In 1941, President Franklin D. Roosevelt delivered his famous “The Four Freedoms” speech, in which he proposed four human freedoms that people “everywhere in the world” ought to enjoy: Freedom of speech and expression; freedom of religion; freedom from want; and freedom from fear. Foreign investors and entrepreneurs come to the United States seeking to enjoy these essential freedoms. The truth is that the United States is still the land of opportunities and the greatest country in the world, and many individuals from around the world seek to live and work here permanently.
With an extensive background in corporate, business and immigration law, one of my passions is to represent foreign investors and entrepreneurs who are brilliant in business, sophisticated professionals, and hardworking and challenging individuals willing to inject their financial and labor efforts into the U.S. economy.
Investors allocate capital with the expectation of a financial return. Entrepreneurs embrace ambiguity and are comfortable with being challenged on a regular basis. Foreign investors who allocate capital in a land they were not born, who speak a language in which they may not be fluent, who face the same challenges as other U.S. entrepreneurs and who still achieve success, are an important part of our country and economy at different levels. Their success depends on several factors, but it all begins with selecting the right immigration visa and the immigration attorney with the experience and sophistication necessary to facilitate the most favorable immigration outcomes available to foreign investors and entrepreneurs.
Some Remarkable Stories of Foreign Investors and Entrepreneurs.
There are different types of foreign investors. First, there are outstanding foreign students (F-1) who upon graduation turn H-1B (see below) professionals, and later, green card holders. Another important category is the family-sponsored immigrant who came to the United States, initially started a business (with the help of family members) that eventually became successful. Finally, there are those foreign entrepreneurs who bolster the American economy through the immigrant investor visa program (E-1, E-2, EB-5, L-1A, L-1B, TN, EB-1, EB-2, EB-3; see below).
Perhaps one of the most widely-known U.S. success stories is the internet entrepreneur and computer scientist Sergey Brin, co-founder of Google. He was born in Moscow, Russia, and came to the U.S. as a refugee, escaping from the Jewish persecution in 1979. As most people know, Brin and his partner, Larry Page, created the Google search engine. Initially they raised capital from family and friends, launching the company in 1998. They went public six years later, making the founders billionaires.
Another successful foreign entrepreneur story that of an outstanding engineer from India (whose name will kept confidential), who came to the U.S. on an H-1B visa. A few years later, he launched his own company that provides high-tech support to other large companies in the U.S. market. His company has created over 20 employment opportunities, some of which are now H-1B’s, and generates annual revenues of $10 million.
The most common stories of successful foreign investors and entrepreneurs are those who came to America, acquired an already existing business, or established In the U.S. a subsidiary, affiliate or branch of a foreign company; or a brand new small business (a print shop, a local bakery, a restaurant, an ice-cream shop, etc.), and are now successfully managing and running those businesses, creating additional employment opportunities.
Immigration laws permit these foreign investors to make the American Dream come true. Some of the current US visas allow foreign investors to become legal permanent residents, also known as green cardholders, at some point. Other programs allow individuals to work and live in the US under certain visas for a number of Years of indefinitely, depending on the visa, as long as they can show that they continuously meet the visa requirements.
Visa options for investors /entrepreneurs.
Following are the most common visa options for entrepreneurs in startups and small business:
- B1 Visa. Business Visitor Visa. This visa applies to individuals who will be participating in business activities of a commercial or professional nature, consulting with business associates, making sales, conducting occasional negotiations, attending meetings or seeking investment. The maximum duration of stay is 6 months.
- H-1B visa, also known as Specialty Occupation Worker. This visa is for foreign individuals who have the equivalent of a U.S. bachelor degree, or a foreign degree and/or work experience that is equivalent to a U.S. bachelor degree. The maximum duration of stay is six years. Under certain circumstances, an H-1B visa holder can also apply for U.S. permanent residency (green card).
- L-1A Intra-Company transferee. This visa is available for executives or managers who have worked for at least one year in the past three years for a foreign parent, subsidiary, affiliate, or branch office of the U.S. company that will employ them. The maximum period of stay under this visa is seven years. Under certain circumstances, an L-1A visa holder can also apply for U.S. permanent residency (green card)
- L-1B Intra-Company transferee. This visa is for specialized knowledge employees who have worked for at least one year in the past three for a foreign parent, Subsidiary, affiliate, or branch office of the proposed U.S. employer. The maximum period of stay is five years.
