Along the bumpy road to raising venture capital, some avenues of potential sources for funding can go unexplored. Yet, all too often, these avenues are the most relevant, applicable, and most efficient mediums for raising the necessary monetary resources. One such avenue is the EB-5 Immigrant Investor Program.
Administered by the United State Citizenship and Immigration Service, this government sponsored program was founded in 1990 by Congress in order to bolster the American economy. The EB-5 Visa (aka the “Immigrant Investor Program) attempts to do this primarily through job creation stimulated by foreign capital investment. It was initially proposed as merely a pilot program but, due to its resounding success, it has been reauthorized every year since the program’s initial implementation.
The Immigrant Investor Program requires an investment in either a new enterprise that will create at least ten full time workers (within two years) or an investment in a troubled enterprise that will save jobs. These jobs may either be direct jobs (people employed in the commercial enterprise that receives the invested funds) or indirect jobs (those employed in other companies within a certain geographic region that arise due to the existence of the new enterprise). The investment amount must be at least one million dollars unless the investment is made in an area of high unemployment or in a rural area, in this case the required amount is lowered to $500,000.
There are several other investment requirements that must be met in order for the investment to be approved by USCIS and you can find these on the USCIS website. By now, the question you are probably asking yourself is “Why should I find a program with so many rules interesting?” or “How can this help me?” You may even wonder why you haven’t heard about this program if it has been around for more than 20 years! Well, yes, it has indeed been in existence for ages but most people traditionally fund their new businesses by either going to the bank or from friends and family or from third parties such as angel investors and venture funds.
All those channels dried up in 2008. The financial crisis affected every source of capital in the United States and unless an idea was foolproof and expected to be the next Facebook then securing funding was very unlikely. Even if your friends and family wanted to help you they needed to preserve capital for themselves in the event of a job loss – a very likely possibility between 2007 and 2012. With domestic capital markets frozen, a few entrepreneurs suddenly remembered the EB5 program and decided to explore it.
I was among what I considered at the time to be the unfortunate group trying to find capital amidst a recession. What’s worse is that I was trying to finance a restaurant. Double whammy. However, this is where the program is helpful. Restaurants, unlike say bio-tech ventures, employ a large number of people and this is what foreign investors, found through this program, need. Yes, I was able to find the investors….but not before spending the equivalent of three MBA degrees and almost losing my sanity in the process. I realized that while this was an incredible opportunity it was a path best traveled by someone with experience. I have since established a business to help entrepreneurs navigate the ocean to securing EB-5 funding as well as other niche capital channels.
Why should you want to explore EB5 funding? It is one of the lowest cost sources of mezzanine and equity funding currently available to entrepreneurs. Is it reliable? Well the developers behind the Barclays Center and Hudson Yards certainly think so. More than $600 million in EB-5 funding was raised for these well-known projects.