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Raising EB-5 Capital

The EB-5 program has been a popular means of raising low-cost capital by developers and others because it is relatively inexpensive compared with bank financing because EB-5 investors seek immigration benefits rather than return on investment beyond the return of their initial capital.

In the past six years, the program raised over $32 billion (averaging over $5 billion per year) from 64,000 immigrant investors. 

Investment Amount

The EB-5 Reform and Integrity Act of 2022, in order to stimulate economic activity in areas of need, offers significant advantages to investment projects in rural and high-unemployment-area locations, and to a smaller degree, infrastructure projects.

Capital is raised in $800,000 increments per investor for projects in rural, high-unemployment areas (as referred to as TEAs) or infrastructure projects. Investments in other EB-5 projects require increments of $1,050,000 per investor.

Offering Documents

Offering documents in the EB-5 program are the legal documents that are used to offer and sell EB-5 investment opportunities to potential investors. These documents are used to disclose important information about the investment opportunity, the issuer of the investment, and the risks associated with the investment.

The offering documents typically include a Private Placement Memorandum (PPM), a Subscription Agreement, and an Investor Questionnaire.

  1. Private Placement Memorandum (PPM): This is the main document in the offering documents package. It provides detailed information about the investment opportunity, including the project description, the investment structure, the anticipated return on investment, and the risks involved. The PPM must comply with SEC regulations and include information required by securities laws.

  2. Subscription Agreement: This is a contract between the investor and the issuer of the investment. It outlines the terms of the investment, including the amount of the investment, the investment period, the expected rate of return, and the procedures for making payments.

  3. Investor Questionnaire: This is a document that the investor completes to provide information about their background, income, and net worth. The questionnaire is used to ensure that the investor is a qualified investor under SEC regulations.

In addition to these primary documents, the offering documents package may also include additional documents, such as an economic report, and immigration attorney opinion letter.

It is important for potential EB-5 investors to carefully review the offering documents before making an investment decision. They should consult with their own financial and legal advisors to ensure that they understand the investment opportunity and the associated risks.

Attracting EB-5 Investors

Build a strong marketing strategy

A strong marketing strategy is essential to attract EB-5 investors. This includes creating a website that provides information about the investment opportunity, advertising in publications that target EB-5 investors, and attending industry events to network with potential investors.

Establish a strong online presence. This includes maintaining an active social media presence, creating a YouTube channel to showcase the investment opportunity, and using online advertising to reach potential investors.

Build relationships with immigration attorneys and consultants

Immigration attorneys and consultants are critical to the EB-5 process. Building relationships with these professionals may lead them to refer clients to projects that they believe are well-structured and managed.

Hire a broker dealer

A broker-dealer can raise EB-5 capital and provide expertise and assistance throughout the process. Here are some ways that a broker-dealer can assist in raising EB-5 capital:

  1. Conduct due diligence: A broker-dealer will conduct due diligence on behalf of the issuer to ensure that the investment opportunity is structured properly, is suitable for EB-5 investors, and is likely to be successful. This provides confidence to potential investors.

  2. Provides marketing and sales support: Broker-dealers have access to a broad network of agents, foreign finders and immigration lawyers and can market the investment opportunity to a wider audience. They also provide assistance with the sales process, helping to facilitate the purchase of securities and ensuring compliance with regulatory requirements.

  3. Navigate regulatory requirements: Broker-dealers have expertise in navigating the regulatory requirements associated with the sale of securities. This helps ensure that the offering complies with SEC regulations and that investors are properly informed through risk disclosures.

  4. Provide ongoing support: After the offering is complete, a broker-dealer should provide ongoing support to the issuer, helping to manage investor relationships and provide guidance on compliance with regulatory requirements.

It is important to note that a broker-dealer must be properly registered with the SEC to sell securities in the United States. Additionally, working with a broker-dealer may result in additional costs to the issuer, including fees for due diligence, marketing and sales support, and ongoing support.

Having an attractive investment offering

Develop a compelling investment opportunity that is structured to minimize risk, offers priority processing of the EB-5 petition, and/or repays investors in a short period of time.

Choosing a viable business model, selecting a project with strong economic fundamentals, and working with experienced professionals to manage the investment are generally beneficial.

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