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It will take more than technological prowess, market intelligence, and the flawless execution of Callisma Inc.’s business plan to make the Palo Alto-based startup successful. It will also take a shrewd immigration plan. With a limited pool of technology-savvy talent in the United States and the number of foreign-born workers strictly controlled, start-up executives are adding immigration to their list of worries. U.S. executives have begun weaving immigration strategies into their business plans with an eye toward moving people and offices around the globe. And venture capitalists have begun to factor immigration planning into their investment strategies. Immigration lawyers are increasingly being called in to examine a company’s immigration history for problems or to create new policies to ensure that a steady flow of people will keep the company growing. At Callisma, which plans to expand overseas over the next two years, executives are mulling immigration plans that include moving U.S. citizens abroad — which isn’t always easy. Alternative strategies include locating operations in friendly countries. And international immigration policies will dictate which customers the company signs on overseas and in what countries the company will locate foreign satellites. For companies like Callisma, the issue centers on hiring goals. Losing a foreign-born engineer with special skills already has hampered the company’s effort to branch into a more esoteric technological niche, and hiring difficulties stand to get worse as the company grows. “In two years, we’ll be more dependent on alternative hiring strategies,” said Timothy Sparks, Callisma’s in-house counsel. Sparks meets almost monthly with the company’s outside immigration counsel to map out Callisma’s growth in concert with its ability to hire people, chiefly engineers in fields that have attracted foreign-born talent. Callisma is certainly not alone. The growth in the technology industries has led to a hiring binge and prompted the industry to call for raising the limit on foreign-born worker visas. This year, the shortage is particularly acute. The Immigration and Naturalization Service reached its limit of 115,000 H-1B visas, the most popular worker visa, in March. The agency will get its next fiscal allotment of 107,500 visas in October. The following year, the number falls to 60,000; at that time a temporary three-year increase in the annual allotments that Congress enacted in 1998 will expire. An effort to raise the limit stalled earlier this year after a bill upping annual allotments sparked debate. The debate should pick up again when Congress returns from summer recess next month. In light of the labor shortages and uncertainty, startups are no longer the only Silicon Valley players fearful of immigration problems. Venture capitalists are more attuned to the issue as well. In the past six months, about a dozen venture capitalists have hired longtime immigration lawyer Peter Loewy to research prospective deals. “The venture capitalists want to make sure that the business plan will work from an immigration standpoint,” said Loewy, the Santa Clara, Calif.-based managing partner of 150-lawyer immigration boutique Fragomen, Del Rey, Bernsen & Loewy. When reviewing a prospective deal, Loewy tries to determine whether a company plans to hire people in fields favored by foreign-born workers. If the company needs too many people who may come with visa problems, the business plan is probably not viable, he said. Meanwhile, technology company clients — and Loewy is seeing them much earlier in their development these days — consider other options. Those include bringing in foreign workers and training them for a short time before sending them back to a satellite, or partnering with a foreign company to access its talent. The boom in mergers and acquisitions has fueled the demand for immigration specialists as well. It’s a primary driver these days behind the immigration practice at Palo Alto, Calif.-based Cooley Godward, the only prominent technology-focused firm to harbor an immigration group. “The kind of companies that are being bought have a fair percentage of immigration issues,” said Lance Nagel, the Cooley partner who heads the firm’s nine-lawyer immigration practice. Like Loewy, Nagel is increasingly called upon to perform due diligence on top of his work counseling emerging growth companies with hiring problems. When it comes to M&A, Nagel often examines a target’s immigration paperwork to make sure everything is aboveboard. Paul Onitsuka, a human resources manager for America Online Inc. in Dulles, Va., said he increasingly calls upon Nagel for due diligence. Three prospective deals he’s considered in the past week bring with them immigration issues that have to be factored into the deal. The immigration status of the target’s employees, for example, sometimes dictates how a deal is structured, Onitsuka said. In some cases, completely absorbing a company may undercut the visa status of the employees, so the target must then be set up as a subsidiary, he said. As companies get larger and more international in focus, their options increase to include an alphabet soup of visa programs, Nagel said. Once a foreign satellite is up and running, for example, it becomes easier to move employees back and forth, he said. And that’s encouraged companies to go global much earlier than they would have, he said. The demand for people, Nagel said, “is driving business models even more than financing.”

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