USA expansion for fundraising and growth
Thinking about US expansion?
Many UK startups think about raising investment in the US, opening up a US subsidiary, or moving their entire operations there as part of their scaling strategy. SeedLegals have worked alongside our partners to gather learnings for UK founders.
Raising investment from US investors
Raising from US investors
When thinking about raising US investment, there are various things to consider, including whether or not you should consider a Delaware flip. Read our guide for UK startups for more information or chat with our experts.
Methods for investment into your UK entity:
Contracts, tax, incorporation and more
How to hire people in the USA
See our tips for hiring in the US, compiled from our webinar with Wilson Sonsini, on how to get started, how to employ staff, and what to avoid.
Key things to keep in mind:
- Don't 'work' in the US without a visa
- Ensure your US contractors aren't seen as 'employees'
- Don't hire US employees via the UK company
- Get specialist advice on job descriptions
- Make considerations for salaries and share options
Establishing US operations
Considering opening a US subsidiary?
See our guide for setting up operations in the US, compiled from our webinar with Wilson Sonsini.
Key things to consider:
- See if a Delaware flip or subsidiary is right for you
- Incorporate as an Inc not an LLC
- Register in the states where you hire
- Americanise your legals
- Sort out your banking, tax, insurance and payroll
Expanding to America
Webinar with SeedLegals and Wilson Sonsini
Watch the video to see Anthony Rose, CEO of SeedLegals talking to Daniel Glazer of Wilson Sonsini.
Everfund successfully flips and raises in the US
Everfund is a developer-tooling startup that did a Delaware Flip and raised an unannounced pre-seed from leading US developer-tooling investors in late 2022 to become the Stripe alternative for building donations on the web. Some tips from their experience:
- If raising from US investors, raise their way with a US investment round. Drop the pounds - embrace dollars.
- If you incorporate with a US parent company, you’ll have to ditch EIS, meaning you instantly become less attractive to many UK investors in the early stage.
- You can keep operations in the UK, but know that the founders have to visit often to get the true value.
Monadd successfully re-incorporates and raises in the US
Monadd is a management service for any bills linked to your home. Read their journey of a US flip:
- Incorporated and bootstrapped in the UK
- Raised an SEIS angel round to develop the MVP
- Brough institutional investors on board via SAFEs
- Worked with lawyers in the US, UK and tax accountants on a US flip - ensuring the UK investors can still claim their S/EIS benefits post the flip, which meant they could achieve further US investment without hesitation
- Retained a subsidiary in the UK to operate the UK and European commercial development
InfoHealth launches 3 successful brands in the US
Infohealth is a UK-based health tech company that has successfully raised Quintech.io and Nicerx.com in the US, and will be launching NowPatient.com in 2023. Some tips from their experience:
- Consider the US from the start, ensure you can accommodate a US economic model without having to significantly redesign your UK model
- Speak to your commercial bank to help with credit card processing and USD bank account setup
- Speak to your local MP so they can put you in touch with the right governmental department to help you with your export model
Your questions answered
How can SeedLegals help with my US expansion?SeedLegals is here to offer help with the legals for fundraising from US investors, via a funding round, SeedFAST or SeedNOTE, or our UK-law version of YC SAFE. For anything that falls outside our remit such as setting up in the US, we can point you to resources and introduce you to a relevant law firm.
Why do companies incorporate in Delaware?Delaware has a global reputation as the most business-friendly state - it has predictable corporate governance rules, a robust infrastructure of services for new and established businesses, and specialist courts known for fair and speedy decisions. That’s why Delaware is the most common state of incorporation in the US - for both US and international companies. By setting up in Delaware, you’ll reduce friction in operating in the USA. And you don’t need to incorporate in all the states where you operate or hire - you only need to incorporate in one state.
Find out more at choosedelaware.com
Can I employee US individuals without a US entity?It is possible, but not advisable due to the tax liabilities, litigation possibilities, and complication of legal matters. You can read more in our guide for setting up operations in the US.
Can I raise from US investors?Yes. Many companies decide to raise from US investors. Make sure you read our guide for UK startups on raising investment in the US.
Is it possible to to get US investment without doing a Delaware flip?A US VC will invest in your company based on the possibility of a substantial return. They might require you to become a Delaware company to receive the investment - but that’s generally a topic that’ll come up in your investment discussions. If they walk away before you get to that point in negotiations, then it isn't because you don’t have a Delaware company - it’s because in some other way, you don’t fit their investment thesis.
If I do a Delaware flip, will my current investors lose their S/EIS relief?If it has been under 3 years since receiving the shares, yes your investor would lose their relief. Practically, this would mean they either do not proceed with the claim, or if they have already received the relief, a rebate would be due. You should seek tax advice on how much investors would be required to pay back and how.
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