H-1B Visa Startup Founders: Navigating Ownership of a Delaware C Corp
Immigration attorney Sophie Alcorn answers pressing questions about H-1B visa holders co-founding startups in her popular “Dear Sophie” advice column. This edition tackles a common dilemma for venture capitalists and immigrant entrepreneurs alike.
The Startup Immigration Question
Dear Sophie,
My VC partner and I are evaluating a pre-seed investment in a startup (NewCo) with two 50⁄50 co-founders:
- Founder A: Green card holder, already working at NewCo
- Founder B: H-1B visa holder currently employed at a major tech company
Our key questions:
- Can the H-1B co-founder legally lead this company?
- What’s the realistic timeline for compliance?
- How do we structure this for immediate operational readiness post-investment?
—Diligent in Daly City
Sophie’s Expert Analysis
The Optimal Structure
The most straightforward solution:
- Green card holder serves as President/CEO
- H-1B holder transitions to a specialized technical role via H-1B transfer
Critical Immigration Considerations
Employer-Employee Relationship Requirement
- Sponsoring company must demonstrate control (hire, supervise, fire)
- H-1B holder cannot own a controlling stake (typically <50%)
Equity Structure Implications
- Majority ownership by H-1B founder requires complex corporate structuring
- Simpler when green card holder maintains controlling interest
Implementation Timeline
| Step | Duration | Notes |
|---|---|---|
| H-1B Transfer Preparation | 2-3 months | Can parallel-track with incorporation |
| FEIN Verification | ~1 week | Required before Labor Condition Application |
| LCA Approval | ~10 days | No funding required at this stage |
| USCIS Processing | 6-12 weeks | Premium processing (15 calendar days) available for $2,500 |
Financial Requirements
- Prevailing wage must be met (often higher than founder salaries)
- Company needs sufficient funds to cover:
- 3 years of H-1B salary
- Operational costs
- Recommended minimum runway: \(100,000-\)300,000
Long-Term Considerations
- Green card sponsorship may be complicated by significant equity ownership
- Alternative paths:
- EB-1A (Extraordinary Ability)
- EB-2 NIW (National Interest Waiver)
Key Takeaways for Investors & Founders
- Legal Structure First: Establish clear corporate hierarchy before immigration filings
- Funding Timing: Complete investment before H-1B petition submission
- Professional Guidance: Work with experienced startup immigration attorneys
- Compliance: H-1B founder cannot work for startup until USCIS approval
For founders navigating similar situations, proper planning with legal experts can make this transition smooth while maintaining full compliance with U.S. immigration laws.
Have immigration questions about your tech startup? Sophie welcomes submissions for future columns.
