The big American dream, every Indian household has had it, or still has it. We have to send our kids to the US, that’s where they’ll grow or reach their true potential. Many Indian AI startups rushed to the US chasing the same big American dream. The advantages? Silicon Valley talent, global customers, and a front-row seat to the AI boom or so they thought. Quickly many discovered that the real issue was not fitting in the product market, it was actually the U.S. immigration system.
In a sad reality what started once to scale faster has now become a hiring nightmare. As a result, whatever is happening now is due to the H1B visa issues and rising regulatory costs. These factors along with some others are forcing founders to rethink their American expansion. Moreover, this is before theyāve even built their first U.S. team.
The Migration That Backfired
Multiple Indian entrepreneurs who were working in the technology sector relocated to San Francisco last year. They intended to establish offices near OpenAI, Anthropic, and Google DeepMind.
The strategy was laid out clearly. They wanted to get the maximum advantage of being close to the best talents, venture capitals, and enterprise customers.
But then the migration backfired, as the facts of visa lotteries, attorneys, and growing fees came in forward. While the founders were expecting to have engineers, they found themselves tangled in administration mazes. A reminder of how fragile scaling strategies can be when external forces hit. Just look at the lessons from Astraās startup shutdown, where regulatory and operational hurdles also played a decisive role.
The H1B Visa Roadblock
As reported by The Economic Times, the main reasons for the crisis are the H1B visa issues that are the major obstacles for the startups. Additionally, Indian AI startups are assessing the impact of the proposed $100,000 H-1B visa fee.
Only 130,000 H1B visas have been made available in 2024. Out of this, Indian tech firms take almost 25,000. But the majority goes to the likes of Infosys, TCS, and Amazon. Small startups or just startups in general who are starting out are almost invisible in this regard.
The competition became even more difficult as some big tech partner companies decided not to sponsor. After that, the Trump administration announced the new policy: a $100,000 fee per visa from 2026 onwards, which sounds outrageous.
If it were an early-stage AI company, that money would not be nowhere near the budget line.
Alternatives? Equally Broken
Founders tried to see past the H1B scenario, but the alternative opportunities turned out to be just as painful.
- B1/B2 visas: The ones for tourist application their wait times in India are from 3.5 to 9 months, which is even longer than some startupsā entire runway.
- O-1 visas: For the the category of āextraordinary ability,ā the document preparation is so complicated as if you were applying to be the next Spiderman.
The Cruel Irony: Talent Shortage Meets Closed Doors
The twist is this: the U.S. is hungering for AI skills. Demand for ML engineers and data scientists goes up by 25-35% each year.
Though, immigration policies only half-open the doors. Indian engineers with good qualifications, instead of filling the gap, are going to Canada, the UK, or Germany.
Consequently, the U.S. is confronted with an odd situation that is the opposite of what one might expect: the AI industry is doing very well but is left starving for people at the same time, while the H1B visa problems are the causes which put the talent the most away from there.
Financial and Emotional Burn
For founders, the immigration problem is like a cherry on top of financial strain. Funding is less than expected, GenAI adoption is slower than the hype around it, and customers are rather cautious.
Then you add in visa lawyers, compliance audits, and six-figure fees and you are just burning cash without getting one more engineer.
An entrepreneur from Bangalore who moved his company to San Francisco explained to me:
āI thought I was moving to the place where I would get the closest to the talent. Instead, my whole team is still in India, and Iām spending more on flights and lawyers than on hiring.ā
Lessons for Indiaās Startup Ecosystem
In all honesty, this should be wake up call for Indian founders. Because the issue is not confined to just it being a Silicon valley problem. Down below I’ve listed the lessons that we should start incorporating, based on my findings:
- Develop local AI talent: Being completely dependent and betting everything on U.S hiring is just not it.
- Plan for immigration early: This one’s the obvious, from everything we’re seeing in the news and headlines. Visa hurdles must be factored in from the day one.
- Push for policy support: Pushing for policy support is a crucial one. Because in reality bilateral agreements could actually ease legitimate startup hiring.
- Stay flexible: Operations must be able to shift across borders without breaking, because as we all know change is the only constant.
Wrapping It Up
In the end, the story is not about paperwork, it’s actually of innovation being throttled by some policy changes. And the sad reality is that some Indian AI startups might fail, not because their product is bad, but because H1B visa issues locked out the people they needed to scale.
The irony really stings because an industry whose aim is connecting people around the world, can’t even hire people to build that future.
Nevertheless, all of this doesnāt mean that you know the American dream is going to be over all together. It just means that itās not going to be everyoneās cup of tea. A straight flight to Silicon Valley, itāll be like a flight with a lot of layovers.
