My co-founder and I were both laid off from Big Tech last week and it’s the kick we needed to go all-in on our startup.
We’re both first-time founders, but they need immigration sponsorship to maintain status with our startup.
Do we look at an O-1A in the 60-day grace period? Thanks!
— Newbie in Newark
Summary: Your first step should be to set up your startup so that it can successfully sponsor your co-founder and other hires for visas and green cards while also attracting funding from investors. Your startup and your co-founder must provide evidence to demonstrate that your co-founder is an employee of your startup, who will be supervised and can be fired, and that your co-founder meets at least three of the eight criteria for an O-1A extraordinary ability visa Register for our 15-module Extraordinary Ability course to learn what it takes to submit a strong application for an O-1A visa, as well as an EB-1A green card. Use code DEARSOPHIE for 20% off.
Full Dear Sophie article:
What a crazy couple of weeks with more big tech (and startup) layoffs coming. We have lots of educational resources for what to do if you were laid off and need a non-immigrant visa sponsorship or a green card. You can also listen to my recent podcast explaining the effects of the mass layoffs on individuals and companies in Silicon Valley and beyond. As explained in last week’s article, there are ways for laid-off immigrants to seek additional time runway in the US to make their next move.
Apparently, almost 25% of tech workers start their own companies, but I am sure the number has historically been lower for international folks because the ball and chain of the U.S. immigration system can feel weighty.
However, there are a lot of ways that you and your cofounder can successfully navigate the layoff, the grace period, and sponsorship at the new startup. Here’s how:
Deadlines & Pathways laid off H1B
The 60-day grace period is discretionary, says startup business immigration attorney Lynda Hagerty in last week’s podcast. We advise conservatively that the grace period runs from the date of termination, although some laid-off individuals will continue to get paychecks for many months. Many of the layoffs are public and WARN Act notices are issued, so the Department of Homeland Security is on notice.
That being said, if you need more time to set things up properly for your new startup to (a) exist and (b) sponsor your cofounder’s immigration, your cofounder can apply for a change of status to B visitor. As a B-1 business visitor, your cofounder can engage in certain activities legally such as business formation and fundraising meetings and request an additional
6 months of time runway beyond the 60-day grace period. This application process can run in parallel with immigration sponsorship by a new company.
Sometimes you can qualify to sponsor a co-founder for an H-1B change of employer to work your startup if you meet the requirements. Additionally, many individuals will use the time runway provided by the 6 months of B-1 status to build their portfolio of accomplishments to qualify for an O-1A visa for extraordinary ability. The O-1 status is available for many professionals including founders who can demonstrate they are at the top of their field.
An O-1A is particularly advantageous for startup founders because it can be sponsored by an agent for an itinerary of services including advising other startups for equity, being a venture scout for a VC firm, and getting paid as a contractor for speaking engagements in your field. For founders subject to the green card backlogs for individuals born in India or China, the O-1A can also be a great stepping stone to qualify for and self-sponsor the faster EB-1A green card pathway.
Incorporate & Morelaid off H1B
For either an H-1B, TN, or E-3 change of employer, or a change of status to O-1A, You should be aware of the importance of setting up your company so that it can successfully sponsor your co-founder and other hires for visas and green cards while also attracting funding from investors.
In the startup ecosystem, I typically see that most VCs prefer investing in a c-corporation created in the state of Delaware, which is often referred to as a Delaware C-corp. Delaware laws protect investors, and Delaware C-corps can distribute two or more classes of stock and stock options to employees, board members, and investors. Talk to your business attorney about registering your company in the state where you will base your business, apply for any business licenses, and make sure you comply with all state regulations. I recommend you consult both an immigration attorney and a corporate attorney for the most effective strategies and recommendations.
U.S. Citizenship and Immigration Services (USCIS) considers many aspects of a new startup petitioning for a founder’s nonimmigrant status based on the nonimmigrant visa status. For example, in general, for an H-1B, USCIS wants to see that there is an employer-employee relationship between your startup and your co-founder. That means you or someone else at your startup, such as your Board of Directors must supervise your co-founder and have the ability to hire your co-founder, set your co-founder’s salary, and fire your co-founder. Demonstrating that your co-founder holds 50 percent or less of the shares in your startup also helps.
USCIS also wants to make sure your startup employs or will employ people and conduct business. Before submitting any petition for your co-founder it’s generally good to first:
- Fully establish your company legally and have at least a couple of months of records of compliance such as:
- Articles of Incorporation
- State Certificate of Registration
- Company bylaws
- Partnership agreements
- And any other relevant legal formation documents
- Obtain a federal Employer Identification Number (EIN) from the IRS and keep the IRS SS-4 letter assigning your company’s EIN as evidence.
