Can an early-stage startup sponsor an H1B?

Even an early-stage startup with few or no employees can sponsor an H1B visa. We routinely obtain approvals for H1B petitions where the applicant would be the first employee! You can be sure, however, that the application is going to get significantly more scrutiny than those filed by a large, established company. When a startup sponsors an H1B visa, these are the areas of the application that need to be especially well-documented:

1. Ability to Pay. When HSBC files an H1B application, USCIS doesn't need to be convinced that the company has enough money to pay the employee while maintaining the rest of the company's operations. When a new startup applies for an H1B employee, however, USCIS normally wants evidence that the company can afford to pay the prevailing wage. This doesn't mean the company needs to be profitable or even generating revenue. I have successfully filed H1B applications for pre-revenue startups operating at a loss. You do need to be able to show that you will have cash coming in from somewhere, and that it is more than enough not only to pay the H1B employee. If you are bootstrapping and can get a cash infusion from friends and family into your bank account, that works. If you are in talks with angel investors, get documentation. Closing a round of VC funding? The Terms Sheet is great evidence.

2. Sophistication. H1B visas are only for "specialty occupation," professional jobs. When a large, multinational company files an H1B, USCIS assumes that the company's operations are sophisticated enough to need an H1B specialty employee. When a new startup files an application, however, USCIS will want to know why exactly the company needs such a specialized employee. The application needs to make it clear to the USCIS officer what the growth trajectory of the company is, and why this employee is needed to ramp up operations.

3. Employer-Employee Relationship. H1B visas are only available to workers who would legally be considered "employees." In the startup context, proving the applicant will be acting as an employee and not as an owner is complicated when the applicant will hold equity in the company. When the equity stake is low, this can be as simple as providing a copy of the employment contract that clearly lays out the terms of employment. When the equity stake is majority or higher, more extensive documentation will be needed to prove that someone, or some group of people, has the authority to oversee the H1B applicant's work, and to fire him or her if necessary.

These are the areas we make sure to focus on at the outset in order to minimize the risk of an RFE on startup H1B applications. As always, if you have questions about your particular situation, feel free to contact us.