed in my district, and they just
got the contract for the new cell phone design for the country
of China. They are a massive success. This sweat equity self-
sponsored plan would be perfect for them.
I do not want to go on. I want to hear this, but I did
mention we have someone sitting at the dais who is an important
person in developing this concept and that is our colleague,
Jared Polis, who is not a Member of the Committee, but had he
been able to participate, he would have introduced Jason
Mendelson, who is his constituent from Colorado. And I wanted
to mention how grateful we are to Jared's leadership in this
whole area, and how glad I am that he can sit in at this
hearing today.
I will just say that in these perilous economic times, our
singular focus should be on creating jobs and more jobs. The
startup visa program has the potential to create that, and I am
looking forward to hearing from our witnesses today. And I
thank you, Mr. Chairman, for allowing me to go over my time
just by a bit.
Mr. Gallegly. I thank the gentlelady. And at this time I
would yield to our good friend from Texas, the Chairman of the
full Committee, Mr. Smith?
Mr. Smith. Thank you, Mr. Chairman.
The number one job of Congress is to create jobs. We must
ensure that our policies help private enterprise, strengthen
our economy, create jobs for American workers and maintain our
global competitiveness.
The Investor Visa Program plays a part in achieving this
goal. Under the program, almost 10,000 immigrants can receive
permanent residence each year if they engage in a new
commercial enterprise, invest between $500,000 and $1 million
in the business, and see that it creates 10 full time jobs for
American workers.
The Regional Center Pilot Project, which is almost two
decades old, has become the most used part of the Investor Visa
Program. Investment through a regional center is attractive to
potential investors because they are relieved of the
responsibility of running a new business, and they can count
indirect job creation toward the job creation requirement.
Investors may feel more confident about a regional center
that is operated through a State or city government. In these
difficult economic times, many State and local governments have
turned to regional centers as a method of generating economic
growth.
The Association to Invest in the USA has estimated that the
Regional Center Program has created or saved over 65,000 jobs
in the U.S., and had led to the investment to over $3 billion
in the U.S. economy.
The program is set to expire at the end of Fiscal Year
2012.
Just as in any visa program, there is the potential for
fraud in the Investor Visa Program. We have to ensure, both for
the sake of the American people and potential foreign
investors, that regional centers operate at the highest levels
of professionalism and integrity. The business plans and
promotional materials that regional centers produce should meet
the same standards as if they were to be submitted to the
Securities and Exchange Commission.
Another proposal is the ``start-up'' visa. Foreign
entrepreneurs would be granted conditional permanent residence
to come to America to launch their businesses. If the
businesses succeed and create a certain number of American
jobs, the immigrants would become unconditional permanent
residents.
While we can benefit by bringing entrepreneurs to America
with their bold ideas, and we need to do so, such a program
could be susceptible to fraud and abuse. How is the government
to determine which economic vision is feasible and which is pie
in the sky? And how will it root out schemes proposed simply to
procure a visa?
I look forward to today's hearing to help us answer some of
these questions.
Thank you, Mr. Chairman. Yield back.
Mr. Gallegly. I thank the gentleman. And at this time, I
will recognize my good friend from Michigan, the Ranking Member
of the Committee, Mr. Conyers?
Mr. Conyers. Thank you, Chairman Gallegly. I have asked
that my statement be submitted. And I would like to join in
with the Chairman of the Committee and, you, Mr. Chairman, in
working out the concerns of fraud that you have so that we can
move forward with a very important part of the jobs initiative
that we are all committed to.
I thank and I yield back.
[The prepared statement of Mr. Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress from the State of Michigan, and Ranking Member, Committee
on the Judiciary
The single biggest issue facing the American economy is the current
lack of jobs available for U.S. workers. The majority has talked a
great deal about job creation, so I'm glad we're finally having a
hearing on how immigration can create jobs for Americans. The hearing
today is about two investor visa ideas that can create American jobs--
one that is current law, one that is not.
The first of these job creating programs is the EB-5 program. It
gives green cards to immigrant investors who invest at least half a
million dollars towards projects that create jobs for Americans. And
the program wisely focuses on creating jobs where they are needed
most--areas of high unemployment.
The EB-5 regional center program is working for my home of Detroit.
For example, the Green Detroit Regional Center is working to advance
sustainable energy solutions by using immigrant investor funds in the
company ``Alt-E,'' which was founded by former employees of Tesla
Motors to retrofit fleet-based trucks with electric-hybrid powertrains
that greatly increase their fuel efficiency. An article in Crain's
Detroit Business noted that the EB-5 investment will let the company
``speed up hiring and create more than 300 jobs by the end of 2011.''
The program as a whole is working to attract significant capital to
the United States. In 2005, the GAO found that the EB-5 program had
attracted $1 billion to the country since it began.
Yet, while successful, the program remains underused because of two
issues that we'll hear about today. First, the regional center pilot
program that targets areas of highest unemployment is not permanent and
is set to expire at the end of FY 2012. This creates uncertainty for
immigrant investors. Second, the program has been administered in an
inconsistent manner by USCIS, and INS before them. This creates even
more uncertainty for investors.
I understand that USCIS is working to streamline the EB-5 process
and make it easier for immigrant investors to use. This is a welcome
change. But we should work towards making the regional center pilot
program permanent so that we can continue to attract money and jobs to
areas that sorely need both.
I'm also interested in hearing today about another immigrant
investor visa concept that does not yet exist. I'm talking about the
so-called start-up visa concept that my friend Zoe Lofgren has worked
on. This concept would help immigrants stay in the United and start
companies here if they have intellectual capital and backing from
American venture capitalists.
