Startups and founders could be hardest hit by $100,000 H-1B visas
Dado Ruvic | Reuters
U.S. President Donald Trump’s plans to place $100,000 fees on H-1B visa applications will disproportionately harm America’s startup space, founders and venture capitalists told CNBC this week.
H-1B visas — which allow companies to temporarily hire foreign workers in skilled occupations such as IT, healthcare and engineering — were already difficult to secure for U.S. startups, due to limited annual quotas.
Over the past year, Desmond Lim, CEO and co-founder of HR, payroll and hiring tech platform Workstream, said all of his startup’s H1-B applications had been rejected — something he called “very disappointing” as he tries to secure more top engineering talent.
The year prior, however, Workstream did secure a couple of H-1B hires that Lim told CNBC were “life changing, both for the employees and for the company.”
“As an early-stage startup, every hire is precious, and we only choose the best to go through the H-1B program, because it not only costs money, but also takes time,” he added.
Now, securing this talent is set to become even harder. The White House plans to require companies to pay a $100,000 fee when submitting petitions for new H-1B visas, though many details remain unclear.
Lim said the fee would be too high to justify for early-stage companies like his, complicating recruitment strategies.
Uncertainty and panic
Lim’s not alone in his concern — startups across the country, along with workers on H1B visas, have been left worrying about the implications of the new fees.
Alma, a San Francisco-based legal tech startup that provides immigration advice to professionals and other startups, told CNBC it had seen a 100x spike in inquiries since the White House’s declaration on Friday.
“Over the past couple of days, clients have been scared and anxious, because the size of their companies suggests that they won’t be able to pay $100,000 and compete in terms of salaries,” Alma founder and CEO Aizada Marat said.
Alma not only advises companies on hiring H-1B talent, but also hires candidates under the program itself.
“The main problem becomes: is there enough local supply to meet demand if this international talent goes away?” Marat questioned. Startups often rely on finding “undiscovered” foreign talent to gain an edge over larger competitors, she added.
Marat said she had been advising companies to wait for more clarity on the H-1B visa changes before altering hiring strategies.
Startups hit hardest
Venture capitalists and innovation experts agreed that startups will be hit hardest by H-1B visa fees.
A $100,000 fee “disproportionately hurts early-stage startups,” as they lack the resources of large incumbents to absorb the cost and rely on global talent to scale, Alexandre Lazarow, managing partner of Fluent Ventures, told CNBC in an email.
He added that startups often struggle to hire the engineers and specialists they need locally, but choose to import talent through immigration, rather than building remote teams outside the country.
Meanwhile, Robert D. Atkinson, president of the Washington, D.C.-based Information Technology and Innovation Foundation, argued that just a few talented employees from overseas can often be a deciding factor in a startup’s success.
Foreign talent can also help startups establish stronger overseas networks and customer bases, he added.
Less venture capital?
Opponents of the H-1B visa program argue that it removes job opportunities for U.S. nationals. But an unintended consequence of the $100,000 fee could be a reduction in entrepreneurship and venture capital funding more broadly.
A 2020 survey found that startups hiring workers through the H-1B visa process were associated with an increase in the likelihood of obtaining external funding, going public or being acquired, and of making innovative breakthroughs.
Now, the new fee could “dampen PE and VC appetite for early-stage U.S. names that rely heavily on H-1B workers, many of whom may now look abroad to secure their careers rather than risk further uncertainty in the U.S.,” Crossbridge Capital’s Chief Investment Officer Manish Singh told CNBC in an email Monday.
Singh added that changes to the visa program could instead create a stronger case for investors to deploy capital into markets such as the U.K., Canada and Europe.
“U.S. startups may experience reduced funding momentum, while Europe could see a relative uplift in both talent inflows and investor attention,” he added.
Brain drain reversal?
Many markets, including in Europe, have been reporting problems with “brain-drain” in recent years, referring to a phenomenon where skilled and educated workers emigrate to seek better opportunities in countries such as the U.S.
This movement is often associated with the development of high-skilled industries and entrepreneurship in the receiving country.
Now, uncertainty surrounding U.S. immigration, including the H-1 B development, could be a real turning point for tech talent that has been on the fence about moving to the U.S., said Laura Willming, head of people and talent at Octopus Ventures, one of Europe’s most active venture capital investors.
Talented individuals who once saw the U.S. as the obvious destination are now seriously considering other markets, such as the U.K. and Europe, to build their careers, she added.
— CNBC’s Hugh Leask and Ernestine Siu contributed to this report
President Donald Trump takes a question from a reporter before signing executive orders in the Oval Office at the White House on September 19, 2025 in Washington, DC.
Andrew Harnik | Getty Images
It’s been a chaotic few days for the tech sector, and industry executives and experts are still assessing how U.S. President Donald Trump’s latest immigration crackdown could shape the future of their workforces.
The Trump administration sparked widespread panic Friday after announcing employers will pay a new $100,000 fee for H-1B visas, which are temporary work visas granted to highly skilled foreign professionals. These visas have underpinned the U.S. tech workforce for decades.
Some tech executives, including Netflix co-founder Reed Hastings and OpenAI CEO Sam Altman, have lauded the changes to the H-1B program, but experts told CNBC that the Trump administration’s changes could prevent some tech companies — namely startups — from securing top foreign talent. These experts said the changes also run the risk of driving top talent toward other countries.
“The short of it is, it would be a disaster for America, for American companies, American competitiveness, American innovation,” said Exequiel Hernandez, an associate professor at the Wharton School of the University of Pennsylvania.
Tech’s reliance on the H-1B program
The current annual cap for H-1B visas is at 65,000, along with 20,000 additional visas for foreign professionals with advanced degrees.
