

Why U.S. VCs don't want to invest in european startups? - chompomonim

I am startup founder from Lithuania (Europe). Now we are creating product for global market (integrating workspace for cloud-based productivity apps) and we are looking for investment both in US and Europe.<p>I am ready to move to California and establish company there.<p>During my visit in San Francisco I talked with several investors there (I/O Ventures, Google Ventures, Foundry group etc.). Most of them told me, that they are not investing in non-US startups.<p>Why?
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md1515
In this instance what is holding them back isn't necessarily that you are
European. They are probably more concerned with some or all of the following
(plus what I forget).

\- Education? Where did you learn how to program/run a business (typically
this can be counter-acted by evidence of success already)

\- Location? Yes, you are visiting California and are "ready to move". But you
haven't moved yet. You're still located in Europe - that's the bottom line

\- Incorporation? You are not incorporated yet. You may say you are willing
to, but they will typically not care much unless they know instantly you have
the next Google/Facebook.

\- Legal resident status? As you have neither moved to California nor
incorporated there is no true indication if you will be allowed to get a visa
to work in the U.S

I would suggest taking the plunge if you really need the capital. Get the
visa, come to the U.S. set up your HQ out of your shared apartment and
incorporate. Then look for VC.

Or just go to European VC firms - there are plenty of them.

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chompomonim
Thanks for answers. I have some more questions.

\- In a month I am going to incorporate my company in U.S. Is California the
best State for my company? Is Delaware corporation right choice or I should
look at LLC?

\- I don't need a visa if I am visiting USA. But I have to leave the country
every 3 months. In the future I will need a work visa. Does anyone have
experience with work visas for Europeans?

~~~
zeruch
From a financial perspective, Delaware is the often default-choice, but your
best bet is having a good advisor/counsel to ultimately help work that out for
yourself.

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cbo
Warren Buffett once said (paraphrasing) that you should only invest in what
you know.

Most American VCs don't know all of the legal and cultural intricacies of
building a startup in another country, which can both be huge factors.

It's way safer for their investment (and possibly even safer for the startups
themselves) if the VCs only invest in startups in environments where they do
understand those things.

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ig1
A number of east coast VCs invest in London, I'm guessing in a large part
because:

1) London is as close to NY as SF is. This obviously doesn't apply to
California based VCs.

2) London has a well developed legal framework for VC deals. When Accel
invested in GetJar it was hugely complicated and took over 6 months to do the
paperwork because so few VC deals had ever been done in Lithuania. You have to
be spectacularly good for a VC to be willing to do that.

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gallerytungsten
re: "I am ready to move to California and establish company there."

Then do so. Your odds will increase from (probably) less than zero to more
than zero.

