How to Start a Company on an H1B Visa: Top Tips for Immigrant Startup Founders
By: Unshackled Ventures
Tags: Immigrants, H1b, Startup, Venture Capital, Founders

How to Start a Company on an H1B Visa: Top Tips for Immigrant Startup Founders Unshackled Ventures Follow Dec 29 · 6 min read

A Q&A with Unshackled’s Immigration Lawyer, Michael Serotte

Written and curated by Unshackled Fellow, Linda Ye

Last month, we invited our very own Michael Serotte, Founding Partner at Serotte Law Firm and immigration lawyer of 25+ years, to chat with our Roundtable cohort of future immigrant founders and help demystify the process for starting a company on a visa.

The biggest takeaway was that your immigration status should not preclude you from starting your company. Generalized advice is often misleading, so we encourage you to work with partners (attorneys, investors) who have expertise in immigration for founders and follow the path that works best for your specific situation.

Below, we’ve put together a summary of Michael’s session for any immigrant entrepreneur on a U.S. temporary worker visa (with a focus on H1B visa holders) looking to learn more about the process.

Disclaimer: Unshackled Ventures is not a law firm and anything written here should not be viewed as legal advice or applicable to any individual’s specific case. We recommend working with an immigration attorney prior to taking any legal action.

What can and can’t you do on an H1B visa when thinking about starting a company?

On an H1B visa, you can only work for your sponsor company — any steps you take to develop your startup idea will need to comply with those terms. This means you cannot act as the CEO of a new company or be performing day-to-day activities as a company employee including any managerial or executive position. Any role where you can hire, fire, and manage people is considered working without authorization, and is thus a no-go.

You can, however, do the following:

Create and register a business

Become a principal shareholder with voting rights

Establish a board of directors

Be on the Board of Directors, including Board Chair, and attend meetings

Perform market research or other research-related activities (e.g. interact with lawyers and accountants, prototype your product/service)

Perform investment-related activities (e.g. pitch or negotiate with potential VCs, angel investors)

To avoid falling into the realm of “working without authorization”, you must create a level of separation between the day-to-day company activities and shareholder decision-making. You, as an H1B holder, cannot run the day-to-day activities of a non-sponsor company — but you can start your business, for instance, with a cofounder who is a U.S. citizen or permanent resident to help execute the day-to-day work, while you oversee higher level decision-making in a shareholder or Board member capacity.

Being on an H1B does not mean you have to give up your startup dream — it just means you’ll need to find smarter ways to grow and nurture your company idea while taking care to satisfy the law, until you are able to be hired by the company. Working with the right partners and people who have gone through the journey will speed up your journey.

Can I self-sponsor my H1B as an entrepreneur?

Yes, but only if you meet very specific criteria. You must demonstrate the existence of a true “employee-employer relationship”, in which a) someone has the ability to hire or fire you from your company and b) the company should continue should you be fired (i.e. not go bankrupt, can have other people meet your role).

For example, if you have 75% majority ownership in the company, you may need not just one but two board members to meet the hire-fire requirement. You may need to have a corporate lawyer review your company bylaws, as some may give a majority shareholder the right to fire other directors. You also must be able to demonstrate that the company has the ability to pay you at least the prevailing wage.

While there are certainly ways to have your own company sponsor an H1B, it would be most prudent to consult an attorney on properly establishing ownership structures to protect your visa eligibility.

If you’re on one type of visa, how does changing visa status work?

Generally for most changes of visa status, you (or your employer) will submit a petition to the USCIS. For most visas, you can file premium processing and, if your petition is approved, you should be able to start working at your company within a couple of weeks.

If you’re going to an early-stage startup, you will likely get a Request for Evidence (RFE) by the USCIS to provide additional evidence, typically within 90 days. Currently, typical processing time is about 5–9 months. However, you can at any time pay USCIS an additional $2,500 for “Premium Processing” and your petition will be adjudicated in 15 days.

Before you file for a change of status you should know the fundamentals about your current valid visa, including when your valid visa expires and what countries you can visit in the waiting period (if need be), as well as your eligibility for the new visa status you’re applying for. There may not be much risk to petitioning for a change in status (e.g. if you’re moving from H1B to your own startup) as long as you apply before your visa expires.

What’s the outlook for obtaining an H1B as we head into a Biden administration? Will things change or get easier?

It is likely that change will happen, but not immediately and mostly in rhetoric rather than the law. The Trump administration was stricter on evidentiary requirements (e.g. providing multiple document types of proof) but temporary work visa laws themselves did not shift much. If the incoming Biden administration does ease requirements or make other reforms, it’s unlikely that the changes will permeate through the USCIS until months or more down the line. What we do predict is more consistent messaging about traveling, borders restriction, etc. in the upcoming months.

What’s the deal around obtaining an O1? What are VC’s long-term expectations for immigrant entrepreneurs?

The O1 visa, which is granted for “extraordinary ability” in a specific field, can put immigrant entrepreneurs on the path towards visa independence as a long-term goal. Unless you already have an Olympic medal or Nobel Prize on your resume, the best strategy to build up your case for an O1 is to first pick a niche area to which you can bring expertise. Then you can gain credentials and documentation of achievements in your chosen field. Venture funds can help facilitate these credential-building opportunities — for example, at Unshackled Ventures, we connect our immigrant entrepreneurs to tech journalists and other public-facing opportunities to demonstrate their thought-leadership.

In the U.S., the majority of VCs will expect entrepreneurs to be working full-time on their venture. VCs want their founders to have time to focus on building and innovating, which can be understandably more difficult for immigrant entrepreneurs who face visa issues. Unshackled’s unique fund structure works on short-term solutions to allow founders to focus 100% on building (e.g. transferring change of status to Unshackled as employer until the startup is robust enough to self-sponsor) and long-term solutions to whatever path is right for the founder (whether it’s O1, green card, etc.).