Crowdfunding EB-5 Foreign Investors: A Path to US Citizenship

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Billions of dollars have flowed into U.S. companies through a little known program known as “EB-5”.  EB-5 is an immigrant investor program created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors.  The program is administered by the United States Citizenship and Immigration Services (USCIS), a division of the Department of Homeland Security.

USCIS_Sig_Rib_VertMost of the EB-5 projects are in real estate, agriculture, restaurant, manufacturing, and other similar industries that might be more job intensive.  However, computer gaming companies, mining, and even ski resorts have successfully raised EB-5 capital.  Many of the projects are large in scale, with slots for hundreds of investors, not unlike crowdfunding.  However, there are lots of smaller deals that only have a handful of investors as well.  An attractive feature of EB-5 is that each investor must invest with a minimum of $500,000 or $1,000,000 depending on the location of the business.  As you can imagine, it doesn’t take many investors to complete a large capital raise.

Crowdfunding is now offering new opportunities to reach EB-5 investors, but first let’s go over some EB-5 basics.

New Commercial EnterpriseUnited States Flag

EB-5 Investors must invest in a for-profit commercial enterprise that is established after November 29, 1990, or if established before, one that undergoes certain qualifying restructuring, reorganization, or expansion.  There are ways, however, to structure a transaction to make it a qualifying EB-5 investment for businesses that don’t fit into those criteria.

Job Creation

The investment from each EB-5 investor must create 10 new full-time jobs for qualifying U.S. workers (or in the case of a troubled business, save 10 full-time jobs) roughly within a two year period.  There are ways to play around with the time period which your EB-5 advisors can help you with.  Full-time employment is determined to be a minimum of 35 hours per week, although it is possible for two or more employees to enter into a job sharing arrangement to share one full-time job.  This job creation requirement is one of the biggest hurdles to technology or other startups that don’t create a significant number of jobs in their business.

Direct vs Indirect

The jobs that are created or preserved may either be direct or, in the case of a project that is affiliate with a regional center, indirect jobs as well.  Direct jobs are qualifying jobs actually created by the commercial enterprise with W-2 hires.  Indirect jobs are jobs that are created in the U.S. economy by virtue of the EB-5 investor’s investment into the commercial enterprise.  Typically an economist would be retained to analyze how many indirect jobs might be associated with a particular project.

United States PassportsRegional Center

An EB-5 regional center is an entity or organization that is designated and regulated by USCIS as a “regional center.” Its purpose is to further the job creating objectives of the EB-5 program by allowing them to pool capital and count indirect jobs.  Larger projects often require involvement of a regional center as the indirect job counts may be necessary in order to raise larger amounts of money.  While the regional center application process is quite detailed, a regional center designation is relatively easy to get if you meet the criteria and hire experienced advisors.  You don’t have to form your own regional center though; you can always try to contract out another person’s regional center.  Whether that makes sense for your project depends on your particular facts and circumstances.

Investment Requirement

Most EB-5 Investors invest $500,000 into a project, though they may invest more should they choose.  While the minimum qualifying investment for EB-5 is generally $1 million, investments into commercial enterprises located in a Targeted Employment Area (TEA) only require a minimum investment of $500,000.  There’s a technical definition for TEA, but for practical purposes, it’s essentially an area with heightened unemployment.  Quick tip: just because your specific address isn’t located in a TEA doesn’t mean that a TEA expert can’t find a way to get a larger area encompassing that specific address to qualify as a TEA.

The Lure of EB-5

As you might have noticed, EB-5 is somewhat complicated.  However, it’s still attractive for many companies because the capital comes relatively cheaply assuming you can get it.  Currently, the overwhelming majority of EB-5 Investors only expect a 1% interest like return on their investment and their money back after their green card transitions from a conditional one to a permanent one (roughly 5 years).  They also don’t usually really want to run or control your company, so they might be less troublesome than some other types of investors.  The cost to a company seeking EB-5 capital, of course, is higher than 1% due to set-up, legal, marketing, and other fees, but it’s still relatively cheap capital.

Your EB-5 Team

$1000 in $100 Bills MoneyTo properly and successfully conduct an EB-5 capital raise, you should definitely hire an experienced team of advisors.  The EB-5 team members you’ll need at a minimum include a business plan writer, an immigration attorney, a corporate/securities attorney, and if necessary, an economist.  It is advisable to retain tax and marketing consultants as well.  It’s important to get team members that understand the EB-5 space very well.  There are a lot of so-called “experts” but the circle of experienced and knowledgeable advisors is actually quite small.  If you ask around, you should come across the same names over and over, and the experienced folks usually know each other quite well and have done deals together.

Finding EB-5 Investors

Unfortunately, the current world of EB-5 is not unlike venture capital, but perhaps even more exclusive.  There are relatively few gatekeepers in the EB-5 industry, and they tend to be pretty protective.  This makes it harder for smaller offerings to get attention in the marketplace.  However, recently, there has been a heightened demand for smaller direct EB-5 projects, and some EB-5 “crowdfunding” portals have emerged to help connect companies seeking EB-5 capital with EB-5 investors directly through the internet.  Check out,, and for three portals that do exactly that.  As with venture capital, EB-5 is not for everyone, but it’s worth investigating as a possible source of finance.

Jor LawJor Law is a co-founder of Homeier & Law, P.C., where he practices corporate and securities law and is recognized internationally as one of the foremost leaders in the EB-5 industry.  He is also a co-founder of, the resource for accredited investor verifications trusted by broker-dealers, law firms, companies, and investors who insist on safety and reliability.  The verifications are used by companies taking advantage of alternative forms of capital raising such as Regulation D, Rule 506(c) offerings and crowdfunding.

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