As you know, companies like Google and Intel were started by
immigrants. We need to do everything we can to ensure that the next
innovative company begins right here in the U.S. and the jobs created
by it stay in the United States. So, I'm looking forward to hearing
about how we can advance the start-up visa concept.
I thank the witnesses for their participation today.
__________
Mr. Gallegly. I thank the gentleman.
At this time, I would like to introduce our witnesses. We
are very fortunate today to have the very distinguished panel
of witnesses we have. And I would just like to make note that
all the statements will be entered into the record in its
entirety.
And I would ask the witnesses if you would be kind enough
to try to keep your comments summarized within the 5-minute
period so we can get into the question and answer session. And
we have provided the lights down there as kind of a convenient
way to remind you, but to make sure that you do understand that
your testimony will be made a part of the permanent record of
the hearing in its entirety.
With that, I would introduce our first witness, Mr. William
Stenger. Mr. Stenger serves as president and chief executive
officer of Jay Peak Resort in Jay, Vermont. He is the general
partner of the largest regional center project in Vermont, and
one of the most substantial EB-5 projects in America.
He has been appointed by the governor of the State of
Vermont to serve on the Governor's Council of Economic
Advisors, and serves as a member of the Agency of Commerce and
Community Development Advisory Council.
Mr. Stenger earned his associate in science degree from the
Corning Community College, and a bachelor of science degree
from Syracuse University.
Our second witness is Mr. Daniel Healy. He is co-founder of
the Civitas Capital Management, LLC. He is responsible for the
general management of the firm. Mr. Healy leads a team that is
responsible for identifying and evaluating investments that
meet EB-5 Program criteria. Prior to forming Civitas, Mr. Healy
served as executive vice president and partner of Royalty Real
Estate Capital.
Mr. Healy earned his B.A. from the University of Texas at
Dallas and his M.B.A. from Cox School of Business at Southern
Methodist University.
Our third witness, Mr. Jason Mendelson, is the co-founder
and managing director of Foundry Group, a bolder based venture
capital firm that invests in early stage formation of
technology companies. He also serves as a board member at the
National Venture Capital Association.
Prior to this, Mr. Mendelson was attorney for Cooly LLP and
a software engineer for Accenture.
Mr. Mendelson earned his bachelor's degree and J.D. from
the University of Michigan.
Mr. Shervin Pishevar--is that close enough?
Mr. Pishevar. Pishevar.
Mr. Gallegly. Pishevar. Is the managing director of Menlo
Ventures at Venture Capital Firm in Silicon Valley. Before
joining Menlo, Mr. Pishevar was chief application officer and
general manager at Mazelli Corporation after spending most of
his career as a serial entrepreneur and angel investor.
He serves on the advisory board of comScore. Mr. Pishevar
is one of the 10 members of the UN Foundation Global
Entrepreneurs Council.
He earned his B.A. from the University of California at
Berkeley.
So, with that, we will start with Mr. Stenger. Welcome, and
we look forward to your testimony.
TESTIMONY OF WILLIAM J. STENGER, PRESIDENT &
CHIEF EXECUTIVE OFFICER, JAY PEAK RESORT, JAY, VT
Mr. Stenger. Mr. Chairman, thanks very much. Distinguished
Members of the Committee, I appreciate the opportunity----
Mr. Gallegly. Why do you not pull the mic up a little bit,
maybe turn on the button. I am not sure.
Mr. Stenger. Is that better?
Mr. Gallegly. I am not sure.
Mr. Stenger. Is that better?
Mr. Gallegly. Yes, sir.
Mr. Stenger. Okay. Can we start my clock again? [Laughter.]
Mr. Chairman, thank you very much for the opportunity to be
here. Distinguished Members of the Committee. We appreciate you
having the hearing on this EB-5 Regional Center extension. It
is very important to our economy. It is very important to the
job creating initiatives we are all eager to promote. And I and
all of my colleagues appreciate your valuable time in
conducting this hearing today.
I am president of Jay Peak Resort located in northern
Vermont. We are a beautiful, marvelous, physical facility in
rural Vermont. We have marvelous assets and characteristics,
but we also have some of the highest unemployment and most
challenging socioeconomic issues that anyone faces in Vermont.
Jay is one of the most significant employers in Orleans
County, a place of great rural agricultural character. However,
despite all these issues that I mentioned that are challenging,
the most profound economic challenge that we have seen in
generations in Vermont and the Nation, the difficulties we are
seeing these days. I am very optimistic about the future of our
community and its citizens.
We are seeing in our facility the significant creation of
the biggest positive life changer a person needs, a job, a job
that will sustain them and their families with benefits and a
future that inspires and rewards their economic and human
spirit.
We are seeing this employment creation at Jay Peak and our
surrounding communities in this terribly troubled economic
times solely because the EB-5 Foreign Investor Program exists
and is helping us.
Over a decade ago in 1997, I had the opportunity to work
with Senator Patrick Leahy and our governor at the time, Howard
Dean, to make the Vermont Regional Center happen.
In today's economy, what is strangling the small business
community in Vermont and nationally is the lack of access to
capital. Affordable capital is almost non-existent in this
marketplace; however, through the EB-5 Regional Center Pilot
Program, Jay Peak has raised over $200 million of equity
capital, and we have welcomed over 400 investors from 56
countries.
This capital has helped us build a wide range of facilities
that we desperately need to be competitive, but it also helps
us create full time job opportunities for so many citizens
throughout Northern Vermont's highest unemployment community.
I have met personally almost every investor participating
in Jay Peak. They are a group of wonderful people, so
appreciative of the opportunity to live in the United States. I
can tell you that their equity investment is changing our
region in a profound and positive way. Once in the United
States, they have continued to contribute as every one of them
are well educated, successful people who have brought their
family values and capital with them.
