The compliance regimen for EB5 investments is different depending on whether the investor is outside the US or within the US. Generally, the investments overseas take place under Reg S, but there are two ways of handling the investments within the US: (a) Investment from only accredited investors; and (b) General solicitation under the Jobs Act. If a project chooses the accredited investor route, they need the potential investor to attest that they meet the requirements as an accredited investor. In this situation, most securities attorneys recommend that in general presentations the projects can talk about backward looking track record, including corporate history, management experience, and past projects. But information about current projects can only be provided after getting a signed accreditation form from the potential investor. The general solicitation route under the Jobs Act is similar to Reg S as far as the presentation to the prospective investor goes. However, it requires suitability analysis for each investor usually through a broker dealer. This requires much more documentation than the alternative of offering securities only to accredited investors.
Why is all this important? The H1B to EB5 Indian market in the US is the single largest EB5 market in the world now, accounting for around a quarter of all EB5 investments in 2020, globally. This market has three strong advantages:
If you are not accessing this market, you owe it to yourself to ask why? This is the most cost-effective and time-effective way of accessing the largest EB5 market in your own backyard, so you need a reason NOT to be actively mining it, if your project is in the market now for EB5 investments. This is not a sales pitch--you should try to access the market directly--as many of our regular clients have done starting with their Indian-American contacts, to ascertain for themselves that a robust market exists. But for accessing the market on the full scale across the USA in a cost effective way, our clients keep coming back to attend our H1B to EB5 events. Dismissing this entire sector (of H1B investors, who comprise 25% of the global market) out of hand does not make sense - we encourage you to reach out to your securities attorney regarding compliance for raising EB5 capital in the USA.