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 NDs 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 Governors 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