Although Jay Peak is employing many hundreds of direct and
indirect year-round employees, Jay is a small business in
comparison with our national economy. As a matter of fact, with
very few exceptions all of Vermont is made up of small
businesses. The EB-5 Regional Center Program is ideal for the
small business community throughout America.
Two years ago on an EB-5 trade mission to South Korea,
Governor Jim Douglas, my partner Ariel Quiros, and myself
visited with AnC Bio/Korea, a cutting edge biotech research and
development company, that was looking for a place in the United
States to create a U.S. affiliate. In the past 2 years, AnC
Bio/Vermont was created, and tomorrow a 90,000 square foot AnC
Bio/Vermont USA facility will be acquired where over 200
quality research and manufacturing jobs will result.
Alex Choi, the chairman of AnC Bio/Korea, could have placed
this facility anywhere, but he chose Vermont because of the
quality workforce, the quality universities, and our ability to
bring equity capital to the table, and create this wonderful
facility.
I would like to take a few moments in closing to let you
know that extending this program permanently is vitally
important to this program. If a project cannot plan, if an
investor cannot plan, they cannot expect a good outcome. I urge
the Committee, and I would urge the Congress, to extend this
program and make it permanent. It is so vital to the projects
as well as the investors.
I also think it is very important to work closely with
Commissioner Mayorkas to make sure that USCIS is as efficient
as possible in processing the applicants. Our applicants need
to be processed in a reasonably short period of time so they
have predictability, the programs have predictability, and we
will have the job outcomes that are so vital to our country
right now.
Mr. Chairman, I appreciate very much this time. I thank you
again for holding this hearing, and at some point happy to
answer questions that you might have. Thank you very much.
[The prepared statement of Mr. Stenger follows:]
__________
Mr. Gallegly. Thank you, Mr. Stenger, and thank you for
being sensitive to the lights with your testimony. We
appreciate it.
And with that, we will move to Mr. Healy. Welcome, and we
look forward to hearing your testimony.
TESTIMONY OF DANIEL J. HEALY, CHIEF EXECUTIVE OFFICER, CIVITAS
CAPITAL GROUP, DALLAS, TX
Mr. Healy. Thank you. Mr. Chairman and distinguished
Members of the Committee, thank you again for the opportunity
to testify this morning or this afternoon about the EB-5
Regional Center Program.
My name is Daniel Healy. I am the chief executive of
Civitas Capital Group in Dallas, Texas. We are a boutique asset
management firm, and we manage the City of Dallas Regional
Center in a public/private partnership with the City of Dallas,
Texas.
Jobs are at the top of the agenda here in Washington and at
kitchen tables across this Nation. With that in mind, my
message here today is that the EB-5 Regional Center Program is
an extremely effective catalyst for job creation. Congress
should act now to permanently reauthorize it.
The City of Dallas Regional Center, or CDRC, is a unique
public/private partnership. The city envisioned creating a
regional center to facilitate economic development, but they
recognize that investment management is best left to the
private sector. Civitas collaborated with the city to design a
regional center that reflects the pro-business, pro-growth
culture that has made Dallas a magnet for employers and
families alike.
USCIS approved the CDRC in late 2009, and we identified our
first project in February 2010. In the short time since then,
just 17 months, the CDRC has committed to six high quality
investments totaling $91 million.
The CDRC is providing low cost, flexible capital for
projects across a range of industries, including $15 million
for a call center, $5.5 for a boutique hotel, and $8.5 million
to help the oldest chain of Tex Mex restaurants in the country
open four new locations.
At its core, the EB-5 Program is about jobs, and I am very
pleased to report that the first CDRC investments are
forecasted to create a total of 1,499 jobs in Dallas. That
figure exceeds the minimum job creation requirement under EB-5
rules by more than 50 percent.
Civitas is expanding its activities to new markets,
including Houston, San Antonio, and Austin. We are working
closely with the City of Amarillo on their ambitious downtown
redevelopment plan, which will include a 300-room hotel and a
minor league baseball stadium at a cost $120 million. But
without $40 million in flexible, low cost EB-5 capital, that
project would be impossible in today's credit markets, and
Amarillo would lose a rare opportunity to create more than
1,000 jobs and revitalize their downtown.
Members concerned that the Regional Center Program has been
underutilized in the past should rest easy because those days
are over. Civitas is hardly alone in grasping the huge
potential of the EB-5 Program to facilitate economic activity
and create jobs.
When I began evaluating the EB-5 Program in 2008, there
were perhaps 35 regional centers. Today there are 180 in 36
States, almost a six-fold increase in just 3 years. According
to USCIS, just 332 investors applied to participate in the
program in Fiscal 2005; by contrast, petitions are on track to
total more than 3,200 in Fiscal 2011, nearly a tenfold
increase.
The pace of new applications has accelerated dramatically
since 2009, with year over year growth averaging 77 percent.
With 180 regional centers competing for investors and more
coming online every day, it is clear that the annual allocation
of 10,000 EB-5 visas will soon become a constraint on the
program's ability to create more jobs for U.S. workers and
bolster local economic development, all at no cost to the U.S.
taxpayer.
These statistics and my own experience with the CDRC
demonstrate the EB-5 Program's vast job creation potential.
With unemployment above 9 percent, Congress should see the
value this program delivers across the Nation. That is why I
strongly urge Congress to act on permanent reauthorization now.
Even with a full year until the expiration date, I can testify
to many personal experiences with respect to investors who are
already hesitant to apply because the program may sunset before
their petition is approved.
