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How can my venture capital fund benefit from the EB-5 program?

I am a U.S. permanent resident. If I am starting a venture capital fund, where my own family members (foreign nationals) and other U.S. natives put in money, and this fund invests in 15-20 companies in the U.S. which create jobs, can this structure be used for EB-5? The companies we invest in will be technology enabled startups, so they will rapidly create jobs. But the investments we make will own minority stake in the companies (5-15% at the time of the investment, and later will get diluted as the companies that succeed raise more capital).

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    Lynne Feldman

    Immigration Attorney
    Answered on

    This could work, money would be at risk and they could be set up as limited partners. Assurance of 10 new jobs being created with two to four years though could make it too speculative.

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    Irina Rostova

    Immigration Attorney
    Answered on

    Although there is no way to get a general EB-5 clearance for the entire fund, it is absolutely possible to structure individual deals for some of the investments.

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    Belma Demirovic Chinchoy

    Immigration Attorney
    Answered on

    This fund does not work for EB-5. However, perhaps you can create a separate fund for EB-5 where you would manage equity investment(s) of foreign nationals into EB-5 qualifying entities.

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    Phuong Le

    Immigration Attorney
    Answered on

    We have done fund models of this sort before, but you need to be aware of some initial challenges. Can be done but you will run into some pragmatic and structuring issues, namely, it is best to identify the companies that will comprise your portfolio. It is OK to pool EB-5 funds and invest into a portfolio, however, the USCIS disfavors a blind fund. Part of this is because they do not like speculative investments where they don''t know if/when the funds will be invested. The more practical reason is unless you identify the business, how can you establish TEA?

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    The structure you outlined will not comply with direct EB-5 requirements. A direct EB-5 must consist of a single new commercial enterprise, which can include any wholly-owned subsidiaries, and must directly create the required number of full-time jobs for U.S. workers (10 per EB-5 investor). It might be possible to affiliate with an existing regional center, or less likely, create your own RC. This would allow your venture capital fund to be the new commercial enterprise ("NCE"), which has a primary business purpose of lending funds to or investing in a job creating entity ("JCE") and taking EB-5 credit for the indirect/induced jobs that result from such activity. This structure is quite common in regional center EB-5 projects.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    It is unlikely to be able to show which specific investments created which jobs, so its better if you can show investment in a specific project to create the requisite number of jobs, either 10 full-time jobs directly or, if via a regional center, 10 indirect jobs.