4 Things That Make Being An International Entrepreneur In The US Really Suck

Access to the US market is an important step that many international entrepreneurs must take in order to help their startups grow — we have the largest and most tech-friendly economy in the world, the best young talent, and an abundance of potential customers and investors that are used to working with entrepreneurs.

But that doesn’t mean it’s easy.

International founders face a whole host of barriers and complications that domestic ones don’t — both logistical and cultural. Here are the top 4 reasons that make being an international entrepreneur in the US really suck.

1. Cultural Differences

Cultural differences are something that can be difficult for founders to prepare for and overcome. Here are three common examples:

1. In many countries outside the US, starting conversations with strangers about business is uncommon and often rude. One Spanish CEO I worked with unknowingly found himself at a networking event and was so confused by the fact that so many guys were starting conversations with him that he assumed it was some kind of meetup for gay men.
2. Language barriers can lead to conversation-ending misunderstandings. One Israeli startup thought that the adjective “heavy” — as in deep, thoughtful, or deliberate — could also be used to describe people in the same way. I informed her that describing the woman she just met as “very heavy” was not a good idea.
3. In many European and Asian countries, more detail is always better.This is the first habit we try to break at Dat Ventures. Sending six -paragraph emails to potential American customers, partners, or investors is annoying and usually results in a deleted email.

2. Visa Hell

You’d think the US government would encourage international entrepreneurs — who in 2014 employed 1 in 10 Americans, created more than 25% of all new businesses, and paid out $126 Billion in wages — to continue adding value to our economy, but you’d be wrong.

There are four common types of visas that tech entrepreneurs seek, and they all pretty much suck:

1. E-2 — Pros: The E-2 is a 2-year option. Cons: You must be able to make a “significant” investment in relation to your company’s valuation. Sound subjective? That’s because it is. Also, applications for the E-2 can get up to 4,000 pages.
2. L1-A — Pros: The L1-A lets you conduct business regularly for up to 1 year.Cons: you must be a top-level executive of the startup that has worked at the company for one year.
3. H1-B — Pros: The H1-B allows entrepreneurs to permanently come to the US if your employer is willing to sponsor your visa (sometimes entrepreneurs accompany a spouse who is on this visa). Cons: If either of you get fired, both of you get kicked out of the country.
4. B1 — Pros: B1 allows startup founders to come to the United States to set up office space, secure funding, or recruit American Talent. This is commonly the option Dat Ventures’ companies use as they begin their transition to the US market. Cons: The B1 only allows you to stay in the country for 3–6 months.

There is currently no clear pathway for international entrepreneurs to expand into the US market. By maintaining an exclusive, expensive, and tedious visa system, the government effectively rejects businesses that have the potential to add Billions to our GDP and create thousands of jobs.

Fwd.Us, a bi-partisan organization founded by Mark Zuckerberg, Peter Thiel, and Bill Gates, is working to create immigration reform that will help the US retain great foreign talent. They’re also proposing a Pathway for Entrepreneurs to the White House in hopes of convincing the government to begin incentivizing international entrepreneurs to create companies here.

3. Lack of Network

Simple questions like “what neighborhood should I live in and how much should I pay to live there?” can sometimes be very difficult for international founders to answer. One of the great luxuries of being an American entrepreneur is the ability to quickly tap into local networks. Whether that’s in the form of family connections, friends from college, former co-workers, or others, there’s usually someone we can easily chat with. Foreign entrepreneurs have a difficult time finding places to work, network, and live because they have nobody to ask for advice.

American founders also leverage their networks for business purposes. Sales and partnership meetings are much easier to secure when the introduction is coming from a mutual connection. Being unable to take advantage of business connections is a distinct disadvantage for international founders, and is something that can only be combatted through extensive and time-consuming networking.

4. IP Transfer and Legal Woes

Foreign Startups seeking funding from American VC’s can sometimes be in for an unpleasant surprise. Many VC’s aren’t willing to take the legal risk of investing in non-American corporate entities and intellectual property. As a result, it’s usually necessary to create an American C-Corp and transfer all your intellectual property to it.

However, many countries outside the US have anticipated this and put taxes in place to make it both difficult and expensive to relocate to the United States.

Example: Spain implemented a controversial ‘Exit Tax’ in January of 2015. Startups wishing to leave Spain must pay a tax based on the unrealized gains of the business — in other words, the difference between the acquisition value of the shares and the market value of the shares the moment the border is crossed. Depending on revenue, this can be close to 30% of a company’s valuation.

About Dat Ventures

Founded in 2014, Dat Ventures delivers a 3-month soft-landing accelerator program for international startups in Boston. Dat Ventures connects founders abroad with local US resources to build teams, adapt businesses, and engage with potential customers and investors. Dat Ventures’ mission is to be the gateway for international startups to enter the United States via Boston, while helping generate an economic and cultural impact in their countries of origin.