You are right, in that this act would exclude folks who want to quit their H1B jobs here and start a startup and are not yet at a stage where they can be funded

You are right, in that this act would exclude folks who want to quit their H1B jobs here and start a startup and are not yet at a stage where they can be funded, or do not want to raise funding. However, if the startup visa act were to remove any filtering requirements for startups, the effect would be a huge spate of tens of thousands of folks who want to open shops, ebay stores or gardening businesses applying along with the single founders of scalable startups - and no one would get a visa in time. The only other 'right' way of fixing this is having the USCIS adjudicate the scalability of business for everyone that applies. That process is hard to scale. Edit: Actually, I forgot - there may be another way. Some other countries have made the process objective instead which makes it scalable, but introduces other filters. For example, Canada uses a points based system where you get points for education, work experience in your field, fluency with languages etc. If you get past a threshold, you get a (relatively) quick interview and permit on the spot. Note that a points based system may exclude a young, college dropout founder with no experience. In other words - a plurality of YC founders. May be you could make it either/or - raise investment, or get enough points based on your profile.