I would like to conclude by acknowledging the good work of
the men and women at USCIS. Director Mayorkas is hosting a
stakeholder meeting shortly after this hearing, which I am
looking forward to attending. I applaud his plans for improving
the program's administration, and I am particularly encouraged
by the announcement yesterday that premium processing of
investor petitions and the ability to communicate directly with
adjudicators by e-mail will soon be available.
While I realize premium processing will take time to
implement, allowing e-mail contact with adjudicators is a step
that can be taken immediately and will lead to a more
collaborative, productive, and cost effective adjudication
process. In my written testimony, I have included additional
suggestions for improvements to this critical program.
Mr. Chairman, thank you again--excuse me--for the
opportunity to appear before you and your colleagues today.
Thank you also for your support of the Regional Center Program
and for pushing its reauthorization forward during these
challenging times when it is most needed.
I hope you found my testimony useful and informative, and I
am pleased to answer your questions.
[The prepared statement of Mr. Healy follows:]
__________
Mr. Gallegly. Thank you very much, Mr. Healy.
And now, we will hear from Mr. Mendelson. Mr. Mendelson?
TESTIMONY OF JASON MENDELSON, MANAGING DIRECTOR, FOUNDRY GROUP,
BOULDER, CO
Mr. Mendelson. Thank you. As a co-founder and managing
director of Foundry Group, an early stage venture capital firm
based on Boulder, Colorado, and as a board member of the
National Venture Capital Association, it is my privilege to be
here today to share with you my perspective on the critical
role that immigration entrepreneurs play in job creation,
innovation, and economic growth in the United States.
I would like to thank the Chairman for recognizing that
this issue is critical to our country's future. I would also
like to thank Ranking Member Lofgren and my own congressman,
Jared Polis, for their leadership and support of the startup
visa legislation.
At a time when we are in desperate need of both fiscal
responsibility and economic stimulus, the Startup Visa Act will
create American jobs at no cost to the Federal Government. Each
day that passes without this legislation, another company
builder is turned away, and jobs are created elsewhere. On
behalf of the venture capital and startup communities, I urge
Congress to send a message that our company is open for
business and eagerly welcome job creating entrepreneurs to our
shores.
The startup visa legislation recognizes two elements that
have been critical in driving U.S. economic growth and job
creation, which are venture backed companies and immigration.
Separately, these elements have helped to differentiate our
country from all others. When harnessed together, they will be
instrumental in maintaining our global leadership.
According to a 2011 IHS Global Insight report, companies,
such as Apple, Genentech, and Starbucks, that were founded as
small startups of venture capital now account for 12 million
jobs and $3.1 trillion in revenues in the U.S. in 20101. That
equates to 11 percent of private U.S. employment and 21 percent
of our country's GDP.
While America's startup economy would not be what it is
today without venture capital, the same can also be said for
immigrant entrepreneurs. A 2006 NVCA report entitled ``American
Made,'' found that approximately 25 percent of U.S. public
companies that were venture financed, including Intel, Google,
Sun Microsystems, and Watson Pharmaceuticals, were founded by
immigrant entrepreneurs. The same study revealed that nearly
half of current startups have immigrant founders. These are
companies that are hiring American workers. They are paying
taxes and they are creating value for American shareholders.
Anecdotally, I would estimate today that a third or more of
the business plans that my firm receives have an immigrant as
part of their founding team.
In my written testimony, I discuss my experience with
Stratify, just one of our portfolio companies founded by
immigration entrepreneurs. The company created more than 400
U.S. jobs before it was sold in 2007, garnering over $150
million to shareholders and employees. More than half a dozen
of Stratify's alumni have gone on to become founders or early
employees of other startups. Yet despite the strength of this
success story, it is my belief that it would be much more
difficult to replicate it today given our current immigration
policies.
The current path to a green card is fraught with complex
requirements, limitations, and delays, sending a message to
these talented people that we do not want them here. Foreign-
born graduates who earn their degrees here and want to stay and
build businesses are often forced to return to their native
country because of our restrictive policies, despite these
entrepreneurs attending federally and State-subsidized
universities. In effect, we are subsidizing the world's
entrepreneurship and not realizing any return.
At TechStars, a seed stage investment program my partners
and Jared Polis helped found, we see opportunities lost each
year, most recently in the Boston program where four of the 12
companies had immigrant founders from Israel, the United
Kingdom, India, and Estonia. In three cases, the founders had
to return to their home countries after the program. We
estimate that in the immediate term, 20 high paying jobs were
lost to these countries, yet the ultimate loss to the U.S. over
time will be much, much greater.
And it is the same story in other TechStars programs in New
York, Seattle, and Boulder. Immigrant founders want to stay and
create fast-growing companies with high paying jobs, but are
forced back to their native countries, such as Canada, Israel,
and England. We should give them every reason to stay in the
U.S. Ironically, our policies are showing them the door.
This negative dynamic is made worse by the fact that the
U.S. is no longer the only destination for high tech startup
companies. In the last decade, countries such as India and
China have adopted the American venture capital model and
accelerated their growth by offering government incentives to
move there. And the world's venture capital dollars are
following these entrepreneurs abroad. Once a company is started
in a specific location, its economic benefits remain
geographically tied to that region.
Despite all of these government incentives, the United
States is still the preferred location to start these types of
businesses. But this will not be the case if we keep sending
founders out of country.
Reforming high skilled legal immigration policy should be a
congressional priority. When we turn away immigration
entrepreneurs, not only do we lose bright people, but then we
end up competing against them in the global marketplace. The
startup visa legislation will help support job creation and
innovation right here.
We appreciate the bipartisan support this Committee has
given to this initiative, and we stand ready to work with you
to get the startup visa legislation signed into law. Thank you.
