It is no secret that many foreign B2B technology startups eventually shift their focus to the U.S., if they hadn’t done so from the beginning. That’s because Silicon Valley offers better access to customers, investors, employees, strategic partners and acquirers. Based on my experience setting up a U.S. presence for my startup from abroad three years ago, if you’re a foreign entrepreneur looking to relocate your startup to the Valley or simply create a U.S. presence, this step-by-step guide will help decode the process.
Step 1: Incorporate
If you have either raised venture capital or plan to do so in the future, incorporate your startup as a Delaware C corporation. VCs are not as likely to invest in LLCs, partnerships or S-corps. Delaware’s corporate laws make it one of the friendliest states in America for corporations and LLCs. Here’s a neat thread on Hacker News that discusses why you should become a Delaware C-corp.
Tip: You can use BizFilings.com to incorporate and get your Federal EIN (employer identification number) a.k.a. tax ID. Choose the package that best fits your needs. If you have a complex cap table (angels, VCs, ESOPs etc.), it might be smart to hire an experienced corporate lawyer to assist with the incorporation process like we did.
Step 2: Get an Address
You will need a business address to which you can forward mail as well as for banking purposes. It’s relatively easy to do this. I went to virtualpostmail.com to set up an account. It will set you back $10 a month, but you will now have a U.S. business address that you can use for all of your correspondence.
Tip: From my own experience, this service works best when you don’t expect to receive a ton of mail and all you need is a mailbox for important federal or state tax notifications, paper bills or bank statements that you can access from virtually anywhere.
Step 3: Open a Business Checking Account
Most U.S. banks require non-citizens to physically visit the bank if they want to open a business or personal account. If you have a B-1 visitor visa, you could fly to the U.S. to do so. If you don’t, Silicon Valley Bank is my suggestion. My startup banked with them from the get-go, and I’ve yet to come across a bank that offers such a high level of concierge service to its smallest customers.
Tip: Silicon Valley Bank has few retail branches outside of the Valley. If you don’t have a local branch in your city, you would need an introduction from an existing customer to get your account setup. Once SVB decides to open an account for your startup, you will have a bank account set up in less than 48 hours.
Step 4: Apply for a Credit Card
If you require a U.S. credit card and don’t have a social security number, Silicon Valley Bank will offer you a secured credit card that will be collateralized by money pre-deposited into your account. You will need a credit card for various online transactions as your foreign credit card may either not work or charge you exorbitant FOREX conversion rates. Alternately, you could use your U.S. bank’s debit card.
Step 5: Set Up a U.S. Payment Gateway
Most entrepreneurs miss this critical point. It’s important to let your customers easily transact in their local currency. It’s hard enough for users to decide to pay; the actual act needs to be kept as frictionless as possible. Setting up a U.S. payment gateway has become easy thanks to the folks over at payment processors like Stripe. Your customers can now make a payment directly on your website and be on their way.
Once you’re past the previous five steps, you now have a fully functional U.S. business that can be operated from anywhere in the world. The next step is only for those who need to physically relocate.
Optional Step 6: Get a U.S. Work Visa
Many entrepreneurs may not feel the need to relocate. However, if you believe you’ve hit a ceiling and can’t scale further without on-the-ground business development, temporary relocation may become necessary. This is particularly true for startups that need to build an outbound sales team to target enterprise customers.
Although there are several work visas available, H1-B and L-1A/B seem to fit best, though these visas were never meant for entrepreneurs. However, recent changes have enabled entrepreneurs to qualify for the H and L visas as long as they have a separate board of directors that controls their employment. Proving that there’s a valid employer-employee relationship between the founder(s) and the startup is central to establishing a successful case. This is more easily done for funded startups with a formal board of directors and preferred shareholders. In certain (less common) cases, the O-1A could be a good fit if you can successfully establish that you meet the extraordinary ability criteria.
Tip: Consider an experienced immigration attorney who has filed H1-B or L-1A petitions for entrepreneurs. I can recommend the Murthy Law Firm, as I have worked with them before for my own immigration needs. If you know other such firms that you would recommend, please mention them in the comments below.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
Image Credit: CC by Justin Vidamo