Liz Kaelin is the human face of how the crackdown on 457 visas is "catastrophic" for Australian technology entrepreneurs.

Kaelin is the founder of Caitre'd, an online platform to connect caterers and corporate clients and a graduate of Telstra's start-up accelerator program muru-D.

Her business, which employs six people, is growing rapidly and Kaelin has applied to sponsor her marketing specialist Iris van der Staak from the Netherlands.

Van der Staak has a Masters in marketing and worked at adidas before visiting Australia on a working holiday visa. After she started working at Caitre'd, the company's revenue tripled to six figures a month.

Caitre'd has spent thousands to support the application and van der Staak is on a bridging visa awaiting the outcome.

But this week's overhaul removes the marketing specialist role from the skills list effective immediately, leaving Caitre'd and van der Staak in limbo.

"She has particular expertise ... and it's also the fact she's been working alongside me for an extended period of time, I don't know if that's replaceable," Kaelin says.

"This is the specific reason why the 457 visa news has been so catastrophic ... the new skills list came into effective immediately so all the applications currently in progress are retroactively affected. My lawyers have no other information for us and say all we can do is wait. It's taxing on the morale of the team and affecting our productivity."

The 457 visa program will be replaced with another temporary worker visa. However, only people on a list of approved skills shortages are eligible and several roles were dropped from that list.

Three technical roles were removed from the skills list, but these were not widely-used categories. Most software and systems roles are still eligible for the revamped visa.

However, as Kaelin's story shows, technology start-ups are looking for more than technical skills.

Annie Parker, chief executive of start-up precinct Lighthouse, says start-ups also have skills shortages in areas such as sales, marketing, business development and operations.

I'm worried that it sends the wrong message, that Australia doesn't want these people.

Annie Parker

Parker, who headed up muru-D until recently and is well-connected in the Australian tech start-up community, says the proposed replacement to the 457 visa has problems.

"The two-year visa doesn't qualify you to apply for permanent residency afterwards and to attract really great talent I don't think that's good enough," Parker says.

"You have to also qualify by showing you have at least $1 million in revenue and five employees – that doesn't work for any early-stage start-up. On a macro level we've just made it harder for any early-stage start-up to attract talent to come to Australia."

Parker came from Britain on a 457 visa to set up muru-D and is now a permanent resident. She wanted to move here and wouldn't have accepted the job if it hadn't been a path to residency.

"I'm worried about the message that it sends ... that anyone who has the growth skills to help early-stage companies be the next Atlassian or Campaign Monitor or Canva will think 'maybe Australia doesn't really want me and I'll look at Canada or New Zealand instead'," she says.

"My worry is that something that was meant to appeal maybe to the nationalist part of the Australian government has backfired into impacting an area of early-stage innovation and growth that can genuinely help the Australian economy in the long term.

"The 457 visa is a replication of what [US President Donald] Trump has done to H1B visas and it's a colossal missed opportunity. Frankly I think we've shot ourselves in the foot."

Of course, start-ups are not the only users of 457 visas within the technology sector. Big IT outsourcing projects often employ a large number of technical workers on temporary visas and there is criticism this is often done without market testing.

For example, the Public Services Association has claimed the NSW Liberal government brought in 32 Indian temporary visa holders as part of outsourcing ServiceFirst, a government body for IT, human resources and payroll.

Parker says such concerns are a "fair point" but if the government had consulted with the sector, they could find ways to support early-stage start-ups in ways that could not be abused by other companies.

Parker says many entrepreneurs are wondering what happened to Malcolm Turnbull's innovation agenda.

"A good chunk of the [start-up] eco-system, including myself, is disappointed."

Caitlin Fitzsimmons is the Money editor and a regular columnist. Find her on Facebook and Twitter.