Attorney Michael Rosenthal Explains 3 Types of Visas Entrepreneurs Could Use to Move to the U.S.
For entrepreneurs interested in relocating to the U.S. to move their company forward, there are a few different types of visas to choose from. Labs mentor Michael Rosenthal, an attorney specializing in immigration issues, led a Labs session all about visas available to entrepreneurs, how they work, and the pros and cons of each. Here are the basics:
The E-2 visa, or investor visa
Who it’s for: Entrepreneurs who are “willing to pursue a business plan and put money at risk to do it,” Rosenthal says.
How it works: In order to get this visa, you have to make investments in your business within the U.S. That money could come directly from you, “but other times it can be done through venture capital money that you’ve raised, or outside funding that goes into a corporation and the corporation does the investment,” Rosenthal says.
There are no set rules on how much money you’re required to invest, “but the law says the investment needs to be ‘substantial,’” Rosenthal says. “It used to say $50,000 but now it’s open to interpretation. But the government wants to see that you’ve sunk the money into the operation before you’ve submitted the visa application.”
There are many different expenses that would qualify here, from office space to inventory to equipment. “Sometimes the launching of a business will naturally require certain financial investment that could reach the level of ‘substantial’ in the law,” Rosenthal says. “It depends on the type of business you have.”
The pros: “It's a great program if you're willing to make the financial risk in the investment because you can get into the U.S. based on proof of your intent to create a business,” Rosenthal says. “You don't have to have a fully mature business at the time you do the application, and so for entrepreneurs, it can be a great thing.”
It can also be a natural fit for businesses with significant overhead. “If you have a business that requires a lot of inventory that you need to purchase, significant office space, or you need certain workers hired in the U.S. before you get there, those could be very big numbers [for E-2 investment purposes]” Rosenthal says.
The cons: “You have to put the money at risk before you get the visa,” Rosenthal says. And not all startups have the kind of costs that would meet the qualification of being ‘substantial.’ “The problem I see frequently is that entrepreneurs have a software company and all they really need is a computer and an internet connection to get things going. In that situation, from a business perspective, you don’t want to spend money when you don’t have to,” Rosenthal says. “And the law has not caught up with this situation. If you fall into this category, it’s going to be very tough to get the visa because there’s very little financial investment occurring, and that’s what the visa is based on.”
That doesn’t mean it’s hopeless, though. “You can get creative with finding ways to invest substantial money,” Rosenthal says. “One thing I’ve done multiple times for clients is having them pay for a year of office space in advance. As long as the money is ‘irrevocably committed’, it turns into money spent on the operation and it qualifies for the visa.”
The E-1 visa
Who it’s for: Entrepreneurs who have “a lot of international commercial transactions with the U.S.,” Rosenthal says.
How it works: “If you have U.S. customers who are paying you on a regular basis, and you have some documentation that shows evidence of a history of regular transactions between your entity in your home country and in the U.S., you can potentially get a visa based on that [international trade relationship],” Rosenthal says. There are no hard and fast rules on how long that trade history needs to be ongoing, but “based on my experience, I look at it as at least six months,” Rosenthal says. “Consular officers have a lot of discretion in deciding what counts as long enough and what doesn’t.”
The pros: “This is a very good visa if you can get it,” Rosenthal says. And startups with a solid history of existing, paying U.S. customers should be well set up to get it. Plus, the discretion that consular officers have could also work in your favor. “You could run into a consular office who would agree on less than six months if your company had really great commitments from customers who were going to pay them a lot of money, like a million dollars,” Rosenthal says. “That might work even though there isn’t a history because there are substantial commitments to paying on paper.”
The cons: This visa can be tough for startups to get because it requires a history of trade between your startup and U.S. customers. It’s not for companies with prospective American customers. “Even if you have customers who’ve indicated some kind of commitment, unless they’re contractually committed to paying, it doesn’t count,” Rosenthal says.
The L-1 visa, or transfer visa
Who it’s for: Companies seeking to transfer their non-US workers to their US parent, subsidiary, branch or affiliate. Founders or early-stage employees who need to transfer to the U.S. for expansion reasons can also potentially utilize this visa.
How it works: The classic example is that you have a manager, executive, or highly knowledgeable foreign worker who you want to transfer to your already established US entity. However, let’s take the example of a founder or CEO of a startup. “You’ve formed an entity in your country. Let’s say it’s Israel,” Rosenthal says. “It’s mostly an R&D entity. You reach a stage in your organizational development where you need to start selling and you’re targeting the U.S. market. So you need a sales and marketing team in the U.S. So you, as the founder or CEO, need to relocate to the U.S. to lead that team. And maybe the CTO comes next because there could be some front-end software development that needs to be done in the U.S.”
The pros: If you or the employee(s) you want to transfer have been with the foreign company for more than a year and you or they meet the qualifications to apply for this visa, it can be a very useful one to get.
The cons: You or the person being transferred needs to have worked for your company for at least one year. “You have to have that year of employment in order to have a chance of qualifying,” Rosenthal says. You also can’t transfer just anyone. “You can only transfer people who are considered managers, executives, or ‘special knowledge workers,’” Rosenthal says. “That eliminates a lot of people. People think that just because they have ‘manager’ or ‘executive’ in their job title, they’re going to qualify, but that’s far from the truth. The government really digs into their job duties and tries to determine exactly what they are doing. So that’s not an easy thing to qualify for in a small company.”
It can also be challenging to get an extension on an L-1 visa when the initial application was for a new US office. “That’s when it’s really a test for the company because the pressure is on to show U.S. growth,” Rosenthal says. “If there’s no evidence of hiring workers and attracting U.S. customers between the time of the initial approval and the extension request, you can be in a very difficult situation.”
The B-1 visa, or business visitor visa
This visa is not for those who want to move permanently or semi-permanently to the U.S. “A lot of people get it as part of a tourist visa, and it’s more for early-stage entrepreneurs who want to come to the U.S. to meet with investors, customers, or participate in an accelerator,” Rosenthal says. It doesn’t allow you to stay in the U.S. for a significant period of time.
And it also limits what you’re allowed to do business-wise while you’re here. “It’s very limited,” Rosenthal says. “It’s hard to draw the line where your activity becomes illegal work under this visa, but I generally tell people that if you’re setting up a desk and it’s becoming your main place of work, you’re probably crossing the line of what’s allowed.
“The key thing to understand with a B-1 is that you shouldn't plan on using it as any type of long-term solution,” Rosenthal says. “Use it to lay certain groundwork for your company, like maybe finding an office, setting up a bank account, maybe attending an accelerator, meeting with investors, those types of things. Don't use it to relocate, and then plan on switching to a different visa. I've seen that before, and it's tempting to do, and it's even worked in some situations. But it's playing around with the rules, and it is not recommended.”
This post is based on content from a WeWork Labs programming session.
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