OtisUsenet

Hello,

What option does a foreigner in the U.S. have for starting a business
with the investment from a Venture Capital firm and/or angel investors?

- Imagine a web-based service business, say "web based email" or some
such - consumer or enterprise market space
- Imagine investors willing to invest $500,000/$1,000,000 or more.
- Imagine a guy who built the technology, has ideas, understands the
field, and wants to turn that into a business.

What are the options?

The E-2 (Investor) visa sounds pretty complicated (min $100K, office,
telephone lines, business plan, model, projections, requires a trip to
the embassy in the home country, and in general feels quite complex)

The H1-B visa is doable, too? The VC firm registers a Corporation,
sets up company shares and all, VCs get a % of shares, they hire the
founder as, say, the CTO, give him a % of shares, pay him the
prevailing vage, maybe also a bonus.
Is this doable and legal?
Are there any drawbacks? (I hear you can't get the company to sponsor
you for a Green Card if you own more than 5% of it, but that's OK)

Thanks.

Bob

Sounds like you need an E visa...
You can't set up a company to sponsor you for H1B...

Joe Feise

OtisUsenet wrote on 5/19/2005 9:59:
    > Hello,
    >
    > What option does a foreigner in the U.S. have for starting a business
    > with the investment from a Venture Capital firm and/or angel investors?
    >
    > - Imagine a web-based service business, say "web based email" or some
    > such - consumer or enterprise market space
    > - Imagine investors willing to invest $500,000/$1,000,000 or more.
    > - Imagine a guy who built the technology, has ideas, understands the
    > field, and wants to turn that into a business.
    >
    > What are the options?
    >
    > The E-2 (Investor) visa sounds pretty complicated (min $100K, office,
    > telephone lines, business plan, model, projections, requires a trip to
    > the embassy in the home country, and in general feels quite complex)

Why would that be complicated? If you get venture capital, you have a business
plan, model and projections already...
Or do you think VCs or angels give out money without that???

    > The H1-B visa is doable, too? The VC firm registers a Corporation,
    > sets up company shares and all, VCs get a % of shares, they hire the
    > founder as, say, the CTO, give him a % of shares, pay him the
    > prevailing vage, maybe also a bonus.

It seems you have quite a wrong understanding of VCs...
VCs are not in the business of starting or running companies. They invest...

-Joe
--
I am not a lawyer.
For reliable advice, consult a competent immigration attorney.

OtisUsenet

Joe Feise wrote:
    > OtisUsenet wrote on 5/19/2005 9:59:
    > > Hello,
    > >
    > > What option does a foreigner in the U.S. have for starting a
business
    > > with the investment from a Venture Capital firm and/or angel
investors?
    > >
    > > - Imagine a web-based service business, say "web based email" or
some
    > > such - consumer or enterprise market space
    > > - Imagine investors willing to invest $500,000/$1,000,000 or more.
    > > - Imagine a guy who built the technology, has ideas, understands
the
    > > field, and wants to turn that into a business.
    > >
    > > What are the options?
    > >
    > > The E-2 (Investor) visa sounds pretty complicated (min $100K,
office,
    > > telephone lines, business plan, model, projections, requires a trip
to
    > > the embassy in the home country, and in general feels quite
complex)
    > Why would that be complicated? If you get venture capital, you have a
business
    > plan, model and projections already...
    > Or do you think VCs or angels give out money without that???
    > > The H1-B visa is doable, too? The VC firm registers a Corporation,
    > > sets up company shares and all, VCs get a % of shares, they hire
the
    > > founder as, say, the CTO, give him a % of shares, pay him the
    > > prevailing vage, maybe also a bonus.
    > It seems you have quite a wrong understanding of VCs...
    > VCs are not in the business of starting or running companies. They
invest...

Oh, I wasn't trying to ask about the VC portion of the story. Yes,
they invest. :) I am really interested in the visa/immigration part of
the story here.
If VCs register a company (for legal purposes, not because they really
want to run a business), they could hire the person who is really the
founder, the person with the idea and skills, couldn't they? This way
the problem of "I have an idea, I start a company, I hire myself" is
avoided, no?

After all, the founder really just wants to run the business, get his
portion of shares in the company, and get a salary.

This doesn't sound a lot different from regular startups who hire H1-B
people, give them stock options and salary, it's just that in the case
of the founder, it would be a larger number of stock options. No?