- Set up a U.S. bank account, provide some initial funding, and keep your statements.
- Set up your branding and web presence including logo and letterhead, website, one-pager PDFs and other marketing materials, and a pitch deck to help USCIS understand your business.
- Talk to your immigration lawyer about how much of a physical office or coworking space you’ll need depending on the visa type and make sure you have a reliable mailing address to receive snail mail correspondence from government agencies
- Save evidence of your company’s funding and operations
- Funding documentation
- Wire transfers
- Cap tables
- Term sheets
- Letters of intent
- Employment records
- Records of payments to contractors
- Org chart
Specifically for your cofounder’s nonimmigrant petition, start thinking now about what their detailed job description should include as well as the terms you want to be reflected in your ultimate offer letter.
Set up your co-founder for success
Your co-founder must gather the following documentation:
- A valid passport.
- Any expired passports if they were ever used for entry into the U.S.
- The most recent I-94, which can be downloaded here.
- Any previous immigration documents, such as
- Form I-797 Notice
- Form I-20
- Any Employment Authorization Document cards.
- Diplomas and official transcripts.
- Certified translations of any document into English.
- Current resume or CV.
Ready for O-1A?
- Retain an immigration attorney to prepare and file your cofounder’s O-1A petition. Together with counsel, you’ll need to determine which of the eight O-1A criteria your cofounder can establish as evidence of their success. To present a strong case, I typically recommend aiming to establish at least four of the following:
- Nationally or internationally recognized awards:
Received at least two awards for excellence, such as:
- receiving a PhD scholarship or doctoral dissertation award,
- securing VC funding,
- winning a startup pitch competition or hackathon,
- an award from a professional association or conference.
2. Exclusive, invitation-only membership:
Joined a group or association that requires outstanding achievements that are judged by recognized experts. This cannot be a membership that only requires paying a fee. Memberships that qualify include:
- fellow-level membership in the Institute of Electrical and Electronics Engineers (IEEE) or the Association for the Advancement of Artificial Intelligence (AAAI)
- acceptance into accelerator or incubator programs, such as:
- Y Combinator or Techstars,
- an invitation to be an advisor or mentor at an accelerator or incubator.
3. Featured in professional trade publications or major media:
Your co-founder and their work have been featured in ideally six or more articles in high-profile publications. Press releases that were not published or posted don’t count. Student-run university publications don’t count either—and neither do posts on Medium unless they go viral.
4. Judge the work of others:
Judged the work of others in her/his field or a related field at least once, such as at a hackathon or pitch competition.
5. Significant contributions:
Your co-founder has made significant contributions to the field. This requirement often overlaps or ties in with the other criteria, such as achievements or contributions that have generated widespread commentary or media attention or their work has been used by others through licensing patents or contracts.
6. Articles have been published:
Your co-founder can fulfill this criterion by writing scholarly articles in journals or articles for professional or major trade publications or major media in the field of expertise. Book chapters and books also count, but probably not if they are self-published and only sold 15 copies! Blog posts generally don’t count unless they’ve generated a significant amount of views and comments. Generally, five or more articles in well-known publications can be sufficient.
7. Critical employee:
Your co-founder has played a “critical or essential” role at an organization with “a distinguished reputation,” which is typically one of the easier criteria for startup founders to meet. Recommendation letters, media coverage, and company metrics are the most common evidence used.
8. Commanding higher than average pay:
Your co-founder currently or previously has commanded a salary, equity, or other compensation that’s higher than the industry average based on the geographical area. Bonuses may be considered if they’re included in the total wage calculation for tax purposes, but benefits such as stock options, 401(k) contributions, and profit-sharing incentives do not count. Generally, a salary should be above the 90th percentile of comparable wage data based on your location. We can also use their equity plus evidence of company valuation from fundraising to establish they have received high remuneration.
Once your co-founder gets their change of status to O-1A through, the EB-1A extraordinary ability green card as well as the EB-2 NIW green card will be within reach as well!
You’ve got this!
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The information provided in “Dear Sophie” is general information and not legal advice. For more information on the limitations of “Dear Sophie,” please view our full disclaimer. You can contact Sophie directly at Alcorn Immigration Law.
Sophie’s podcast, Immigration Law for Tech Startups, is available on all major platforms. If you’d like to be a guest, she’s accepting applications!