December 3, 2012 Article, originally published at PE Hub
Importing Brain Capital with EB6
Senator John Kerry (D-MA) and Senator Richard Lugar (R-IN) introduced a Start-Up Visa Act earlier this year. This has legs and in essence is responding to a need in the Green Card Immigration Visa program. The current EB5 visa allows up to 10,000 investors spending $500,000-$1,000,000 in a US company or realty investment to get a two year temporary green card for themselves and their children under 21. A permanent greencard can be applied for after two years when the investors can prove that at least 10 people were full time employed from their investment. This has been highly successful in real estate investments. In addition, EB5 has been highly sought by parents wanting to send children to study in the US. Now Senators Kerry and Lugar are looking to allocate portion of these 10,000 allocated annual visas towards the proposed EB6 program. EB5 expert Michael Gibson adds: “The Startup Visa is a great concept in that it would allow the foreign entrepreneur an opportunity to come to the U.S., get funding for their idea and then create a company which could employ a number of U.S. citizens. Entrepreneurship is vital to our economy and if we exclude foreign nationals from the ability to create our future engines of growth, then we are doing a disservice to Americans looking to work in industries which represent the future as well as creating a stronger, more vibrant and diverse United States workforce able to compete in a global economy.”Under the EB6 proposal, US VCs & angel investors with $250,000 to invest in an immigrant’s startup will enable those immigrants to get temporary two-year visas. These temporary visa holders would then be able to apply for permanent green cards should the entrepreneurs be able to prove that they employ at least five people full time or have company assets of north of $1 million. I would think this would inject VC firms with LP capital. We have long discussed that the less fortunate VC firms that have problems raising capital would see opportunities in retail investors and hit the University population for foreign students. EB5 firms do this now so why wouldn’t a VC fund partner up with our EB5 partner firms? Vince Molinari of Gate Technologies has an international span with investors states: “We have already seen a huge amount of interest from angel, private equity and venture capital firms looking to access foreign capital to co-invest in U.S. companies as a way to increase the number of investments that they can do and diversify the risk to their partners and shareholders.” Gibson states: “This is beneficial to the foreign investors as well as they now have a US partner with experience in managing investments and monitoring the development and operational risk that welcomes their investment on equal terms as their US counterparts. It is a win-win for both the foreign investors looking to invest their capital in the US into more illiquid and non-traditional investments concerned with asset preservation and the US financial firms looking to increase their assets under management.” Most EB5 firms we know that have been in business for five or more years know that their investors trust them and are seeking alternative investments to US realty. This would allow a more structured symbiotic partnership to expand. Foreign families will gladly invest $250,000 plus into a VC fund if their kid entrepreneurs get the investment instead of spending $500,000 to a third party getting the investment. What do you think?