Innovation at Risk: U.S. Startups Fear Brain Drain Under Trump’s New H-1B Policy

Startups across the United States are on edge after President Donald Trump signed an executive order last Friday imposing a staggering $100,000 (£74,000) fee on applications for H-1B visas — the programme that allows skilled foreign workers to contribute to the U.S. economy.

For many small businesses and early-stage ventures, the new cost could prove crippling. Entrepreneurs warn the measure may stifle innovation, shrink the talent pool, and even force some startups to relocate abroad.

Abhishek Singh, a software engineering manager who has lived in the U.S. for a decade, said the change left him anxious about his future. His Seattle-based startup employer, he explained, could never afford such an expense on top of salaries.

Singh, who has spent the past seven years on an H-1B visa, admitted to feeling a brief reprieve when the White House clarified on Saturday that the new fee will only apply to future applicants.

Even so, the signal to the business community has been loud and clear. “If you’re a startup with new technology, and you’ve got some venture capital money but you’re worried about burning through it too quickly, this could kill you,” warned John Skrentny, a professor at the University of California, San Diego, who researches workforce policy in STEM industries.

The burden is not confined to the tech world. Karen Brady, CEO of Seattle-based behavioral health nonprofit Ryther, said the policy would worsen an already dire staffing shortage. “There’s no way we can afford $100,000,” she said. “In terms of future hiring, we won’t be doing any more H-1B visas.”

Historically, the H-1B programme has been dominated by tech giants such as Amazon, Microsoft, Meta, Apple, and Google, which together account for tens of thousands of visa approvals each year. But smaller firms and nonprofits have long depended on the programme to fill critical workforce gaps.

Economists warn the ripple effects will extend beyond boardrooms. In a note to investors, Atakan Bakiskan of Berenberg cut his 2025 U.S. growth forecast from 2% to 1.5%, citing Trump’s “anti-growth policymaking.” He cautioned that the six-figure fee could accelerate a brain drain and weigh heavily on U.S. productivity.

The White House, however, has defended the move, pointing to long-standing concerns about “abuse” of the programme, with claims that some companies exploit H-1B visas to undercut wages.

For startups and smaller enterprises, the battle lines are already drawn: absorb the cost, shut the door on international talent, or look for friendlier shores.