Ask Sophie: As an immigrant to the US, how can I create and work for my own startup?
Here’s another edition of “Ask Sophie,” the advice column that answers immigration-related questions about working at technology companies.
“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”
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Dear Sophie,
I was born in India and have been living and working in the U.S. on an H-1B with my current employer for four years. I tried to apply for one of the 10,000 H-1B visa holder work permits that Canada made available in July, but I didn’t get one.
I’ve decided to move forward and found my own startup in the U.S. What’s the best way for me to be able to stay in the U.S. and legally work for my startup?
— Fledgling Founder
Hiya Fledgling!
Kudos to you for your grit and determination to continue to build and innovate in the United States. You’ve got this — and I’ve got your back!
A note to U.S. lawmakers: We are falling behind
Canada’s H-1B initiative and its overall work visa and permanent residence processes are far more appealing and effective in attracting and retaining international talent than the restrictive, complicated and backlogged immigration system individuals face in the United States.
The U.S. must enact immigration legislation that helps startup founders and merit-based workers have a clear path. This has become a national security issue: Do we want the emerging technologies of the future to be created in the U.S.?
Even state-level actors see the urgency and importance of founder immigration: California governor Gavin Newsom recently budgeted $2 million for a Global Entrepreneur in Residence (GEIR) pilot program in the University of California system. The program aims to attract and retain international talent by enabling the UC system to sponsor visas for individuals to build startups.
Immigration vs. corporate law
Creating a strong foundation for your startup under corporate law and creating a strong startup to sponsor you for a work visa or green card under immigration law focus on different things. Because of that, I recommend you work with both an immigration lawyer and a corporate lawyer for guidance.
During a chat with Michael Avent, a partner at multinational law firm Perkins Coie who works with emerging growth startups and VCs, he emphasized it’s crucial for prospective founders to keep in mind the proprietary inventions and assignment agreement that they likely signed with their current employer.
Avent said one of the first things he does when meeting with prospective founders if they are currently working for a company is to go through the proprietary inventions and assignment agreement. “One of the things that we always think about at the earliest stage — even pre-company — is protecting the IP that’s going to form the foundation of the business and that can be complicated if you’re working someplace else.”
Things get complicated with immigration law, too, since you cannot do any work for your startup without a work visa or other work authorization. Your H-1B usually authorizes you to work only for the company that sponsored your visa — your current employer. Working to get your startup off the ground without the proper work authorization could have a detrimental impact on your ability to remain in the U.S. and any future visas or green cards you apply for.
However, there are things you can do that are not typically considered work, such as attending business meetings with prospective hires or investors or signing contracts. Ask your immigration lawyer about other activities you want to engage in to set up your startup to find out if they are allowed.
Avent also highlighted a few things that will have a huge impact on your future as a founder and on that of the company that you should stay on top of as a founder. For example, he talked about the importance of meeting the filing deadline for Section 83(b), which enables a founder to be taxed on the equity in their startup on the date it was granted rather than when it vests.
It can be “catastrophic to founders and their company if the 83(b) filing is missed,” he says, meaning potentially “hundreds of thousands [in] tax liability for the founder and withholding for the company.”
In addition, Avent emphasized that founders pay close attention to the dilutive impact of a convertible security or SAFE (simple agreement for future equity) or multiple SAFEs. “You can inadvertently give away more of your company than you want if you don’t understand the mechanics.”