SETTING UP IN THE US
- What are my choices?
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- Go direct
- Branch
- Subsidiary
- "Flip" –creating US Holding Company
SETTING UP IN THE US: FUNDRAISING
- Fundraising: Accessing US Venture Capital
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- Will US VC invest directly in foreign company?
- Are you ready for VC financing?
- VC financings
SETTING UP IN THE US: SUBSIDIARY
- Objective: Established foreign company ("TechCo") needs US subsidiary for local presence and contracting, hiring, benefits, limited liability, IP/tax structuring
- Key Steps:
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- Delaware corporation
- One Shareholder
- One Director (or more)
- Officers: President, Chief Financial Officer, Secretary
- Common Stock (ordinary share equivalent)
- Timing: as fast as 1 day
- "Qualify" in California or other States where operate
- Consider operations and need for intercompany IP agreement
- Consider tax optimization and intercompany services agreement and transfer
"FLIPS" –SETTING UP A NEW US PARENT
- Objective: TechCo needs access to US venture capital and focus operations in US
- Process: "Flip" the business from abroad to the U.S. by inserting a new US "Parent" company above TechCo
- Key Steps:
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- Incorporate a new Delaware company ("US Newco")
- Existing shareholders of TechCo contribute their TechCo shares to Newcoin exchange for US Newco shares
- NewCo seeks US venture financing –using $ to fund operations in the US and for TechCo
- Business conducted in US by US Newco; certain foreign activities continue through TechCo or other subsidiaries, as needed
- CEO and sales staff typically US based
- R&D; technical, development and support staff abroad
- "Flips" to US seen from: Western Europe, Israel, Australia, Canada
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- Tax issues/valuation of TechCo–tax rollover/deferral
- Tax considerations going forward
- IP –Keep IP in TechCo or migrate to US
- US Newco management and capital structure
- Consents/approvals of TechCo and viability of flip
- Compel exchange of TechCo shares for US Newco shares?
- Effect flip sooner rather than later, prior to creation of significant 'value' in TechCo
- Required legal and accounting team in place for transaction
- Time/expenses to effect flip
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