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Doesn't this give investors a rather disproportionate amount of negotiating power, particularly for the 2nd round? "Agree to our terms ... or lose your visa!"
by crux_ 16y ago
Doesn't this give investors a rather disproportionate amount of negotiating power, particularly for the 2nd round?
"Agree to our terms ... or lose your visa!"
- blizkreeg 16y agoNot really. Except for the first category, it's 100K in financing. Not penny change, but not a big amount either. Of course, you can also generate 100K in revenue (two years is plenty enough time to get there) and then financing isn't a requirement.
- crux_ 16y ago100K in financing that must come from a US-based VC/angel, no friends-and-family fundraising or personal savings allowed. That 100K is going to be rather more costly to acquire than you think.
- ssp 16y agoThey already have almost the same leverage: "Agree to our terms ... or lose your business". Competition among investors would probably prevent this from becoming a big issue.
- crux_ 16y agoWhy is that anything close to "the same"? Example: a 3-person $400k-revenue business a year and a half old would normally be able negotiate with investors from a position of great strength, because they can painlessly walk away from a deal -- if they're talking to investors at all! Same situation, only with founder(s) on a startup visa? They'll be going hat-in-hand for 6mo from VC to VC with no choice but to close a deal. The only competition will be between the VCs to find the one who screws them over the least. Further: There's a great deal less "competition among investors" written into the bill. Foreign capital does not count, nor does friend/family money, nor do strategic partnerships that include capital investments -- the only investment that will keep you in the country is US VC investment.
- ojbyrne 16y agoExcept they do have an alternative. Move the company outside the US.