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Should I make someone a CTO or partner if they need an H1B?

I'm currently vetting a smart backend developer with whom I seem to be having a good working relationship. However, he will need an H1B Visa in order to work in the US full time. I cannot afford to sponsor him at this time. If he gets sponsored by another company, can he work with me on the side on the same Visa? Also, what are the cons of partnering with someone on an H1B? For this reason I have been talking to him in a more "you'll be the CTO" manner rather than "let's partner." Should I just part ways with him now? Please advise, and thanks, family!

21 Replies

Dennis Franczak
1
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Dennis Franczak Entrepreneur • Advisor
President and CEO, Fuseideas
Be very careful with how you handle people with H1B visas. They are very restrictive and the sponsoring companies have to pay a lot to get them. If you have a falling out with him after he gets here or he loses his job with the company that's sponsoring him, it could be bad for you because he'll blame you for bringing him over, etc. Plus the company that is sponsoring him will not like it one bit if they bring him over and all of the sudden he has a side job that is taking more time than they want. What happens if you need him full-time and you can't afford the visa?? You will end up being stuck. Think long and hard about this. DENNIS FRANCZAK CEO [cid:image001.png@01CDB1F6.B35F4990] O: [removed to protect privacy] M: [removed to protect privacy] EMAIL: [removed to protect privacy] BOSTON / NEW YORK / ATLANTA / PRAGUE / PORTLAND FUSEIDEAS.COM Please consider the environment before printing this email.
Joe Mellin
3
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Joe Mellin Entrepreneur
View My Learnings
I co-founded a company with someone who we got an H1B for. It was great, once you get him the H1B it is really no different than any other cofounder relationship.

My thought is, right now you don't have the option of having him as your partner. There is no difference between CTO and Partner, the essence is that if you work with him you are putting yourself in a position where the success of your company depends on someone who does not have clearance to work here.

He either has to get a job and still want / have time to work with you, has to return home or you have to raise capital so you can sponsor him.

Until one of those 3 things happen, he is not an option.

So I would lay those options out for him, tell him the truth and say I'll let you know if I raise and you let me know if you get the legal stuff worked out.

Then go on with building your company / looking for other people.



Dennis Franczak
1
0
Dennis Franczak Entrepreneur • Advisor
President and CEO, Fuseideas
Good point Joe..very good point. DENNIS FRANCZAK CEO [cid:image001.png@01CDB1F6.B35F4990] O: [removed to protect privacy] M: [removed to protect privacy] EMAIL: [removed to protect privacy] BOSTON / NEW YORK / ATLANTA / PRAGUE / PORTLAND FUSEIDEAS.COM Please consider the environment before printing this email.
Neelesh Vaikhary
1
0
Neelesh Vaikhary Entrepreneur
Sr. Architect - Goto Meeting at Citrix
The biggest problem is having H1-B as partner is that the company cannot sponsor his green card :) ( you cannot sponsor fro yourself). Apart from that with H1-B , legally you cannot work for other companies as employee/partner. You can be non working director but if you have any foreign national as partner, you cannot have it as S- corp, have to go with LLC or corp then.
Jeff Axup
2
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Jeff Axup Entrepreneur
Sr. Manager, Palo Alto UX Design Research Group at Bosch
I just went through this, and decided eventually that it was too big of a risk as a co-founder (maybe OK for larger startup hiring an employee).
Advice I got from various immigration lawyers (and definitely check out posts on Quora) included:

This would create significant problems for this person to be an active co-founder down the road.

  • H1B selection is random, although there is a master's cap which reduces the pool size to some degree for some applicants. Therefore it is not certain this person would be able to get an H1B and continue to be able to work in the US.
http://www.quora.com/H1B-Visa-1/What-parameters-are-considered-while-applying-a-lottery-system-for-H1B-Visa

  • Hiring a non-US employee is expensive and is a lot of work
You also have to prove that you are a legitimate company to sponsor someone. While you may be legal, you may not have an office yet, etc, which can make it more difficult to prove. Estimates range from 3k-10k total.
http://www.quora.com/Startups/Can-a-startup-realistically-sponsor-an-H1B-or-is-that-just-for-the-big-companies

  • H1Bs are a lottery, they may not receive one.
  • Even if you arrange for the person to pay their own legal fees, you still have to pay the fees to request the H1B for ~$1000. Having the person pay for that indirectly is illegal.
  • Having the applicant own equity in the company might invalidate their claim to apply for an H1B. You're not supposed to own the company that is petitioning for you. That would be a conflict of interest and would essentially allow people to buy an H1B.
  • O1 visas are extremely difficult to get. Almost always not an option.

Basically the US government has made it extremely difficult for foreigners to a) found their own companies and b) join as co-founders for existing companies. This is really un-American since we are supposed to be the country of opportunity and many of our best companies were started by immigrants (e.g. Tesla). Unfortunately foreign cofounders seem to add a lot of legal "gray area" and increase the risk of a startup.

Disclaimer: I am not a lawyer and this is not legal advice.

Alex Potérya
0
0
Alex Potérya Entrepreneur
Technologist and entrepreneur.
Can you afford paying him a CTO salary? If not, make him your partner.
Ash Eldritch
3
0
Ash Eldritch Entrepreneur
Chief Science Officer & Co-founder @ Vital Enterprises, Engineer, Inventor
An update on Jeff Axup's comments, as the Quora links provided are prior to some recent changes. Essentially:

"As of August 2011, under the current US immigration rules, if you are the cofounder of a funded startup with a board that is empowered to make hiring decisions-that is, the board can fire the founding team-then you are eligible for an H1-B visa sponsored by your startup."

...which equates to non-majority ownership for the H1-B co-founder.

http://www.quora.com/Can-a-H1B-holder-work-for-a-startup-as-a-co-founder
Leena Chitnis, MBA
0
0
Leena Chitnis, MBA Entrepreneur • Advisor
Content & Publication Manager at NetApp
Wow! Thanks everyone, please keep the advice coming. Here are some replies to your advice and questions, too:

- Dennis, he's already here and is an MA student at ASU. He's a bright guy, young, and just got a coveted summer internship at Cisco. I am pretty sure that he will get work upon graduation. Right now, he's working for me pro bono since, under ASU work study rules, he cannot take paid work outside of school. We haven't talked salary or equity points just yet, we are just seeing how it goes, relationship-wise...he has signed an agreement that basically says that his work is pro bono and that the code he authors belongs to me. Anything else I should do to cover myself legally?

- Joe (or Jeff or anyone else who knows), how much, ballpark, is it to sponsor an H1B? What sort of fees am I looking at in total?

- Neelesh, I have a c-corp, so I'm covered there...

- Ash, does this mean my guy can get some equity? I cannot afford to pay him a salary just yet.

Thank you in advance for any other advice/answers you may have!
Dennis Franczak
1
0
Dennis Franczak Entrepreneur • Advisor
President and CEO, Fuseideas
Leena, The fact he is here is good. I would definitely talk to an attorney about your situation so you are covered. Best of luck!!! DENNIS FRANCZAK CEO [cid:image001.png@01CDB1F6.B35F4990] O: [removed to protect privacy] M: [removed to protect privacy] EMAIL: [removed to protect privacy] BOSTON / NEW YORK / ATLANTA / PRAGUE / PORTLAND FUSEIDEAS.COM Please consider the environment before printing this email.
Joe Mellin
1
0
Joe Mellin Entrepreneur
View My Learnings
I paid around $2-3k for it including legal. It took a couple months to get then about a year and a half to get his green card
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