In fiscal 2025, Amazon, Microsoft, Meta, Apple and Google are among the top 10 companies that employ the most H-1B holders. Prominent tech executives like Microsoft CEO Satya Nadella, Google CEO Sundar Pichai and Tesla CEO Elon Musk were H-1B recipients earlier in their careers.
As tech companies scrambled to respond before Trump’s proclamation went into effect at 12:01 a.m. ET on Sunday, the White House quelled some concerns on Saturday by clarifying that the fee is not annual and would only apply to new visas, not renewals for current visa holders.
More changes could be on the horizon.
The Trump administration teased a proposed rule on Tuesday that said H-1B recipients should be selected through a weighted process instead of a random one. The weighted process would take place when the number of requests for visas exceeds the limit of available spots, and it would be based on wage levels, the proposal said.
The proposed rule will officially publish in the Federal Register on Wednesday, and it’s still subject to change after the administration reviews initial public feedback.
Hastings called the Trump administration’s $100,000 fee a “great solution,” in a post on X on Sunday.
“It will mean H1-B is used just for very high value jobs, which will mean no lottery needed, and more certainty for those jobs,” he wrote.
OpenAI’s Altman expressed support for the updates during an interview with CNBC’s Jon Fortt on Monday.
“We need to get the smartest people in the country, and streamlining that process and also sort of outlining financial incentives seems good to me,” Altman said.
‘It kneecaps startups’
Historically, H-1B visas have cost employers somewhere between $2,000 to $5,000 per application, depending on the size of the company, according to the Immigration Law Group.
The new $100,000 fee is a big jump for small, cash-strapped startups.
“You’re not going to find many startups who are going to be willing to pay $100,000 per H-1B, in addition to salary for that H-1B,” said Adam Kovacevich, CEO of Chamber of Progress, a left-leaning tech industry trade association.
Even big tech companies could feel some pain and have to reassess who they use H-1Bs for. But their deep pockets come with advantages.
“A big firm like Microsoft or Google, even though it’s not ideal for them, they have workarounds,” said Wharton’s Hernandez. “They can offshore jobs, or they’re the ones who can make acquisitions.”
Garry Tan, the CEO of the popular startup accelerator Y Combinator, criticized the Trump administration’s new fee, writing in a LinkedIn post that “it kneecaps startups” and is a “massive gift” to overseas tech hubs.
“In the middle of an AI arms race, we’re telling builders to build elsewhere,” Tan wrote. “We need American Little Tech to win—not $100K toll booths.”
A picture shows logos of the Big Tech companies named GAFAM, for Google, Apple, Facebook, Amazon and Microsoft, on June 2, 2023.
Sebastien Bozon | AFP | Getty Images
China and other competitors loom large
U.S. tech companies big and small are fiercely competing with one another – and the rest of the world – as they race to develop the most advanced AI models and applications. Organizations like Meta have shelled out billions of dollars to recruit top AI talent in an effort to try and gain an edge.
The Trump administration’s changes to the H-1B program could complicate similar recruiting efforts.
“What this does is that it gives our competitors, other countries, places like Asia, Canada, Europe, they can then attract these employees to create new innovations,” said Steven Hubbard, a data scientist at the American Immigration Council, which is a nonprofit for immigration advocacy and research.
One big competitor in the war for talent is China. The world’s second-largest economy has long fought against the U.S. for tech dominance, and more recently the AI race.
Earlier this year, Chinese AI firm DeepSeek rattled global markets after claiming to create a large language chatbot that outperformed competitors at a fraction of the cost. The news raised questions over the significant sums that American tech companies are shelling out on AI.
Some experts worry that visa changes could deal a victory into China’s hands, sending top talent overseas. The move may also deter foreign students from attending university in the U.S. as uncertainty hangs over their post-graduation job prospects.
“Those students are going to look at this environment and stay home,” said Greg Morrisett, vice provost at Cornell Tech. “It’s giving a leg up to both China and India in terms of feeding their startup ecosystems.”
For Bradley Tusk, the CEO of Tusk Venture Partners, the changes to the H-1B program are simply “terrible.” American companies have to have access to top talent in order to compete at the highest levels, he said.
“America’s competitive advantage has always been the ability to attract the best talent from around the world,” Tusk said. “To limit our ability to recruit and compete is illogical.”
WATCH: JPMorgan CEO Jamie Dimon speaks out on H-1B visa changes
Alibaba‘s Hong Kong-listed shares surged on Wednesday to reach their highest point since 2021 after the company said it will invest more in artificial intelligence and rolled out new AI products and updates.
Shares of the company jumped over 6%, while its total gains year to date rose above 107%.
The tech giant plans to increase spending on AI models and infrastructure development, on top of the 380 billion yuan ($53 billion) over three years it announced in February, Chief Executive Officer Eddie Wu said Wednesday at Alibaba Cloud’s annual flagship technology conference.
“We are vigorously advancing a three-year, 380 billion [yuan] AI infrastructure initiative with plans to sustain and further increase our investment according to our strategic vision in anticipation of the [artificial superintelligence] era,” Wu said.
Alibaba shares surge after CEO unveils plans to boost AI spending
So-called ‘artificial superintelligence’ refers to AI that would hypothetically surpass the power and intelligence of the human brain, with the hypothetical benchmark becoming a growing focus of major AI companies.
Alibaba also officially unveiled the latest version of its Qwen large language models — the Qwen3-Max — on Wednesday, along with a series of other updates to its suite of AI product offerings.
Wu highlighted that Alibaba Cloud is strategically positioned as a “full-stack AI service provider,” delivering the computing power required for training and deploying large AI models on the cloud through its own data centers.
“The cumulative investment in global AI in the next five years will exceed $4 trillion, and this is the largest investment in computing power and research and development in history,” he added.
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