The Situation
Another firm brought me in as outside counsel. The client wanted an E-2 treaty investor visa to run a company he and his partner were forming in the United States.
The company would provide investment management services to a single client, a hedge fund under common ownership: promoting the fund, deciding when, where, and how to invest its assets, and executing those strategies. Straightforward business, straightforward visa category, but with two issues that made the case anything but straightforward.
My client had to be the principal investor, owning and controlling the enterprise, while his partner, the U.S. citizen who founded the hedge fund, remained in the minority. That meant funding the controlling stake himself. He didn’t have enough money.
What he did have was a proprietary dataset and trading software he had spent twelve years and $53,910 of his own money building. The software ran advanced statistical analysis on financial markets data, identified recurring patterns, and automatically generated investment strategies from them. It placed and executed trades through electronic market access platforms. Functionally, the software and the dataset were the entire business.
Their value was never in doubt. Their price was. No one had ever put a number on either.
The Strategy
Before the application could be filed, the software and the dataset had to become capital.
The first step was a credible valuation of each IP asset, one that would survive consular scrutiny, from an independent expert with genuine standing in the quantitative trading sector. The Foreign Affairs Manual permits intellectual property to count as E-2 capital to the extent its value can reasonably be determined, and where the asset has no available market value, that value may be established by expert opinion. 9 FAM 402.9-6(B)(h). That kind of expert is harder to find than it sounds. We found two: one to appraise the software, the other the dataset.
But a valuation alone wasn’t enough. The investment is only an investment if the enterprise owns the asset. Both had to actually belong to the company, which required drafting an asset transfer agreement that cleanly conveyed the client’s intellectual property. A sloppy transfer agreement would have unraveled everything the valuations established.
The business plan had to be perfect too. The idea may have been simple; explaining how it would work in detail and in numbers was not. Understanding the fund’s operations and following its projections required basic familiarity with quantitative trading and financial modeling. I brought in a writer whose job was to make the plan lucid and unimpeachable. She delivered twenty pages worth every word.
The appraisals came in. The software and the dataset: $728,998, 90% of my client’s entire investment. His investment, 87% of the enterprise’s $930,760 total start-up costs. The transfer agreement signed. The business plan polished.
The Result
E-2 approval in ten weeks.
The client told me afterward that the interview had lasted ten minutes. The appointment letter from the consulate had listed documents to bring; the officer asked to see none of them. She asked what the business did, how it charged its clients, whether the client owned the software outright and was bringing it into the company, and whether the business was new or bought from someone else. He answered; she typed; she approved the visa at the window.
That was it.