Visa Sponsorship 101 for startups: your questions answered

Here’s a common scenario for our customers: they find an amazing candidate who isn't US-based. The candidate asks if they'll sponsor their visa application. Now, they're left to scour through verbose, unhelpful resources about visa sponsorship for employers, mostly written to large and established enterprise companies. They aren't sure if this is something their startup should even offer or can afford.

At Dover, we know that while visa sponsorship for an early-stage company might require more planning, fees, and documentation, it can also open up your talent pool to a significant number of high-caliber candidates. Plus, taking a proactive stance on sponsorship provides transparency throughout the interview process — a win when it comes to fostering a positive candidate experience.

It can be difficult to decipher which visas are most reasonable and the least risky for your team to support. With this guide we hope to answer your questions about:

  • the sponsorship process
  • which types of visas make the most sense for an early-stage company to support
  • the employer burden and cost associated with the most common visa types

💡 TL;DR: If you are a venture-backed startup, you will almost certainly be able to support H1-b transfer, TN visas, and E-3 visas. We don’t recommend sponsoring H1-b visas since they operate on a lottery system, are more complex, and are expensive for smaller companies. This article is meant to be a guide based on our own personal experience as founders, and should not be treated as legal advice.

First, you’ll need to do some prep work.

Before you begin hiring folks who might need visas, there are two key steps you need to take (make note that if you hire a law firm to process applications, they’ll handle all the application process for you):

1: Gather as much documentation about your viability as a company. You’ll need to provide paperwork that proves your startup is a legitimate business. Such documents include, but are not limited to:

  • a business plan,
  • lists of customers and vendors,
  • partnership agreements,
  • annual reports,
  • lease agreements (if you have an office or hub),
  • photos of the premises,
  • payroll records,
  • financial documents (such as tax returns),
  • VC/Angel funding,
  • recommendation letters from your VC/Angel

2: File a Labor Condition Application (LCA) with the US Department of Labor (DOL). Startups are typically scrutinized more heavily to prove they’re an actual company, and the application process might be longer, or you’ll need to provide more documentation. The more proof you have, the faster and simpler the process will be.

The three visa types you should support, and two you shouldn’t.

If you’ve done a simple Google search, you’ve probably discovered visa sponsorship is a complicated, coded system. Each type of visa offers a different level of employer burden, cost, and time constraints. Here’s a brief rundown of our recommendations.

Most startups support: H1-b transfers, TN visas, and E-3 visas

H1-b transfers

  • The most common visa for foreign employees is an H1-b. H1-b transfers are much faster, cheaper, and simpler than starting an application from scratch. As an added bonus, H1-b transfers don’t have a cap on recipients, meaning that there is no lottery.
  • Plus, the candidate will likely have all of the required documents handy since they’ve been through the lottery before.
  • H1b visas are only available to workers who would legally be considered “employees.” In the startup context, you’ll need to prove that the candidate will be acting as an employee and not as an owner, which can be a bit more complicated if they’ll hold equity in the company. Here are two ways that can pan out:
  • When the equity stake is low, an offer letter will suffice.
  • When the equity stake is higher, you’ll need to include a line in their offer letter or contract that someone, or some group of people, has the authority to oversee the H1b applicant’s work, and to fire him or her if necessary.

TN

  • This visa is only applicable to Canadians and Mexicans and is granted for three years (but can continue to be renewed indefinitely).
  • The documentation requirements and procedures are much less burdensome than those of the H1B Visa.
  • Candidates apply at the U.S. border (port of entry) and visas are usually granted immediately.

E-3

  • This visa is for Australian nationals as well as their spouses and children.
  • The visa is valid for 2 years and can be renewed indefinitely.
  • The E-3 visa application is submitted online to the U.S. consulate in Australia by the employee and they would then go for an interview with the relevant documents.

Most startups do NOT support: H1-b visas

  • The H-1B visa is the most common visa application for foreign employees. The H-1B program has a regular cap of 85,000 H-1B visas made available every April 1. It’s a lottery system, meaning there is a good chance that your sponsee’s application won’t be approved.
  • You’ll need to pay legal fees in order to file on behalf of the candidate, and the process can take up to 3 months.

Bonus — some startups support: OPT F-1 with STEM

OPT F-1 with STEM

  • Optional Practical Training (OPT) is temporary employment that is directly related to an F-1 student’s major area of study. It’s typically extended for 12 months post-grad, and is low cost, with a fairly simple application process.
  • A few years ago, the DHS created a new category to allow certain foreign students with science, technology, math or engineering (STEM) degrees to extend their OPT period by 24 months, on top of the 12 months allowed for graduates in all fields. This gives applicants more opportunities to apply for an H-1B visa in subsequent years if they do not get it on their first try.
  • If you’re recruiting engineers, OPT F-1 visas with the STEM extension are a great bet. That being said, they still have to get approved for an H1-b visa within 3 years. You run the risk of making an amazing hire who may not get approved in that timeframe, leaving you with big shoes to fill.

For more details about cost, employer burden, and complexity, we created this chart to help you assess which types of sponsorship make the most sense for your company at this stage:

Visa Sponsorship for Startups