Can I use the EB-5 Program to obtain capital for an online company?

You may get a foreign investor to invest in your company, but your company must meet the 10 job requirement and all other EB-5 requirements. Please consult an experienced EB-5 attorney to assist you.

It does not appear you have provided enough facts, we need information such as: 1) the location of your company or the operating nerve of your online company, 2) the current size and your project planned growth of the company in terms of personnel; and 3) what is the planned economic impact in terms of jobs your company can produce upon raising money through the EB-5 program. These questions must be thoroughly addressed before you can get good advice. Operating an online website in the music industry, which is now a normal occurrence in the entertainment industry, is not unusual. However, expect the United States Citizenship and Immigration Services (USCIS) to insist that you should meet the standard EB-5 requirements: 1) investment will have to be either $500k or $1 million for each investor depending on the location of your operating headquarters, either in a rural or city area; 2) the investment must be at risk; and 3) an investment will produce at least 10 jobs. As you stated, most of the investment you are going to get will come from direct investment as very few or no regional center currently invests in an online music business. Observe cautions as you go through the securities laws you mentioned. See below brief comment as you and your counsel wades through the labyrinth of the securities and immigration laws.

First, you mentioned your SEC 506-D exemption and having a POM (Private Offering Memorandum) for potential investors, both which are securities law related issues. According to the Securities and Exchange Commission (SEC), Sec 506-D exemption is a safe harbor that allows businesses to raise fund without advertising and filing a report with the SEC up to $5 million from investors. This is where there could be a conflict with the USCIS EB-5 program as you and investors would have to provide far more detailed information on the funds you raised. Thus, watch out on whether you are in compliance with 506-D exemption or your need to comply with the USCIS rules and regulations. Secondly, you mentioned the Private Offering Memorandum (POM), a POM in itself is a marketing tool that details your business, the planned expansion, how much funding you intend to raise, how the fund will be used, etc. If done well your POM can be a road map of your fund raising activity, however, you must observe and provide the USCIS details of how you raise funds and that those funds come from lawful sources. Finally, expect potential investors and their securities counsels to ask a set of serious questions on whether both of your Section 506-D and POM will survive an EB-5 scrutiny. Since the SEC continuously issues updated rules on both Section 506-D and POM, be very concerned about the latest rules so as not to run afoul of either the USCIS EB-5 rules or the SEC itself when you decide to proceed. Therefore, it means you need a combination of securities attorney and immigration attorney working in tandem.

You certainly can. Depending on the number of jobs being created will dictate how much you can raise. As to what may be more suited, direct or RC is contingent upon several factors. We would happy to discuss this in a free consultation.

If you are going to use the capital in the business and directly create the requisite number of full-time jobs in two years, it might be structured in a way to comply with EB-5 requirements. On the other hand, you may have difficulty finding investors, but that is a separate issue. It would be wise to engage the services of an experienced EB-5 immigration attorney who can advise you on these matters.

The EB-5 infrastructure will allow the use of EB-5 funds for the operations of an online company as long as the required employment creation of 10 full time jobs per investor occurs.

Yes it is possible if the requisite jobs will be created.

Your on-line company will work for EB-5, as long as you meet the job creation requirement and capital investment requirement. The company does need a bricks and mortar location, in order to determine whether the minimum investment is $500K or $1m. If you go the direct route, EB-5 funding needs to go directly into your company as equity and you will need to show at least 10 new full time positions on payroll for each EB-5 investor. If you go through an RC, you don't necessarily need to give up equity (the EB-5 money can come in as debt) and you definitely don't need to show any direct employees.

Nothing in the regulations would prohibit this use of the EB-5 program. Geographical location of business and employment are relevant to the determination of whether the qualifying investment level would be $500,000 or $1 million.

If the business activities and, therefore, job creation, take place within a set geographical area, then the project could work. Of course, using an existing business for an EB-5 project has additional job creation requirements. If a direct EB-5 project, you can only count the actual full-time U.S. citizen or permanent resident employees of the company.

Although much more information is needed to determine whether you can qualify, there is no bar to the kind of industry or company for an EB-5 investment. One of the preliminary, and most important, things to consider is whether the investment will be able to create 10 jobs per investor for your company. That is the hallmark requirement of the EB-5 program. I would be happy to discuss with you in depth and help you assess whether you can qualify. Do not hesitate to contact me for a free initial consultation.