Financing Your Client Firms: The EB-5 Model

A RIAN Webinar
With Presenters: Rodrigo Cintra of North Dakota/NW Minnesota Regional Center, and Bruce Gjovig of Center for Innovation

Rodrigo Cintra EB-5 Regional Center Manager/Entr. Consultant January 24, 2012 Regional Innovation Acceleration Network (RIAN) Webinar

Agenda
• • • • • • • • • Center for Innovation EB-5 Foreign Direct Investment North Dakota/NW Minnesota Qualifying Companies Opportunity/Risks Process & Timeline Costs RC Application Process Q&A

Background
• • • • • • • • • Launched 1984 Among first entrepreneur centers in nation Skalicky Tech Incubator – 1996 Ina Mae Rude Entrepreneur Center – 2005 Ina Mae is ND’s First Center of Excellence for Economic Development Access to Capital: Angel Networks, student VC 1 of 19 incubator worldwide: “NBIA Soft Landings” Center for Innovation Foundation raised $26 M Designated EB-5 Regional Center in 2011

Center for Innovation:
• Innovation • Entrepreneurs • Investment

• Entrepreneur Community • Entrepreneur Infrastructure • Angel Investors/EB5

Center for Innovation Results

• • • • • •

540+ startups (+ Innovate ND) 110+ startups in incubator 90% operate with profit, sustainable $130 M + investment 4,800 jobs created statewide 340+ entrepreneur interns Stronger entrepreneur community

Entrepreneur Services
•Business Plans •Marketing Plans •Market & Feasibility Studies •Export / Import Plans •EB-5 Regional Center •Angel & Seed Capital •Innovate ND (Innovatend.com) •Rural Technical Assistance Program •SBIR /STTR grants •Proposal Preparation •Strategic Relationships •Student Internships •Incubator Space •Entrepreneur Seminars •Youth Entrepreneurship •Partnerships with other service providers

Soft Landings Intl. Incubator
• • • • • • • Helping Intl. firms enter US markets Specialized programming Close to Canada Ties to Norway, & China Entrepreneur community, network Access to U talent -US & home country Soft Landings: 2006-08 2008-10 2010-12

Angel Fund Network
• • • • • • Angel Investor Education since 2001 9 funds in ND and MN 110+ Angels in North Dakota Syndication / Deal Flow Side-by-side Student Internships – unique • Dakota Venture Group • Angel Field Agent – Elisabeth Knapp • EB-5 Foreign Investment (Equity)

Innovate ND
• Fostering Innovation & Entrepreneurship statewide • 6th year: venture competition, online entre. education, business plan tools & coaching/assist • Organizing Sponsors: UND Center for Innovation, North Dakota Governor’s Office & Department of Commerce, NDSU Research& Technology Park • UND: Educational content Dr. Jeff Stamp • UND Center for Innovation: coaching & mentoring

Incubator Facilities

EB-5 Investment
EB-5
U.S. Federal Program
ND/NW-MN Authorized Center

Foreign Investment
$.5MM - $1MM per Investor Qualified Companies 10 Jobs within 2 years per Investor

Return on Investment
Green Card / U.S. Residency Principal Fees

Fall within EB-5 Zone and Qualified Industries

Qualifying Companies
Companies
ND/NW-MN Target Employment Areas (TEA) Bank Relationship: Demonstrate 5 year ROI/Exit plans Create at least 10 direct or indirect U.S. Jobs Agribusiness, Aviation, IT, Utilities, Real Estate, Bio-Science, Manufacturing: Expansion only!

Investors
Desire U.S. Residency (Self, Spouse, Family <21) “Clean” Investment Capacity Invest Fall within EB-5 Zone + Target Industries

EB-5 Service Providers
Experienced/Proven Groups/Agencies: Immigration Law Firms, Foreign Trade Experts, Banks, Universities, Economic Development Groups, Private Equity Groups, Overseas Talent Agents

EB-5 Regional Center
Company Portfolio
Other Services Providers Business Plan w/ 5 Yr. ROI/Exit