[The prepared statement of Mr. Mendelson follows:]
__________
Mr. Gallegly. Thank you, Mr. Mendelson.
Now, we will hear from Mr. Pishevar?
TESTIMONY OF SHERVIN PISHEVAR, MANAGING DIRECTOR, MENLO
VENTURES, MENLO PARK, CA
Mr. Pishevar. Thank you, Mr. Chairman.
My name is Shervin Pishevar. I am a managing director at
Menlo Ventures. We have $4 billion under management and a new
$400 million fund that we are investing out of.
Yesterday we announced the Menlo Talent Fund, which is
specifically for early stage seed stage companies where we will
decide within 24 to 72 hours to invest up to $250,000 to a
million dollars in new companies.
I am testifying before you today as a venture capitalist,
an entrepreneur, and an angel investor who has founded five
U.S. companies, and invested in 40 other startups that have
gone on to innovate and create jobs in America. From my vantage
point and home in Silicon Valley, I witness each day the value
that startups can bring to a region and to our country. I am
also an immigration entrepreneur.
I would like to read a quote that inspires me and many
other people in Silicon Valley every day, ``Never doubt that a
small group of thoughtful, committed people can change the
world. Indeed, it is the only thing that ever has.'' It is a
quote by Margaret Mead, and I believe that it captures the
ethos of Silicon Valley.
People from around the world are inspired to come to
Silicon Valley, to come to America and pursue their dreams. I
am privileged to testify today on behalf of countless foreign
entrepreneurs who would like nothing more than to do what I
have done--build companies and pursue their dreams here in the
United States.
I was born in Iran in 1974. My family was poor. We survived
persecution, the Iran-Iraq War, and fled to the United States
in 1975 when I was 5 years old. There, my father took a job as
a taxi driver in Washington, D.C. driving some of you
congressmen. And my mother cleaned hotel rooms.
When I got accepted to the University of California at
Berkeley, I remember how proud my parents were. I received the
Presidential Fellowship to continue to continue my high school
science project, which led to finding a new way to selectively
lice malaria-infected red blood cells. Berkeley filed a patent
on that discovery, and I was the sole inventor, and that
inspired me to actually become an entrepreneur.
In 1994, at the computer lab at Berkeley, I came across a
program called NCSA Mosaic, created by Mark Andreessen. I
quickly imagined all that I could do, and with my friends, we
developed an idea called the web operating system, webOS. A
mentor encouraged me to start my own company, and in my senior
year I began to pursue my American Dream.
I took a job as a security guard at night to make enough
money so I could work day and night on my business. After a
number of fortunate breaks and cold calling Jamie Diamond in
his office, the company found investors and we launched. And I
was on my way with the first of many startups.
History shows us that the location of innovation drives
where the economic value is created. Nowhere is that more true
than in Silicon Valley, where the economy thrives on
technological breakthroughs and innovations that occur each
day. If you look at the top startup regions around this
country, you will see a familiar combination of successful
research universities, a cadre of highly motivated
entrepreneurs, and a system of capital and mentorship that
supports the growing of businesses. It is a benevolent circle
that begins with that innovation. Where the innovation goes,
the value flows.
Immigrant entrepreneurs are an integral part of the Silicon
Valley ecosystem. Studies have shown that Silicon Valley has a
higher concentration of foreign-born entrepreneurs,
technologists, scientists than any other region in the U.S.
According to the 2006 ``American Made'' study, 40 percent of
U.S. publicly-traded venture capital companies operating high
tech manufacturing were started by immigrants. The story of
privately-held venture backed companies is even more
compelling, where almost half of the companies across the U.S.
had foreign-born founders.
The U.S. innovation pipeline is well fueled by immigrants,
and it is our responsibility to ensure that we do not
unintentionally divert this energy to other nations overseas.
The startup visa legislation applies two very important
filters so that when the United States accepts an immigrant
entrepreneur who has received venture investment, we can have
the confidence that we are getting the best and the brightest
talent from around the world.
First, there is the selection filter, which applies to any
individual enterprising enough to leave one's home and pursue
their dreams in an attempt to innovate and grow a business in a
new country. The second filter is the venture capital vetting
process, which only funds those companies that have the highest
chance to succeed. The result will be creating a network of
highly motivated, well supported entrepreneurs who will
generate value and perpetuity here in America.
To wit, the ``American Made'' survey has reported that
nearly two-thirds of immigrant founders of privately-held
companies, venture backed companies, have started or intend to
start more companies in the United States. Like me, they have
become serial entrepreneurs and angel investors, and will
continue to serve our economy well by building innovative
companies, one after the other.
Reforming the legal immigration process so that our highly
motivated immigrant entrepreneurs can grow their businesses in
America must be a congressional priority. I am encouraged by
the growing bipartisan support for the startup visa proposal,
but for this bill to become law, we will need more than
bipartisan support. We will need bipartisan compromise. The
stalemate has gone on too long.
The ``American Made'' survey reported that nearly all the
immigrant founders and private companies would still start
their companies in the United States if they had the choice.
But nearly two-thirds believe that it was currently more
difficult to enter the United States and start a company than
when they started their companies. When I think about that
fact, that others like myself, the same commitment and talent
and passion for technology and innovation are not being
permitted into this country, which I now call home, I can only
shake my head and ask why.
I urge this Committee to ask themselves the same question
and then act quickly and compromise to reverse an unfortunate
path down which we have traveled for too long. I urge Members
of Congress to come together, work together as a team, and
create a package that is in the spirit of bipartisan compromise
before year end. The American people are counting on you to do
this for the good of the American economy.
Thank you.
[The prepared statement of Mr. Pishevar follows:]
__________
Mr. Gallegly. Thank you, Mr. Pishevar.
