Apr 14 2008 by Jason

Does Having a H1B-Visa Founder Preclude Venture Investment?

Q:  Does having an H1B founder (among other non-H1B founders) inherently prevent a startup from being funded? For example, what if a U.S. citizen creates the company which receives funding, and then applies for the H1B founder to join as a regular employee and then issue a founder-sized portion of the company stock?

One possible problem is that the founder will be working on the idea in their spare time while employed, but at least in the state of California this isn’t a problem if the H1B founder’s work isn’t related and he does it on is own time and resources. Are there other issues? I’m just trying to figure out the general "gotchas" of an H1B founder (who is sufficiently skilled and productive to make it worthwhile to have on board).

A:  (Jason)  I am not an immigration lawyer, so the "gotcha" part of your question isn’t something that I can answer, be I can provide the VC perspective.  The answer is "no."  Having a H1B co-founder is not inherently a problem to get funded.  So long as the co-founder can work full time and provide comparable contributions to the company, then VCs shouldn’t care. 

A couple things to consider:

1.  Timing of grant.  If the grant is only going to occur upon the issuance of the H1B visa, then you should consider the timing issues of your grants being made at a different time than the other founders (and potentially at a higher price);

2.  Timing of the visa application.  It seems like the U.S. is running out of H1B visas earlier and earlier every year.  You should take this into consideration when forming the company and sponsoring the application.  Short answer:  get this done early in the year before the visas are exhausted.

Good luck with your venture.