Coordination
USCIS Reporting

Side-by-Side Capital + Investor Package

Immigration Consultants

Econometric Analysis

Investors

PPM Consultants

Due Diligence Team
Dave Benusa CEO Froehling-Anderson CPA Firm dbenusa@fa-cpa.com Jon Strinden Fredrickson & Byron jstrinden@fredlaw.com Dr. Cullen F. Goenner, Phd Economist /Econometric Analysis University of North Dakota Kermit Nash Gray Plant Moody kermit.nash@gpmlaw.com Donavon Johnson Director, Global Resource Management Group donavon@ndto.com Charles Raether AmLaw Group charles@amlawpro.com

Lincoln Stone Stone & Grzegorek lincoln@lskglaw.com Laura Danielson Fredrikson & Byron ldanielson@fredlaw.com

Susan Geib EB-5 Center and Foreign Trade Ventures susan.geib@ndmneb5.com

Rodrigo Cintra
EB-5 Regional Center Manager rodrigo.cintra@ndmneb5.com

Jordan Schuetzle EB-5 Center Jordan.schuetzle@ndmneb5.com

Bruce Gjovig EB-5 Regional Center CEO bruce@innovators.net

Potential Risks
Companies
Equity Participation Share Valuation / PPM Credit Line Capacity Unrealized Jobs/ROI Escrow: 3 – 12 months

Investors
Not Approved by USCIS 5 Years ROI not realized Reject: Unrealized Jobs I-526 Incomplete (delays)

EB-5 Process & Timeline
Companies 10-15 months
Executive Summary 5 Year Financial Plan/ROI Investor Pkg w/ Exit Side by Side Capital Econometric Analysis Create Jobs within 30 months Investor Review Private Placement Memorandum New Talent Pool: 10 jobs 5 Yr. Expansion/Exit

Investors 6-24 months
Review Company Portfolio Invest (Escrow in U.S. bank) Align with Immigration Consultant Submit I-526 (Demonstrate “clean money” + Escrow Release) Obtain Conditional Green Card Submit I-829 (Final Green Card Status) Receive Principal + Fees in 5 years

EB-5 Regional Center
EB-5 Center Matches Company with Investor Econometrics USCIS Reporting (5 Years) Matches Suppliers to Investors and Companies Success Stories

Costs
Companies $70,000-$80,000
EB-5 Fees ($65k) Econ Analysis Annual Reporting PPM Documents Investor Pckg Prep Financial Due Diligence Project Management

Investors $40,000-$50,000
EB-5 Fee ($25K) Annual Reporting Legal Immigration Fees

Cost Comparison: $1MM Investment
Debt Financing - 5 Years
4.5% per year Total : $225,000

EB-5 Fees - 5 Years
$130,000 Spread over 5 years

Savings of $95,000

Why North Dakota/Minnesota?
• Booming Economy • Qualified Portfolio of varied industries • 16,000 Job Openings! • Safe, Accessible Business Location • Greater Value Higher Education • Expert Relationship Management and Coordination

Regional Center Application
• Project Vs. Program • Industries
• Econometric Analysis

• Business Plan
• Marketing +Operational efforts

• Timing • Costs • I-924
• USCIS.org

• Reporting Obligations

Why our EB-5 is different
• University Affiliated Foundation • 7 Industries
• Econometric Analysis

• Non-Profit • Platform Approach vs. Projects • Multi State
• ND+NW MN

EB-5 Factors for Success
• Strong Deal Flow • Not for start ups • Mid- Stage Growth Organizations
• Safer Investments

• Source of Foreign Investors
• Agents +Immigration Attorneys+ Intl. Networks

• Experienced Advisors

EB-5 Lessons Learned
• Big Projects or Many Projects • Sweet Spot: $3 - $10MM
• Agents may disagree

• Side by Side Investing • Complex and lots of coordination of experts • USCIS process is slow
• RC, Investors, Applications

• Reauthorization Important
• Set to sunset September 2012

Q&A
Thank You

Contact Us
● Bruce Gjovig
● CEO, EB-5 Regional Center ● Bruce@innovators.net ● 701-777 3132

● Rodrigo Cintra
● Manager, EB-5 Regional Center ● rodrigo.cintra@ndmneb5.com ● 701- 777 3970

● Susan Geib
● EB-5 Consultant, Foreign Trade Ventures ● susan@ndmneb5.com ● 701- 541 0735

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