I would like to start by asking a couple of questions of
Mr. Stenger.
Where would Jay Peak Resort be today had it not been for
the Regional Center Pilot Program?
Mr. Stenger. Well, we would be a resort that would be
confined largely to winter operation only. An incredibly
capital intensive business like we are, that would be fraught
with challenge.
We currently have approaching 2,000 direct employees and
indirect employees around our community. We have 450
construction workers working today, all Vermonters that would
not would be working otherwise.
So, I can tell you, Mr. Chairman, that were it not for the
equity capital of this program, all the things that we have
been able to do in the last few years would not have been
possible, and especially since the banking challenges of 2008.
Equity capital is just not available. And a resort like ours,
we are vibrant, we are healthy. We are excited about the
future.
The EB-5 capital has made that possible in a rural, high
unemployment area where now we are no longer the highest
unemployment community in Vermont. We are up and coming, and it
is because of this capital access that has made that possible.
Mr. Gallegly. How many jobs specifically were created at
Jay Peak as a direct result of the program?
Mr. Stenger. I would say right now, as we enter into this
current year where we open one of our newest facilities, we
will approaching 800 to 900 direct new jobs.
Mr. Gallegly. That are a direct result of the program?
Mr. Stenger. Yes, and many, many hundreds more that are
indirect--all of the contractors, all of the people who support
those businesses. Vermont is a rural State in general, and in
our part of the State, even more so. So, the indirect impact is
profound throughout the region.
Mr. Gallegly. How do you respond to those that claim that
the Investor Visa Program simply allows aliens to buy green
cards?
Mr. Stenger. Well----
Mr. Gallegly. Some have made that accusation.
Mr. Stenger. I appreciate that. What I see in our
investors, and I think in all of the quality programs in the
country, you see people who are interested in being in this
country. They have the capacity to invest in a project that is
job creating.
Yes, they are getting a preference, but they are bringing
something that we desperately need. We need equity capital.
These things, and you asked the question earlier, what would we
be if we did not have access to this? The banking community is
just not available to us in the manner that we would like it to
be. And that is not just true at Jay Peak; that is true for
small business throughout this country.
So, when our investors come, they bring their capital. They
bring their good educations. Many of them invest in other
communities that they live in. And it is truly a win-win-win
situation in that they bring capital, they bring their
education, they bring their family, they bring their love of
this country and their desire to be here. And it is a great
economic benefit to us, and it creates jobs everywhere along
the way.
Mr. Gallegly. Mr. Healy, from your perspective, do you see
any fraud or dubious investment vehicles in the Regional Center
Program?
Mr. Healy. From my perspective, no, I do not regularly see
fraud or dubious investments. I think what is important to keep
in mind is that like any market, there is a range of
investments. Our program at Civitas with the City of Dallas has
a particular approach that we take that is different from Mr.
Stenger's, that is different from many other regional centers.
Some of my competitors I would invest in; some I would not. But
in terms of fraud or abuse, I really do not see that.
I mean, we see a great number of investment opportunities.
We, you know, try hard to monitor our competition and
understand where the market is going. But where I have seen
problems is not really in people entering the market or
attempting to game the system. It is much more on the
regulatory adjudication side.
Mr. Gallegly. What competition do you see from the Canadian
and Australian programs?
Mr. Healy. The competition from other countries' programs,
including those two that you mentioned, is sometimes quite
stiff. Very recently, the Canadian program doubled the required
investment because they had substantial demand and were looking
to tamp it down.
There is no question that when investors in other countries
are considering emigrating, they look at other options. And one
of the challenges that we face as regional centers is that
while the United States remains the gold standard for many of
the reasons that my colleagues have mentioned, the process for
going through an EB-5 investment is arduous, time consuming,
expensive.
Mr. Gallegly. I thank the gentlemen. My time has expired,
so I would yield to the gentlelady from California, Ranking
Member Ms. Lofgren.
Ms. Lofgren. Well, thank you very much. And to all the
witnesses, it has been great to hear from all of you.
I want to specifically say, Mr. Pishevar, what a thrill it
is to see the person responsible for webOS. I mean, it is very
cool that you are.
You know, coming from the Valley, there are some things
that are obvious to me, but may not necessarily seem as obvious
in other parts of the country. One of the things, and I am
interested in how you would see this fact factored into how
this program needs to be fine-tuned.
I mean, in the Valley, failure is a learning experience,
and not every venture is going to hit on all cylinders. I mean,
we see people, you know, be successful in later things.
How in your judgment--we have got like in the bill, we have
a 2-year window to see whether this is going to take off or
not. Twenty-five, maybe half of the ventures you fund, Mr.
Mendelson, you in your testimony, are not going to make it. And
yet, their founders may go on to found another business. How
would you suggest we deal with that phenomenon?
Mr. Pishevar. Well, I think, first of all, 2 years is
plenty enough time to realize if a venture is going to take
hold or not, especially in the dollar amount we are talking. I
have heard anywhere from $250,000 to $500,000 as a threshold to
enact the startup visa.
That is going to be plenty to get somebody nine to 12 to 18
months. And we are going to know.
Ms. Lofgren. Okay.
Mr. Pishevar. Either more money is going come and they are
going to ramp up or not. So, whether they can turn around and
create a second company, too, within 24 months, I do not think
that happens. But it is certainly plenty for the first.
Ms. Lofgren. And we have got built into the visa the plan
that either you create the jobs or you attract the additional
capital.
Mr. Pishevar, in your testimony, you were talking about the
screens, I think, because, you know, I really think in this
venture, the VC world is going to be better at sorting this out
really than some government bureaucracy.
