Article By: Matt Sellers
For many aspiring international entrepreneurs and international students, the prospects of starting a business in the United States can be both exciting and intimidating. The already complex task of starting a business in the U.S. can be further compounded by visa concerns, access to capital and exiting the business at the proper time.
This article is a brief overview to help the international entrepreneur navigate these issues and maximize the opportunities for a successful startup as an international student in the United States.
Visa Options for International Entrepreneurs:
Many international students enter the United States on an F1 visa
. This visa is quite restrictive in regards to international students owning businesses. Under the F1 program, international students are to allowed to own a business. This means that international students cannot earn revenues or salary derived from a business which they operate.
However, they are permitted to become a passive investor or a passive partner in a startup in the U.S. While this issue is not altogether resolved, it is important to remember that becoming too active in the startup’s operations may result in revocation of the F1 visa.
However, there is another option. Instead of starting a business on the F1 visa, international students are eligible to apply for the Optional Practical Training (OPT) program
. OPT allows international students to operate a business that is related to their field of study, but only lasts for one year. Therefore, you may wish to begin networking and planning how to manage the year of OPT status in advance. Also, after the student completes the OPT year, they are required to exit the United States, and are not guaranteed reentry without applying for another visa.
A third option for international students who wish to start a business in the U.S. is the H1-B program
. Under the H1-B Visa program, an international student is barred from holding a majority stake in their company, but is allowed to work in the U.S. for 3 years. After the 3-year limit has elapsed, the H1-B visa holder may extend the visa for an additional 6 years, after which they are eligible to apply for a green card. For many international students who desire to start a business in the United States, the H1-B program is likely the best option.
Access to Capital:
Accessing capital for your business as an international student is another area that may be more difficult than initially expected. Many U.S angel investors and venture capital firms may be hesitant to invest in a startup that has an international student as one of the lead founders.
Instead of viewing this as a type of xenophobic prejudice, it is important to remember that angel investors and venture capital firms are evaluating the viability of the business – regardless of where the founders are from – but visa status will be included in the investor’s diligence on the company and founders. Also, keep in mind that an international background could actually be an asset with regard to marketing your expansion potential and ability to attract foreign investors as well.
Likewise, having a diverse startup team is often viewed as an asset that protects against group think in the entrepreneurship community, and should not pose significant problems if some of the other founders on your team have American citizenship.
We recently posted an article detailing 100 venture capital firms and angel investors in the southeastern United States
. When selecting a business entity, keep in mind that the S corporation bars non-resident aliens from becoming investors. This means that you will likely need to choose either the C corporation or the LLC as your business entity of choice. (You can learn more about selecting your business entity here
As a non-citizen, exiting your startup in the United States may seem like a daunting task. Selling your startup should be a reason to celebrate your personal and financial success in the U.S. and viewed as a major accomplishment. There is, however, one thing an international entrepreneur should keep in mind when going through the sale process.
Just because you sell your business does not mean you necessarily have to abandon your plans to stay in the U.S. You should consider hiring attorneys to help you negotiate with the buyer regarding his/her support for your H1-B or other visa status. This will allow you to continue to pursue a green card, even after your business is sold.
The unfortunate truth is that many startup businesses fail, but if an international entrepreneur finds themselves in such a situation, know that you are not required to leave the United State immediately. You are allowed 3 months in which you may be unemployed before you must leave the United State on the H1-B visa. You can also go back to school or obtain a job in your field of expertise and then reapply for the H1-B visa.
About Fourscore Business Law:
Based in the Research Triangle region of North Carolina, Fourscore Business Law serves entrepreneurs and businesses in Raleigh, Durham, Chapel Hill, Wilmington, Charlotte and throughout the Southeast. We also represent venture capital funds and other investors who invest in companies located in New York, Silicon Valley and everywhere between. The idea of delivering maximum impact in a simple and succinct manner is what we’re calling the Fourscore Principle. And that is what Fourscore Business Law is based on. Our clients operate in a broad range of industries including tech, IoT, consumer products, B2B services and more. Questions? Shoot us an email or give us a call at (919) 307-5356. Your first call is on us.