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How can I qualify for EB-5 via a new or existing VC fund?

I am interested in EB-5. I can invest $500,000 or $1 million from my own funds. Can I possibly invest into an established venture capital fund and get an EB-5 visa based on that? Or if that is not possible, can I start my own fund that invests into startups and qualify for an EB-5 visa?

Answers

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    Answered on

    EB-5 funds must be invested into a new commercial enterprise that complies with EB-5 rules and laws. That enterprise may make loans to investments into job creating entities, and get credit for the job creation. In the regional center program, groups of investors pool their funds into a single New Commercial Enterprise and the lump sum is loaned to the project.

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    Answered on

    Investing in a venture capital entity is not acceptable for a host of reasons. First, it is virtually impossible to detail how a VC fund is invested, particularly how it creates the required 10 jobs. Secondly, a VC investment is too passive, the administrator of a VC can invest its fund as it deems fit without any regard to meet any EB-5 visa requirements. Advisably, instead of investing in a VC, consider either direct investment or investing through a regional center. Also, consult an EB-5 attorney on various alternatives to a VC investment.

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    Answered on

    In theory, yes. In reality, that is very unlikely and challenging unless your fund has already identified the specific businesses that will be receiving your venture capital. USCIS is not a big fan of open portfolio/fund structures.

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    Answered on

    Investment in the traditional VC fund structure would not qualify for EB-5 investor processing, since the funds are pooled and allocated to multiple projects, and tracking requisite job creation and verifying minimum capital investment for EB-5 purposes would be difficult, as well as maintaining the minimum investment required for the I-829 stage, etc.

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    Answered on

    While it may be possible technically to make a direct investment in a venture capital fund, it may not work as a practical matter. An established venture capital fund typically would not be set up for EB-5 purposes and may not want to make any adjustments to accommodate a single investor. Furthermore, venture capital funds are invested in multiple venture and it may be difficult to establish that your portion of the funds were invested in a particular new commercial enterprise that created 10 jobs that were sustained over the requisite period of time of three years or longer. It may also be difficult to show that the enterprise is located in a Targeted Economic Area (TEA); thus, you would have to invest at least $1 million.

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    Answered on

    It may be difficult to use a VC funding structure for an individual EB-5 investor. The reason is the core component of the EB-5 program requires job creation that can be reasonably ascertained. In theory, it may be possible for a regional center project to utilize VC funds and credit jobs based on an economic impact study. If the VC fund is spreading funds around to many different businesses, it may be hard to track the expenditures by each company receiving the funds. A similar option may be to find an EB-5 project that allows an investor to fund multiple businesses based on the refinancing of debt provided to each business. But each business will still need to be identified and analyzed.

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    Answered on

    Investing in a VC may work, but you need to be clear where jobs will be created in the fund model. Since the investment amount is likely to go up soon, I would advise you to consider investing in an existing regional center project with a track record, and get your green card as fast as possible.

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    Answered on

    From what you are suggesting, running your own fund, hiring an economist and the like on your own dime seems like a long route to go in lieu of a regional center application. Given issues in the renewal of the EB-5 program, it would likely be prudent to consider an investment now in a regional center project rather than risk doing it yourself. That is because by the time you complete everything you need to have a fund and the pieces put together, the program may well be in limbo or not renewed at all.

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    Answered on

    The EB-5 visa is only available if you invest into a business that will create minimum of 10 full-time jobs with your investment, rather than a mere passive investment like venture capital funds or some other investment portfolio.

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