Talk to us about how you evaluate ventures as an angel
investor or in your VC capacity, and what that would mean for
people who participate in this program?
Mr. Pishevar. Absolutely. So, our philosophy at Menlo is
that we invest in people, that people are the greatest asset
class. And so, we look for the greatest talent that we can find
regardless of where they are in the world. In fact, you know,
we look at entrepreneurs from all over the world that we would
like to attract and invest in.
So, the filter really is around talent, and we invest in
those people and those teams that we think have the greatest
opportunity to build companies of consequence.
So, I think that is really, you know, in terms of our
philosophy, that we want to stick to that, that works. It is a
great philosophy that, you know, this is all about people, that
investment and entrepreneurship is about finding that band of
gold that exists out there in terms of the greatest talent that
we can find and back them.
And to the other point that Mr. Mendelson was talking
about, many of these companies within 24 months very quickly,
you know, figure out that their initial idea was not working,
and they can pivot to a new idea, even within the same
structure of that company.
Ms. Lofgren. And space, yeah.
Mr. Pishevar. And I completely agree that 2 years is more
than enough time to realize that and realign the company as
quickly as possible to the right opportunity.
Ms. Lofgren. Well, I think then the advice I am hearing you
give, and it is one I believe in and we put in the bill, is
that if the venture world is willing to put their capital on
this, that is likelier to be a sound screen than the
bureaucracy trying to second guess that decision. Is that
basically what you are saying to us?
Mr. Pishevar. Absolutely. I mean, venture capital firms
have a huge responsibility to invest their limited partners'
money well. And they would not be in business if they did not
have a high filter for quality and did an immense amount of due
diligence on those teams and those companies that they are
potentially investing. And so, it is a pretty rigorous process
that, you know, I would not consider outsourcing to some other
process.
Ms. Lofgren. Right. The final thing I would ask, you know,
we have got a quantified number of jobs that need to be
produced in order to turn the visa from conditional to
permanent. But, again, coming from the Valley, that is not just
the jobs that are going to be grown, because if you have got an
ecosystem, was we do in the Valley, it is not just the jobs
that one company creates with that one. It is things spin off,
other inventors, so that it really is creating--well, we are
not creating. The ecosystem is there. It is preventing that
ecosystem from degrading.
Mr. Mendelson. You know, I would add that the people are
spinning off through the rest of the country.
Ms. Lofgren. Yes.
Mr. Mendelson. I was in the Valley for 10 years before I
moved to Boulder, and there are a lot of people from the Valley
in Boulder and everywhere else.
Ms. Lofgren. I know that.
Mr. Mendelson. So, this is ecosystem is a nationwide thing,
not just a particular geography.
Mr. Gallegly. Thank the gentlelady. I want to remind
Members, I have just been told, we are going to be called to a
vote on the floor shortly. So, what I am going to try to do, if
we can, wrap up so we do not have to ask you folks to stay
while we go and vote and come back. If we cannot, we will go
from there.
So, with that, I would yield to Mr. Smith?
Mr. Smith. Thank you, Mr. Chairman. Mr. Stenger, let me ask
you a question that we discussed earlier today because I think
your answer will be of interest to other Members of this
Subcommittee.
In the case of your companies and projects and investment
opportunities, I think you have 100 percent foreign investors.
Why is it we cannot find more American investors to participate
in these kinds of programs?
Mr. Stenger. Well, I think our particular program is very
attractive to EB-5 candidates around the world. And we have
reached out to various parts of the world.
And earlier the comment was made about Canada. We became
very involved in this program in Jay Peak because of our close
relationship with or our proximity to Canada.
So, there is an investment market. There is interest in
coming to this country. There is a tremendous amount of capital
that is looking to become part of programs in the United
States. So, we have reached out to various parts of the world
to welcome investors to the United States.
The return on investment is competitive to reach out to
U.S. investors. We have other investments that U.S. investors
can participate in. This particular EB-5 program is focused on
foreign investors who have capital, who have a good background,
and are capable of investing and making job creation occur in
rural areas, such as ours.
Mr. Smith. Okay.
Mr. Stenger. So, the program is specifically for the
foreign investor, bringing capital, creating jobs in rural,
high unemployment areas such as ours. And that is where we have
focused, and we have seen substantive results and success.
Mr. Smith. Thank you, Mr. Stenger.
Mr. Healy, we've discussed this before as well, but how
would you suggest we improve the program. A few minutes ago,
you testified in response to another question that there were
some individuals, some enterprises who gamed the system. How
can we prevent individuals from gaming the system? How can we
better protect investors?
Mr. Healy. Thank you for the question, Mr. Chairman. I
think that the way that I would suggest that most of the
regional centers that are operating now are very high quality
and are not, you know, attempting to do anything that would be
gaming the system. But I think that in order to ensure that
that does not occur, all of the best practices suggested by
IIUSA, which include complying with and being subject to the
regulation of the SEC with respect to unregistered securities
just to the extent that these regional center projects are
structured as limited partnerships or other forms of
unregistered securities, would be appropriate.
I mean, my background is in institutional investments. I
was the chief compliance officer at a broker dealer. We are
approaching the threshold for being required to register as an
investment advisor with the SEC anyway.
This is not new to us, and I think for people that are
operating at a high quality level, it is not going to be a
problem.
Mr. Smith. Thank you, Mr. Healy. Mr. Mendelson, I do not
know where my time went, but let me squeeze in a last question
to you.
And you said in your written testimony that in regard to
these companies, 25 to 50 percent will not return our invested
capital. What happens to those foreign investors in businesses
that do not work out?
