Starting up in Silicon Valley: Cheat Sheet for Foreign Entrepreneurs
It is no secret that most Internet product startups targeting small and medium businesses eventually shift focus to the US, if they haven’t done so from the beginning. That is because Silicon Valley offers better access to customers, investors, developers, strategic partners and acquirers.
If you’re a foreign entrepreneur looking to relocate your startup to the Valley or simply create a US presence, this cheat sheet will help you navigate your way around American regulatory and immigration complexities.
Step 1: Setup a Delaware C-Corp
If you have either raised venture capital or plan to do so in the future, do the right thing today and incorporate your startup as a Delaware C-corporation. VCs do not like 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 do a Delaware C-Corp.
Actionable Tip: Use BizFilings.com to incorporate and get your Federal EIN (employer identification number) a.k.a. Tax ID. They are smooth, efficient and quick. Choose the package that best fits your needs.
Step 2: Get an Address
You will need a business address to which you can forward mail and for banking purposes. It’s relatively easy to do this. Go to virtualpostmail.com and setup an account. It will set you back $10/month, but you will now have a US business address that you can use for all your correspondence.
Step 3: Open a Business Checking Account
Most US banks will require non-US citizens to physically visit the bank if you want to open a business/personal account. If you have a B-1 visitor visa, you could fly to the US to do so. If you don’t, Silicon Valley Bank is your best bet. My startup’s been banking with them from the get-go and I haven’t come across a bank that offers such a high-level of concierge service to its smallest of customers.
Actionable Tip: Silicon Valley Bank doesn’t have retail branches in India. 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 would have your bank account setup in less than 48 hours. They. Are. Fast.
Step 4: Apply for a Credit Card
If you require a US credit card and don’t have an SSN (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 may need a credit card for various online transactions and your Indian or foreign credit card may either just not work or charge you exorbitant FOREX conversion rates. Alternately, you could use your US bank’s debit card.
Step 5: Setup a US Payment Gateway
Most entrepreneurs miss this critical point – it’s important to let your customers easily transact in their own local currency. It’s hard enough for users to decide to pay; the actual act needs to be kept as friction-less as possible. Setting up a US payment gateway has become incredibly easy now thanks to the wonderful folks over at Stripe. Your customers can now make a payment directly on your website (yes, no more redirecting to multiple pages before a payment is completed) and be out in a jiffy.
Once you’ve got past the previous five steps, you now have a fully functional US business that can be operated from anywhere in the world. The next step is only for those who have a need to physically relocate.
Step 6: Get a US Work Visa
Many entrepreneurs may not feel the need to relocate. However, if you believe you have hit a glass ceiling and can’t scale much further without on-the-ground business development, temporary relocation may become imperative. This is particularly true for venture-backed startups that have an urgent need to scale faster.
Although there are several work visas available, H1-B and L-1A/B seem to fit best. 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 can prove that a separate board of directors controls their employment. Proving that there does exist 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.
Actionable Tip: Get a good immigration lawyer who has experience filing H1-B or L-1 petitions for entrepreneurs. I would recommend Murthy Law Firm since I have worked with them before. If you know other such firms, please recommend them in the comments below.
- If the US is your target market, building a local or ‘virtual’ US presence is almost inevitable.
- Anyone can setup a US entity. You don’t have to be a US citizen or permanent resident to do so.
- A Delaware C-Corp will give startups the ideal corporate structure and legal platform.
- A US payment gateway will let your customers transact with you in a friction-free environment.
- H1-B and L-1 visas are a foreign entrepreneur’s best options to obtain US work authorization.
I hope that you enjoyed this post and found some value in it. I would love to read your feedback and hear the lessons that you have learned from our experiences. Please share your thoughts in the comment section.
Recommended read: Startups: Compliance checks after raising money from outside India
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