E8 Foreign Investment

E8 invests only in companies incorporated in the United States or Canada. Where your team or headquarters sits does not matter: what matters is that the company we invest in owns the whole business. We hold this line because tax treatment and investor protections differ from country to country, and some arrangements can be costly for US investors.

If your business started elsewhere, you can still qualify. The usual path is to make a US or Canadian company the parent of your existing company. The rest of this page explains what that means and what we check.

The core test

Ask one question: if someone bought your business tomorrow, would E8 investors get their share of the sale price?

The answer is yes only when a buyer has to buy the US or Canadian company to get the business. That company must own everything of value: the technology, the brand, the customers, and the foreign operating company itself.

The answer is no if a buyer could purchase your foreign company directly and walk away with the product, team, and revenue. In that case the US company is an empty shell, and our investment would be left behind.

Common structures

Structure	Eligible?	Why
US or Canadian company is the parent and owns 100% of the foreign company	Yes	A buyer must buy the parent to get the business
US or Canadian company with no foreign entity at all	Yes	Nothing sits outside the company we invest in
Foreign company is the parent; the US company is its subsidiary	No, except project companies (see below)	No, except project companies (see below)The foreign parent could be sold without us
Two separate companies with the same founders ("sister" companies)	No	Either one could be sold without the other
US company licenses its technology from a foreign company it does not own	No	The foreign company still owns the core asset
US parent owns part of the foreign company; others own the rest	Usually no	Usually noOutside owners can block or share in a sale
Parent controls the foreign company by contract rather than by owning its shares	No	Contract control can be hard to enforce abroad
Restructuring planned for after our investment	No	It must be finished before we close

Must-haves

You need all of these in place before E8 closes an investment.

US or Canadian parent. The company we invest in is incorporated in a US state (a Delaware C corporation is most common) or in Canada.
Parent owns the foreign company. The parent holds 100% of any foreign operating company. A token share held by a nominee to satisfy local law is fine.
Everyone owns shares in the parent. Founders, employees, and earlier investors hold their equity in the parent, not in the foreign company. Stock options are granted by the parent.
Parent owns the intellectual property. Code, patents, trademarks, and domain names are owned by the parent, with signed assignment agreements from founders, employees, and contractors. See Technology held by a subsidiary below for the one exception.
Customers and revenue sit with the parent. Major customer contracts are with the parent, or with a wholly owned subsidiary.
Written agreements between the companies. If the foreign company does engineering or operations, a services agreement says the parent pays for that work and owns the results.
Our money goes to the parent. E8 invests in the parent. The parent may then fund its subsidiaries for operating costs.
US or Canadian law governs. Investment documents are under US state or Canadian provincial law, with disputes resolved there.

Disqualifiers

Any one of these makes a company ineligible.

The US company is owned by the foreign company.
The foreign company owns the technology or brand and licenses it to the US company.
Founders or investors still hold shares directly in the foreign company.
The foreign company could be sold, or could sell its assets, without the parent's approval and without proceeds going to the parent.
The US company has no real assets: no IP, no customer contracts, no team, only a bank account.
The restructuring is promised for later rather than completed before closing.
Investment documents are governed by foreign law or require disputes to be resolved abroad.

How to get there

The standard approach is often called a "flip": a new US or Canadian company becomes the owner of your existing company. Plan on several weeks to a few months.

Get advice in both countries first. Hire a startup lawyer in the US or Canada and a lawyer and tax advisor in your home country. A flip can create tax costs for founders or the company in some countries, so understand them before you start.
Form the parent. Incorporate the new company, usually (but not necessarily) as a Delaware C-corp in the US or a Canadian corporation in Canada. Other US states or Canadian provinces are acceptable, as are B-Corps in the US.
Swap the shares. Every shareholder of the foreign company exchanges their shares for shares of the parent, in the same proportions. The foreign company becomes a wholly owned subsidiary.
Move the IP to the parent. Assign code, patents, trademarks, and domains to the parent. Have all founders, employees, and contractors sign assignment agreements with the parent.
Set up agreements between the companies. Put a services agreement in place so the subsidiary works for the parent and the parent owns what it produces.
Move customers and payments. Shift major customer contracts, payment processing, and the main bank account to the parent where practical.
Reissue equity from the parent. Create the option plan at the parent and grant all future equity there.
Clean up the cap table. Confirm the parent's ownership records match the foreign company's former owners, with nothing left behind.

Other structures we will consider

Most companies we invest in follow the standard structure above. The two arrangements below aren't off the table, but they are uncommon. Both need a closer review, and we decide each one case by case. If either fits you, talk to us before you apply.

Project companies

Some cleantech businesses raise money for a specific US project, such as a plant, facility, or fleet, through a US company created just for that project. That project company may be owned by a foreign parent.

We may consider investing in the project company if:

The project company owns the project assets outright.
The project's contracts are held by the project company. These include customer or offtake agreements, the site lease, permits, and grid connection rights.
The project company has a permanent, paid-up right to use any technology the project needs. That right must continue if the parent is sold or fails.
Investors must approve any payments or deals between the project company and its parent.
The project company is governed by US law.

Keep in mind that investing in a single project is different from investing in a company. Returns are usually steadier and more limited. We weigh that against our goals as a venture investor.

Technology held by a subsidiary

In some countries, moving intellectual property to a new parent company creates a large tax bill. In that case we may accept the IP staying in your foreign company if:

The US or Canadian parent owns 100% of the foreign company.
The foreign company gives the parent an exclusive, worldwide license to the IP.
The foreign company cannot sell or license the IP to anyone else without approval from the parent's board.

Everything else in the must-have list still applies.

What we will ask for

During diligence, expect to provide:

A chart showing each company in your group, where it is incorporated, and who owns it
The parent's cap table
Signed share exchange documents
Signed IP assignment agreements
Agreements between the parent and any subsidiaries
A list of major customer contracts and which company holds each one

Foreign Companies Seeking E8 Investment: A Guide