Mr. Mendelson. So, the investors? Well, I am a venture firm
that takes money from other folks and invests it in. And in
those 25 to 50 percent, I get back less money than I put in,
and I take a loss. While the VC, venture capital, diligence
process is extremely rigorous, you know, these are high, high
risk situations. And, you know, we fund less than .01 percent
of all the business plans we get. And despite that, just on
pure luck and who knows what, you can have some problems. So,
it is a very tough screen.
Mr. Smith. Okay. Thank you very much.
Thank you, Mr. Chairman.
Mr. Gallegly. Thank you, Mr. Smith.
Mr. Conyers?
Okay. I appreciate that, and we will then yield to Mr.
Lungren for his 5 minutes?
Mr. Lungren. Thank you, Mr. Chairman.
Mr. Pishevar, it is good to see somebody that I can relate
to. I also had expectations from my mom and dad I was going to
be a doctor. And my dad did talk to me, but my mom cried for 2
weeks. But they would probably be happier with me sitting in
your shoes, sitting in your seat than here as a Member of
Congress, I might say. Actually, my dad was disappointed
because I became a lawyer.
The question I have got, Mr. Healy, is this. I am in
support of this program and refining the program. But in answer
to critics, I have noticed that a representative of your State
has talked about how many jobs you create in your State and
what a great job you do. And he has done a very good job of
taking jobs out of my State and putting them into your State.
In fact, he has talked about how he loves to go on hunting
expeditions to California where he bags an employer or two.
With a State that presumably is the best job creating State
in the Union and has a lot of investment, why do you need to
have a regional center to attract foreign investors when
presumably you would be the place for people to want to invest
that are already here?
Mr. Healy. Thank you for the question. There is always room
for improvement, Congressman.
In the City of Dallas, there are areas of Dallas that have
been underserved for years that have very high unemployment
rates. To give you an example that I will briefly summarize
that I have written about in my written testimony, we just
recently committed to an investment with an affordable assisted
living developer to provide seniors' housing for Dallas
residents that are underserved in this market completely,
because while the investment climate in Texas is indeed strong,
there are always areas that are underserved and that, in
particular, EB-5 capital can facilitate transactions occurring.
Because the capital can be much lower cost, much more
flexible than traditional institutional investment capital or
bank financing, there are opportunities to create a great many
jobs that would be missed without this program.
Mr. Lungren. Okay. Mr. Pishevar, again, I am trying to
respond to critics of the program. When I support the program,
they would say--someone like you, you and your parents did not
come here under a program like this, correct?
Mr. Pishevar. Right.
Mr. Lungren. And many of the entrepreneurs that you have
talked about that have started companies did not come under a
program like this. They came as refugees. They came under the
regular immigration policy. But there was something about
America and the opportunities here that attracted them to be
able to succeed as you have.
And so, they would say to me, well, why do we need a
special program which, some people say, looks like you are
buying a precious commodity, that is, the ability to become an
American citizen, when folks such as you--that is not what
attracted you here, and yet you succeeded. Can you give me a
response to----
Mr. Pishevar. Absolutely.
Mr. Lungren [continuing]. That kind of a criticism of this
kind of a program.
Mr. Pishevar. Thank you, Congressman. That is a great
question.
So, I believe deeply that we need to move away from passive
immigration policy in terms of waiting and hoping that we will
attract the types of immigrants that can actually build these
types of, you know, companies and that kind of success, and
begin to go into recruiting mode, to actually, you know,
specifically attract these types of talented entrepreneurs who
want to come to America, and be a magnet for them to come here.
We have just seen it over and over again, both inside of Y
Combinator and TechStars, in companies that I have invested in
so many. That those incredibly talented entrepreneurs that we
want to fund many times have funded, run into immigration
issues in terms of getting their visas to move here, move their
companies here, and create jobs.
It just happens, you know, in every single class of the
companies that we see. In these incubators, we have a number of
those. And I am spending a lot of time, you know, trying to
help those entrepreneurs with----
Mr. Lungren. Mr. Healy, just one quick thing. I have been
contacted by one of the regional centers in California, and
they have complained about the lack of activity or action by
the government agency that is supposed to approve this. Have
you seen a similar thing?
I mean, we have the commitment from the head of the
government agency to do a better job. But have you seen that as
well, that if we are going to have this program? I mean, I have
got a situation where they suggest that the USCIS preapproved
the project in September 2010. They still do not have final
approval, and they have got investors hanging out there that--
well, you know, whether they get here or they do not get here,
hangs in the balance.
Mr. Healy. Yes, sir. Thank you. We have indeed seen similar
situations. I have personally faced similar situations. I am
very encouraged by the director's recent announcements for
plans to streamline the program, but there is no question that
there is considerable work to do with USCIS to make sure that
they have the internal capacity to process these applications
in a timely manner, and the expertise that that will require.
We are, as I mentioned, meeting with the director later
this afternoon, and I expect to discuss that specifically.
Mr. Lungren. Give him my regards, will you please?
Mr. Healy. I will.
Mr. Lungren. Tell him I have a concern.
Mr. Healy. I will do that. Thank you, sir.
Mr. Gallegly. Thank the gentleman. And before we adjourn, I
would like to give special thanks for Mr. Polis for joining us
today. Glad to have you here.
And I would also like to especially thank all of our
witnesses for your testimony today.
Without objection, all Members will have 5 legislative days
to submit to the Chair additional written questions for the
witnesses, which we will forward and ask the witnesses to
please respond as promptly as possible so that we can make the
answers a part of the formal record of the hearing.
Without objection, all Members will have 5 legislative days
to submit any additional materials for inclusion in the record.
And with that, I thank you again.
And with that, the Subcommittee stands adjourned.
[Whereupon, at 2:35 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record