Immigration Pathways to the United States for Investors and Entrepreneurs
Investment and doing business in the United States continues to be attractive. Foreign direct investment in the United States increased by 10% in 2021 as compared to 2020.[1] Immigrants in particular play a substantial role in new business formation, and immigrants or their children have founded 44% of all Fortune 500 companies.[2]
This overview of immigration pathways draws from 30 years of experience representing thousands of investors and entrepreneurs, as well as US businesses that have raised $5 billion in capital from immigrant investors. Our practice at SGG Immigration also covers the spectrum of US immigration law, including services for universities, research and healthcare institutions, startups and multinational companies, and individuals qualifying as extraordinary immigrants in the sciences, arts or business. Discussion of immigration strategies often revolves around near-term needs and potential “non-immigrant visa” categories, as well as the longer-term horizon and applicable “permanent residence” categories. As US immigration law is a federal practice, we represent clients far beyond our head office in Southern California, to most states in the country. Also, our immigration law work is often in concert with transactional, real estate and corporate lawyers, securities counsel, international tax advisors, and experts from the client’s home country.
Investment
Entrepreneurs seeking permanent residence typically inquire about the “EB-5 category” for investors. This pathway may be suited whether the investment is made for a startup, acquisition, or growth scenario. The minimum investment is $800,000 for businesses located in rural or high unemployment areas. The investment must create at least ten jobs for US workers, proven with payroll documentation or reasonable economic methodologies for estimating indirect job creation. Proof of lawful sources of investment funds is essential, and often leads to collaboration with foreign legal counsel. With the enactment of new legislation in March 2022, investments made in qualifying infrastructure are prioritized.
Given delays in government adjudications with EB-5 category applications, most entrepreneurs find the EB-5 category to be lacking as a standalone strategy. A parallel non-immigrant visa pathway is also essential. On the other hand, where the EB-5 category is the lone immigration pathway, the applicant is typically a passive investor.
Hands-on entrepreneurs are more likely to be drawn to the E-2 visa category as a potential near-term pathway. The E-2 visa authorizes entry to the United States for purposes of developing and directing a US business. The applicant must have invested a “substantial” amount of capital (no minimum stated), and owns at least 50% of the business or is in operational control. The applicant must be a national of a country having a bilateral investment treaty with the United States. The Department of State publishes a long listing of these countries, including United Kingdom, France, Germany, Netherlands, Japan, South Korea, Canada, Mexico, to name a few. Notably missing are Brazil, Russia, India, China, and South Africa. What to do in the latter case? Some clients have opted for a two-step strategy that involves obtaining citizenship from a third country that has a treaty (for example, Grenada) and then applying for the E-2 visa.
Extraordinary or Exceptional Ability
In certain circumstances, investors and entrepreneurs may have better odds of qualifying for US immigration benefits by applying on the merits of their own resume if it demonstrates “extraordinary ability” in a particular field of endeavor. For permanent residence, the “EB-1A category” is for persons who are in that “small percentage” at the “very top” of their field. Supporting evidence might consist of “sustained acclaim” and a major internationally recognized award, or alternative evidence such as awards, published material about the applicant, and scholarly articles. In a startup scenario where the company has not generated substantial revenues, the applicant might self-petition.
In a slightly different twist, where the investor-entrepreneur’s work is considered of national significance, the applicant might qualify for permanent residence in the “EB-2 category” without a company sponsor. The applicant would demonstrate, initially, membership in a profession with an advanced degree, or exceptional ability in the sciences, art, or business, that would substantially benefit prospectively the national economy, cultural or educational interests, or welfare of the United States. The self-sponsoring applicant then would show the proposed endeavor has both substantial merit and national importance, and the applicant is well positioned to advance the proposed endeavor. The required proof may be in the form of ownership and/or unique skills and experience, publications referencing the applicant, relevant patents, substantial revenue growth, capital commitments from angel investors or VC firms, participation in incubator or accelerator programs, and grants provided by federal, state, or local development agencies.
While either of these permanent residence pathways may be applicable to the particular client, again, the application/approval process can be lengthy. Depending on whether the investor-entrepreneur is already in the United States, a near-term strategy may be necessary to fill the gap.
The O-1A non-immigrant visa is for individuals with extraordinary ability in the sciences, education, business, or athletics that could fit well for the entrepreneur. The applicant must prove sustained national or international acclaim in the particular industry, as evidenced by major internationally recognized awards, or publications about the applicant, contributions made to the field of endeavor, high compensation, and the like.
A different immigration benefit – “parole” – is not permanent residence or a non-immigrant visa category, but is a status for entrepreneurs that could be used for up to five years (assuming it is extended). The entrepreneur must hold at least a 10% ownership interest and will have a central role in the startup business. Also, the startup must have received at least approximately $265,000 in investments from qualified angel or VC investors, or at least approximately $105,000 in qualified government awards or grants. The applicant must show that the startup has substantial potential for rapid growth and job creation. A broad range of evidence could be relevant, including revenues, the amount of funding, national scope of the endeavor, and the entrepreneur’s earlier successes as evidenced by patented innovations and job creation.
Multinational Companies
Investors and entrepreneurs might be able to qualify for the L-1 non-immigrant visa that is reserved for executives and managers of multinational companies. The applicant must have worked in the foreign company for at least one year in a managerial or executive capacity, or in a position requiring specialized knowledge. The foreign and US companies must be related as parent, subsidiary or affiliate. The L-1 visa generally is issued for three years, with an opportunity for extension. However, a one-year L-1 visa may be available for a “new office” established in the United States. As in a recent successful case, the pivotal managerial role of the foreign executive to the US company may be evidenced by the substantial VC funding that the business has garnered in anticipation of the foreign executive taking the reins of the US company.
On the whole it can appear that US policymakers are ambivalent about welcoming immigrant investors and entrepreneurs. Job-creating investment is desired, but then political expediency requires clarifying that the immigration benefit is not a pathway to US permanent residence or citizenship. The experienced practitioner helps the client weave through the many obstacles by pursuing a feasible strategy tailored to the client’s core business objectives.
[1] https://www.bea.gov/sites/default/files/2022-07/fdi0722-fax.pdf
[2] https://data.americanimmigrationcouncil.org/en/fortune500-2022/