- E-1 Visa. Treaty Trader. This visa is for staff to direct and develop import/export trade between the U.S. and the treaty country. This visa allows the holder to Remain in the U.S. indefinitely in two-year increments.
- E-2 Visa. Treaty Investor. This visa is for staff to direct and develop investments made in the U.S. by a treaty country national or a treaty country company. This visa allows the holder to remain in the U.S. indefinitely in two-year increments.
- EB-5. Immigrant Investor. This visa provides the process to obtain a green card for foreign nationals who invest money in the United States. Individuals must invest $1.8M (or at least $900,000 in a “Targeted Employment Area” – high unemployment or rural area), creating or preserving at least 10 full time jobs for U.S. workers excluding the investor and their immediate family.
- Permanent residence for First Preference Priority Worker (EB-1a, EB-1b, EB-1c). This visa is for international managers and executives, aliens with extraordinary ability and outstanding Professors or Researchers. An EB-1c visa is a good way for small or start-up overseas companies to expand their business and services to the United States.
- Permanent residence for Second Preference Priority Worker (EB-2). This is for professionals with advanced degrees or those with exceptional ability in the sciences, arts or business.
- Permanent Residence for Third Preference Worker (EB-3). This is for professionals with basic degrees, and skilled workers or other workers who have less than two years of relevant experience.
- TN Visa. Canadian (TN-1) or Mexican (TN-2) professionals and managers. This visa allows the holder to remain in the U.S. indefinitely upon required renewals.
Each of these visas has its own rules, pros, cons, and limitations which must be carefully followed to achieve immigration goals. Only a limited number of investor visas gives the opportunity to apply for U.S. permanent residency, while others allow investors and their families to live in the U.S. for a number of years, or in definitely, provided that certain requirements are met at the time of the visa renewal.
Business considerations for foreign investors. Collaborative practice among attorneys and other professionals.
In addition to the immigration issues foreign investors must confront while seeking status to live and work in the United States, they must also deal with business, and tax issues. It is important that the immigration counsel closely work with an experienced business transactional counsel and a tax advisor (CPA) who can advise investors on the right choices.
Some investor visas are quite complex and require the assistance of a business lawyer, a security lawyer, a business plan writer, and/or an economist. The immigration lawyer should be sufficiently knowledgeable in these areas to dialogue intelligently on topics relevant to the visa.
A very basic and important consideration is to select the state of incorporation and what type of business entity is used for the investment: Limited liability company, corporation, limited or general partnership, or limited liability partnership. The appropriate language must be contained in the enabling documents to meet the visa requirements.
Another critical component of the investor visa is a well-drafted business plan outlining the goals, projections and financial analysis of the business. This is especially the case with smaller businesses that have lower revenues or small number of employees. The business plan is the opportunity to explain the investor’s business concept to the immigration authorities who will be adjudicating the visa application.
During the immigration investment process, special considerations may also be necessary to address such as tax status, open bank accounts, transfer of funds into the entity and documentation of the source of funds, protection of intellectual property, and additional government filings may also be necessary. Drafting collateral agreements, contracts, leases, and buy-sell agreements is necessary to facilitate the investment, as well as advising clients to obtain the necessary insurance policies (Directors and Officers Insurance, Errors and Omissions Insurance, other liability insurance).
The Evolving Process of the U.S. Immigration Laws for Foreign Investors and Entrepreneurs.
Immigrants continue to become some of the most successful founders in the United States. Yet, despite such vast economic contributions, U.S. law provides no dedicated means for immigrant entrepreneurs to launch innovative companies in the United States. In fact, immigration laws and regulations do not favor foreign investors and entrepreneurs, and the U.S. government is fully aware of this.
Foreign entrepreneurs, like any other foreign individual seeking to live and work in the U.S., are subject to the immigration process, which in many occasions it can be a big distraction when trying to build a company. The President’s executive actions aim to increase efforts to strengthen the economy and create jobs for U.S. workers by enhancing options for foreign entrepreneurs, attracting investment and generating tax revenue to ensure economic growth.
Statistics show that 40 percent of the Fortune 500 companies were founded by an immigrant or the child of an immigrant. Many small and medium-sized companies founded by immigrants have also contributed to the U.S. economy. I am personally familiar with countless stories of brilliant, successful, sophisticated, and hard-working investors and entrepreneurs who run their business with “an accent.” Some of them are still trapped in the loops of the immigration laws while others, like myself, have become American citizens.
The hope is that the U.S. immigration laws will continue to evolve toward more flexible rules for foreign investors and entrepreneurs. They are part of our history, they are part of America.