Thanks.

Dan725

I think it's an EB-5 investor Visa that you need. Don't know much about them, but for the amount of money you are talking about, it's far better than an E-2 Visa as you can get a green card on an EB-5. Seems you need to invest 1,000,000 dollars (or 500,000 in an area targeted for employment growth).

As far as complex - you aint going to find it easy, whatever you do - easy is not a word that figures in the vocabulary of USCIS.

OtisUsenet

Bob wrote:
    > > Hello,
    > >
    > > What option does a foreigner in the U.S. have for starting a
business
    > > with the investment from a Venture Capital firm and/or angel
    > > investors?
    > >
    > > - Imagine a web-based service business, say "web based email" or
some
    > > such - consumer or enterprise market space
    > > - Imagine investors willing to invest $500,000/$1,000,000 or more.
    > > - Imagine a guy who built the technology, has ideas, understands
the
    > > field, and wants to turn that into a business.
    > >
    > > What are the options?
    > >
    > > The E-2 (Investor) visa sounds pretty complicated (min $100K,
office,
    > > telephone lines, business plan, model, projections, requires a trip
to
    > > the embassy in the home country, and in general feels quite
complex)
    > >
    > > The H1-B visa is doable, too? The VC firm registers a Corporation,
    > > sets up company shares and all, VCs get a % of shares, they hire
the
    > > founder as, say, the CTO, give him a % of shares, pay him the
    > > prevailing vage, maybe also a bonus.
    > > Is this doable and legal?
    > > Are there any drawbacks? (I hear you can't get the company to
sponsor
    > > you for a Green Card if you own more than 5% of it, but that's OK)
    > >
    > > Thanks.
    > Sounds like you need an E visa...
    > You can't set up a company to sponsor you for H1B...

Yeah, one can't sponsor himself. That's why I wrote "The VC firm
registers a Corporation". Would that not work?

Thanks.

OtisUsenet

Dan725 wrote:
    > > Sounds like you need an E visa...
    > > You can't set up a company to sponsor you for H1B...
    > I think it's an EB-5 investor Visa that you need. Don't know much
about
    > them, but for the amount of money you are talking about, it's far
better
    > than an E-2 Visa as you can get a green card on an EB-5. Seems you
need
    > to invest 1,000,000 dollars (or 500,000 in an area targeted for
    > employment growth).
    > As far as complex - you aint going to find it easy, whatever you do -
    > easy is not a word that figures in the vocabulary of USCIS.

Thanks, I'll take a look at EB-5, although, I'm afraid that it, like
E-2, requires a _personal_ investment (money coming from the bank
account of the applicant)... and I see EB-5 requires that one creates a
certain number of jobs, etc.
Having VCs hiring the real founder under H1-B avoids this, as the money
is VCs, and the H1-B status is the same as any old H1-B status (founder
or not).

Thanks.

Bob

You having stakes in the company will look very fishy from the outset won't it...so there more likely to scrutinise it....and probably why more people don't try it themselves...

Joe Feise

OtisUsenet wrote on 5/19/2005 13:25:
    >
    > Oh, I wasn't trying to ask about the VC portion of the story. Yes,
    > they invest. :) I am really interested in the visa/immigration part of
    > the story here.
    > If VCs register a company (for legal purposes, not because they really

VCs don't register companies. That's what I tried to get across.
VCs invest in *existing* companies.

    > This doesn't sound a lot different from regular startups who hire H1-B
    > people, give them stock options and salary, it's just that in the case
    > of the founder, it would be a larger number of stock options. No?

Startups are *not* started by VCs, they are merely funded in part by VCs *after*
the companies have already been in existence.
There is a reason why a founder is called a founder: he starts, founds the company.

-Joe
--
I am not a lawyer.
For reliable advice, consult a competent immigration attorney.

Joe Feise

OtisUsenet wrote on 5/19/2005 14:02:
    >
    > Yeah, one can't sponsor himself. That's why I wrote "The VC firm
    > registers a Corporation". Would that not work?

VCs don't register companies. They invest in *existing* companies.
Invest $1M and hire at least 10 Americans or Permanent Residents, and you can
get a GC in the EB-5 category.

-Joe
--
I am not a lawyer.
For reliable advice, consult a competent immigration attorney.

