Lower Investment Threshold Spurring Interest in EB5 Visa Law
From Business Daily:
By Gwen Moran
A push to raise awareness and change policy on a new visa that will let foreign entrepreneurs set up shop in the US if they invest has gained momentum.
The EB-5 visa, which permits foreign nationals who invest at least $1 million into a US start-up or existing business and create 10 jobs, or which invest $500,000 in capital investment and create five jobs in economically disadvantaged areas, to obtain permanent resident status, commonly known as a green card was recently muted by the US Congress.
Last December, representative Jared Polis introduced the Employment Benefit Act (HR 4259), which included reform of the EB-5.
In February, senators John Kerry and Richard G Lugar introduced the Start-up Visa Act of 2010 (S 3029), which focuses on EB-5 reform, reallocating a portion of the 10,000 visas allowed annually under the EB-5 category and creating a new EB-6 category for immigrant entrepreneurs.
While some of the details of the bills are different, the meat is largely the same: it amends current immigration law, lowering the investment threshold to $250,000 in equity funding from qualified super-angel investors or venture capital firms.
Records from the Department of State, show that only 692 EB-5 visas were issued last year.
Qualified super-angel investors need to meet certain Securities and Exchange Commission (SEC) criteria to be an “accredited investor”.
In addition, the angel investor has to be a US citizen and have made at least two equity investments in the past three years of not less than $50,000 each.
Qualified venture capitalists must be US-based VC firms in business for at least two years, and whose partners are primarily US citizens.
The firm must have made at least two investments of not less than $500,000 within the past two years.
At the end of two years, those immigrant entrepreneurs who employ at least five full-time employees or who have either raised $1 million in new capital or earned $1 million in revenue will be given green cards.
It could be next year by the time the bill sees real action in Congress, but it is already spurring plenty of discussion both on and off Capitol Hill.
Attorney Angelo Paparelli, a partner in the immigration practice of law firm Seyfarth Shaw LLP’s Los Angeles office, says the proposed changes would make it possible for entrepreneurs to start business under this provision and qualify for citizenship.
Traditionally, he says, the EB-5 has benefitted entrepreneurs starting retail, hospitality, and commercial construction enterprises.
Sectors like technology typically run lean and “don’t employ 10 or more employees in the start-up phase,” he says.
Paparelli also likes that the Start-up Visa Act requires investors who have a track record and licensure with the SEC.
This may encourage immigration officials, who may not be fully versed in business theory and may reject business proposals they don’t understand, to be more lenient in their approvals.
While more than 160 venture capitalists have rallied behind the Kerry-Lugar bill, which Feld and his colleagues helped shape, there is also some opposition to the reforms.
A piece published on BusinessInsider.com in March by Paris-based entrepreneur Pascal-Emmanuel Gobry entitled “The Start-up Visa Act Must Be Stopped” was widely circulated, and criticised the bill as putting too much power in the hands of investors, while saddling entrepreneurs with too much risk — not only would their livelihood be at stake should the business fail, but also their residency status.
Nothing much is likely to happen with either bill before the mid-term elections.
But most who tout this bill emphasise the job-creation aspect rather than the political hot potato of immigration reform.