You cannot actively run, code, or launch your startup without work authorization, even if you do it for free. However, you can legally form the company, own equity, and do market research right now.
“As an international student in the U.S. on an F-1 visa, how can I navigate launching and monetizing my software startup without violating my status, and will applying to Y Combinator without a public launch or revenue hurt my chances? Should I launch for free to gather feedback and traction first, or is there a safe way to charge users and validate my product before I have formal work authorization or have incorporated?”
Summary
You can cross the fear of a visa violation off your list. As long as you wait for your Optional Practical Training (OPT) approval before you launch or write code for the business, you are safe. You did the right thing by checking the rules first.
To legally operate your business, you must use Optional Practical Training (OPT).
Apply for work authorization to operate your startup while you are still completing your degree. This limits you to 20 hours of work per week while classes are in session.
Apply near graduation to operate your startup full-time after completing your degree. The business must relate to your major and provide at least 20 hours per week of work.
Available after post-completion OPT for STEM graduates. This requires restructuring the startup so you are not the sole employer, enrolling in E-Verify, and having an employer sign Form I-983.
You cannot launch or code for free. The rule that entrepreneurship is work applies regardless of compensation or revenue. Coding or managing the startup for free without an EAD is unauthorized employment.
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The rules for unpaid work and early validation
You asked if you should launch for free to gather feedback and traction first. You must not do this. Working without pay at your own company still counts as unauthorized employment. Federal guidelines do not distinguish between paid and unpaid work when it comes to your own business.
You also asked if there is a safe way to charge users and validate your product before you have formal work authorization or have incorporated. There is not. The U.S. government considers entrepreneurship as work, which requires you to qualify and apply for OPT first. If you begin working, even in an unpaid position, before the start date on your Employment Authorization Document (EAD) card, it is a severe violation of your status.
The documents do not state whether applying to Y Combinator without a public launch or revenue will hurt your chances.
While you wait for authorization, you can legally form an LLC or corporation, own equity, write a business plan, and build a test model to explore technical feasibility. You cross the line into unauthorized work when you provide services to customers, manage operations, or perform labor like coding for the active business.
Next steps
Follow these steps to secure the authorization you need to legally launch and operate your startup while in school.
Ensure your business relates to your major
Your startup's business activity must be directly related to your major area of study.
Complete one full academic year
You must complete one full academic year of full-time study at an SEVP-certified school before you are eligible for OPT.
Request a DSO recommendation
Ask your Designated School Official (DSO) for a recommendation for pre-completion OPT. They will enter this into SEVIS and provide you with an updated Form I-20.
File Form I-765 with USCIS
Submit your application for employment authorization and wait to receive your physical Employment Authorization Document (EAD) card.
Launch and operate your startup
Once your EAD is in hand and the start date has arrived, you can legally launch, code, and actively operate your startup. Note that your work is limited to 20 hours per week while school is in session, but you can work full-time during official breaks.
Legal sources
The rules governing F-1 student entrepreneurship and unauthorized employment come from the Department of Homeland Security and immigration practitioners.
Scholaro Research
Working for your own business without pay is still considered unauthorized employment under federal guidelines.
Working without pay at your own company still counts as unauthorized employment. Federal guidelines do not distinguish between paid and unpaid work when it comes to your own business.
Study in the States
The U.S. government classifies starting a business as work, requiring F-1 students to apply for OPT.
The U.S. government considers starting your own business in the United States, also known as entrepreneurship, as work. Therefore, if you are an F-1 student who plans to start your own business in the United States, you must qualify and apply for OPT.
Scholaro Research
You do not need work authorization to form a legal entity.
Forming a legal entity does not require work authorization.
Peryeva Immigration Law
Permitted activities without authorization include forming the company and building a test model for technical feasibility.
Permitted activities include forming the company, collaborating with co-founders, obtaining legal advice pertaining to the business, meeting with investors, performing research, negotiating contracts, developing marketing, and branding materials, and developing business plans and business models. You can engage in discussions or conduct research such as performing customer discovery, engaging in competitive analysis, exploring potential company formation options and equity arrangements with co-founders, building a test model to explore the technical feasibility of a product
SettleKit is not a law firm. This is general information, not legal advice. Always confirm your specific situation with a licensed immigration attorney or your school's DSO.
SettleKit is not a law firm and this is general information. Please consult a licensed immigration attorney for legal advice.
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