As long as there have been economies with borders, some form of protectionism has arisen. The United States is no different as it seeks to protect American jobs for American workers. The problem arises when there’s an absence of skills in a country which raises the need for skilled migrants to join the workforce.
One avenue that skilled migrants to the US could take was through the H-1B visa. The visa made its debut in 1990 with around 65,000 visas allotted on a lottery basis for migrants within specialized fields like programming and computer science.
Twenty-five years later though, the use of the visa has people divided even among political parties, with many souring on the influx of migrants and the perceived effect on the local workforce.
In 2023, more than 700,000 people held H-1B visas in the United States, notes Forbes. The visa is also open to entrepreneurs looking to found tech startups as the system (for now) no longer requires sponsorship by a US company. It has also been shown that the “winning” of a H-1B visa boosts the chances of success for a startup as it leads to more external funding.
But does this make the visa ethically justified for startups looking to hire? In other words, is it moral for startups to employ workers on H-1B visas or are American startups morally obliged to hire American workers?
Smaller startups eschew hiring
“When you boil it down to first principles, if you’re a government or society and people want to come to the society that will benefit it, that’s a no-brainer. The worry from the other side is that if you import a lot of skilled immigration, people’s jobs may be at risk.”
This is how Allen Naliath framed the balancing interests of the problem. A cofounder of AI email assistant Friday, the US-born Naliath expressed that the scheme is born out of a need and we can’t replace it unless there’s a better solution to that need.
“H-1B visa or not, we need to make the process of coming to the US easier for skilled people,” Naliath told StartupUp Beat, adding that, “I like that illegal immigration is being addressed as that’s not fair to migrants coming in legally. You can have a protectionist vision of the US and also value immigration.”
For companies like Friday — a proactive email AI assistant that empties your inbox for you — the reality is probably staying lean and mean until later funding rounds, as hiring new workers can be prohibitively expensive which isn’t justified for a small startup.
Streamlining the H-1B Process
If the H-1B visa scheme is inherently unfair, are there ways of making it better? The founders of Gale certainly hope so. Founded by three Canadians who have themselves had the experience of obtaining work visas in the US, Gale seeks to automate the process of applying for H-1B visas.
“It had been a pain to get our visas,” cofounder Rahul Gudise told StartUp Beat about how arduous visa applications could be. “The lawyer turnaround has been super slow and can be around 3-4 business days on average for what could be a simple question. Especially for startups it can definitely slow things down.”
Initially conceived as software for lawyers, cofounder Haokun Qin talked about how the product expanded to be used by H-1B applicants. “Instead of a lawyer going back and forward with emails,” Qin said, “our software allows you to just fill out a form and we automate the rest of the compliance work for you.” This automation particularly comes in handy to deal with the nuances of H-1B applications which have become more stringent under the current US administration.
On the issue of the ethics behind H-1B visas, Gudise weighed in on the practical considerations of hiring H-1B applicants for startups. “When you’re a small scale company, the first hires that you have in the company are usually people that the co-founders have known for a very long time and want them to be a part of their company.”
“It’s not latent skill, it’s also trust,” Gudise added, “That in itself is ethical as this individual is sometimes the only one that can build the company with you.”
This trust aspect can also reflect on the culture of a company from the ground up. Being part of Y Combinator’s 2025 cohort, Gale cofounder Sambare also reiterated this.
“Startup accelerators like Y Combinator will stress that hires set the culture of your company,” Sambare said, adding that “Your trust with them will set the bar for communication for the rest of the chain. It’s not just the trust between you but the trust that you transmit further down into your organization.”
This is different, Sambare says, when you’re speaking about larger scale corporations. “When you’re on the scale of an Amazon or Microsoft, it’s almost like a procedure to get into these companies. When hiring starts to get systematized and it seems like upper management views workers as code monkeys in productivity or output, I can personally understand protectionism, not wanting H-1B visas, and preferring domestic hires.”
And while the debate on whether H-1B visas are justified continues, it’s important to recognize there’s no clear ethical reason for startups not to have applicants work as part of their business. Even celebrated American ethicist Donald Trump summarized the current mood in the following concise manner:
“I like both sides of the argument,” the US President said at a press conference in January, adding that, “I also like very competent people coming into our country even if it means training and helping other people that may not have the qualifications they do. But I don’t want to stop … and I’m not just talking about engineers. I’m talking about people at all levels … we want competent people coming into our country. And HB1, I know the program very well …I used the program … maitre’ds … you know, wine experts, even waiters, high quality waiters … you gotta get the best people.”
We couldn’t have summed it up better ourselves.
This article is a part of our series on the confluence of startups and ethics. If you have a take on a particularly spicy moral conundrum in the world of startups, drop us a line at [email protected].