Tech Startups and the E2 Visa Part 1: Investment
Tech startups were made for the E2 visa. We have helped tech entrepreneurs get E2 visas, and we can help you, as well. Read on to discover how you may be positioned to launch your tech startup in the United States with the E2 visa. In this article, we dive into the investment requirement for the E2 visa. If you are like most startups, you may not have your own money to invest. You may be a recent graduate looking for an E2 visa or simply new to entrepreneurship. Never fear! There are several options when it comes to meeting the investment requirement of the E2 visa.
Investing a “substantial” amount of money into a business is crucial in order to qualify for the E2 visa. Of course, this is sometimes an obstacle for young entrepreneurs. However, there may be ways to get the money to invest in the business that will allow you to qualify as an E2 visa investor.
1. A gift.
If you have a benevolent aunt or brother or parent, you may be able to get a financial gift in order to invest into the business. Of course, you know your family and friends best, but it may be wise to let them know the business you plan to launch and how this business will make money. If you are able to get a gift from family/friends, you can use this money to invest in the U.S. business, and it will likely be seen as a legitimate source of funds. A gift is exactly how it sounds — there is no expectation of repayment of any type.
2. A loan.
Again, you could approach family and friends first to see if a loan could be a possibility. If they aren’t able to help, you could get a loan from any financial establishment that typically issues loans. One thing to be cautious about in this case is what the loan is based upon. “Indebtedness such as mortgage debt or commercial loans secured by the assets of the enterprise cannot count toward the investment…” The regulations go on to state that, “…if the business in which the alien is investing is used as collateral,” these funds are not eligible to be used. “Only indebtedness collateralized by the alien’s own personal assets, such as a second mortgage on a home or unsecured loans, such as a loan on the alien’s personal signature may be included,” in the loan. (9 FAM 402.9-6(b))
As a result of this language, it’s crucial that the terms of the loan are very clear and include only personal items as collateral.
By far the most popular option among startups, investors’ funds can be used for the E2 visa investment with a little bit of strategy. There are three ways that the investors may be able to fund the company and you can still get an E2 visa.
Option 1: Investors give you the money personally (likely as a loan).
In the case that the investors are giving you the money, things are a bit easier to navigate when it comes to an E2 visa. If you are personally in control of the money and are able to invest it, you have an easier time showing that the money is a personal loan and that you are going to use this personal loan to invest it in this business.
Option 2: Investors invest directly into the U.S. tech startup.
In this case, we are assuming that you invest at least some money (think $20,000-$30,000). Once we have determined that you have some ownership and will be investing some money, we next have to look at the nationality of the other investors. In order for this to work well, you need to make sure that at least 50% of the investment comes from investors who have the same passport as you. We also have to determine where the investors are living and working. Are they in the United States? If so, they must have an E2 visa, or their investment won’t count toward the overall investment. But, if the treaty national investors are living and working outside of the U.S., we can use their funds as part of the investment. One other caveat — the investors (each of them), must be able to show their source of funds.
Option 3: Investors invest into a “home country” business that, in-turn, invests in the U.S. company.
Again, we need to determine the passports of each of the investors. It’s crucial to show that 50% of the ownership of the “home country” business has the same passport as you do. Once that happens, we can show that the U.S. company is owned by a “home country” company and that you are the employee of the US company. If the home country business is only a holding company, we have to show the individual share holders’ source of funds. If the home country business is operational, the source of funds can be shown through tax documents.
4. Start a foreign business.
If all else fails when it comes to investment funds, it may be time to launch your startup in your home country — for now. If you can launch the business in your country of citizenship, save the money and then invest into a U.S. startup company, you may have a winner. In addition, you will have proof (by virtue of your success in a foreign country) that the U.S. business can work.
Have more questions about the investment requirement for the E2 visa? You’re not alone. We have answered many tech startup questions about this option, and we’re happy to speak with you about your tech start up and how to get the E2 visa to run it.