EB-1B Strategies for Start Up Companies “Can a Small Start-Up Company Successfully Sponsor an EB-1B?”

As our readers are aware, EB-1B Outstanding Researcher petitions must be sponsored by a qualified employer that meets the requirements found under INA § 203(b)(1)(B).  A private company may qualify as an EB-1B sponsor if: (1) the company employs at least 3 full-time researchers, (2) the company has achieved documented accomplishments in an academic field, and (3) the company demonstrates the ability to pay the beneficiary the proffered wage under CFR § 204.5(g)(2).  Because of their small size and negative cash-flow, many small start-up companies have trouble meeting these criteria and many of these potential employers do not attempt to sponsor their employees under EB-1B.  This is unfortunate because even very small start-up companies can qualify as a sponsor for an EB-1B when the proper legal strategy is implemented. In fact, a significant portion of our EB-1B cases from our San Jose office are sponsored by small start-up companies less than three years old, and we would like to share with our readers several strategies to overcome the unique challenges faced by these petitioning employers.

When first formed, start-up companies are usually in the research and development phase, and thus, even the smallest start-up companies will likely have at least 3 full-time researchers.  In our experience, most start-up companies have trouble demonstrating criteria (2) and (3), namely, demonstrating accomplishments in the field, and the ability to pay the beneficiary.

Demonstrating Accomplishments in the Field

Most established companies can easily demonstrate their accomplishments in the field by submitting product releases, commercially successful inventions, industry awards, etc.  But because start-up companies are still in the research and production phase, there is usually very little to show in terms of tangible accomplishments in the field.  In cases like this, accomplishments can be effectively demonstrated by the company’s patents and/or the publications by the employees of the company.  Using 2 of our previous cases as an example:

Using Patents

The petitioner was a manufacturer of IP equipment that was established approximately a year and a half before the filing of the EB-1B petition, and the beneficiary was an R&D Engineer.  The company was still researching and developing one of the key technologies that would differentiate itself in the market, but had not yet released any products for sale.  The company had over a dozen pending and granted patents, with two of the patents generating interest from a large technology company.  While the patents were not licensed yet, we submitted evidence of the patents along with documentation evidencing the ongoing communications between the two companies regarding licensing.  The patent and the interest generated by them was enough to convince the USCIS of the company’s accomplishments in the field.  The case was approved in eight days without an RFE via premium processing.

Using Publications

The petitioner was a biotech start-up that was established less than six months before the filing of the EB-1B petition, and the beneficiary was a senior drug investigator.  This case was particularly challenging since there were no patents under the company’s name and none of the company’s compounds were in clinical trials yet.  Instead, our office highlighted two recent peer-reviewed articles, authored by several of the senior researchers at the company.  These two publications alone had garnered over 30 citations in less than 6 months time and in this way, we were able to convince the USCIS of the company’s accomplishments in the field.  This case was approved with an RFE in 22 days via premium processing.

Demonstrating Ability to Pay

Since most start-ups are in the research and development phase, they usually post a negative income for the first few years of operation; most of their expenditures are on researching products for release in the near future.  Because of this, most companies post a negative net income or have higher current liabilities compared to its current assets in its most recent tax returns.  This can have an adverse impact when trying to demonstrate the company’s ability to pay the beneficiary the proffered wage for the EB-1B.  In cases like this, we have found it is best to show a combination of the company’s most recent investor funding and the company’s payment of the beneficiary’s salary at the proffered wage.

In several previous cases we have suggested the company withhold the EB-1B submission until the next round of investment was complete.  In this way, were able to demonstrate that the company recently received a large cash infusion to offset the negative balance on its earnings sheet.   This combined with previous paycheck stubs showing the payment of the proffered wage has been enough to convince USCIS of the ability to pay, even when the company was deeply in the red.

Conclusion

Many potential EB-1B petitioners and beneficiaries do not consider an EB-1B as a viable option because of the stringent criteria a company must meet in order to qualify.  However, as demonstrated by the above examples and approaches, small start-ups can indeed successfully sponsor an EB-1B.  Even if there are negative factors such as no tangible products released, a negative income, etc., these adverse facts can be all overcome if the appropriate strategy is employed for the case.


For questions or comments regarding this article, please email Attorney Fok at: jfok@jclawoffice.com

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