Joe Feise

OtisUsenet wrote on 5/19/2005 15:06:
    >
    > Thanks, I'll take a look at EB-5, although, I'm afraid that it, like
    > E-2, requires a _personal_ investment (money coming from the bank
    > account of the applicant)... and I see EB-5 requires that one creates a

Yes.

    > Having VCs hiring the real founder under H1-B avoids this, as the money
    > is VCs, and the H1-B status is the same as any old H1-B status (founder
    > or not).

Again, VCs don't run companies, they don't hire peopel to run startups, they
don't create startups. VCs *invest* in companies.

-Joe
--
I am not a lawyer.
For reliable advice, consult a competent immigration attorney.

OtisUsenet

Bob wrote:
    > > Bob wrote:
    > > > > Hello,
    > > > >
    > > > > What option does a foreigner in the U.S. have for starting a
    > > business
    > > > > with the investment from a Venture Capital firm and/or angel
    > > > > investors?
    > > > >
    > > > > - Imagine a web-based service business, say "web based email"
or
    > > some
    > > > > such - consumer or enterprise market space
    > > > > - Imagine investors willing to invest $500,000/$1,000,000 or
more.
    > > > > - Imagine a guy who built the technology, has ideas,
understands
    > > the
    > > > > field, and wants to turn that into a business.
    > > > >
    > > > > What are the options?
    > > > >
    > > > > The E-2 (Investor) visa sounds pretty complicated (min $100K,
    > > office,
    > > > > telephone lines, business plan, model, projections, requires a
    > > > > trip
    > > to
    > > > > the embassy in the home country, and in general feels quite
    > > complex)
    > > > >
    > > > > The H1-B visa is doable, too? The VC firm registers a
    > > > > Corporation,
    > > > > sets up company shares and all, VCs get a % of shares, they
hire
    > > the
    > > > > founder as, say, the CTO, give him a % of shares, pay him the
    > > > > prevailing vage, maybe also a bonus.
    > > > > Is this doable and legal?
    > > > > Are there any drawbacks? (I hear you can't get the company to
    > > sponsor
    > > > > you for a Green Card if you own more than 5% of it, but that's
OK)
    > > > >
    > > > > Thanks.
    > > > Sounds like you need an E visa...
    > > > You can't set up a company to sponsor you for H1B...
    > >
    > > Yeah, one can't sponsor himself. That's why I wrote "The VC firm
    > > registers a Corporation". Would that not work?
    > >
    > > Thanks.
    > You having stakes in the company will look very fishy from the outset
    > won't it...so there more likely to scrutinise it....and probably why
    > more people don't try it themselves...

Well, in tech startups, when you hire a person, you typically give that
person a small stake in the company in a form of stock options, so
that's pretty normal practise.

Also, I don't think INS (former) ever asks for employee's stake in the
company. They ask for the salary, to ensure that the employee is paid
the prevailing wage, but that's all, as far as I know.

As for "probably why more people don't try it themselves".... that's
kind of what I'm wondering. That is, I don't think that statement is
quite correct - foreigners _do_ start VC-backed companies in the U.S.
(think Hotmail, for example). How do they do it? Hotmail's founder
and CEO was an Indian guy. What's more, I heard he was still a
(graduate?) student when he started Hotmail. He sold it to Microsoft
for $80M, and that's something pretty high profile and visible. So
how did he do it?

Thanks.

Joe Feise

OtisUsenet wrote on 05/19/05 22:25:

    > As for "probably why more people don't try it themselves".... that's
    > kind of what I'm wondering. That is, I don't think that statement is
    > quite correct - foreigners _do_ start VC-backed companies in the U.S.
    > (think Hotmail, for example). How do they do it? Hotmail's founder
    > and CEO was an Indian guy. What's more, I heard he was still a


So what? He probably had a GC.
The last foreigner to launch a business while on visitor visa was Philippe Kahn, who
founded Borland in the early 80ies. According to a story I read, he moved from cheap motel
to cheap motel to avoid deportation...

    > (graduate?) student when he started Hotmail. He sold it to Microsoft


No, he wasn't.

    > for $80M, and that's something pretty high profile and visible. So


That was $400M...

    > how did he do it?


It takes all but a quick Google search to find this...
http://en.wikipedia.org/wiki/Sabeer_Bhatia

-Joe
--
I am not a lawyer.
For reliable advice, consult a competent immigration attorney.