Despite President recently imposing a $100,000 application fee on new H-1B visas, San Francisco remains a for international AI founders keen to tap into the epicenter of innovation.

I was one of those wide-eyed entrepreneurs back in 2017, when I first packed my bags and moved from my native Ukraine to SF to scale my startup, . Unfortunately, I ended up returning home demoralized and depressed as my trip had led to so many rejections.

However, I eventually realized that the problem wasn鈥檛 my tech 鈥� it was that I hadn鈥檛 understood the unspoken rules of Silicon Valley.

After spending years trying to break into the Valley, things finally turned around for me. Now, as a startup mentor at and , and founder of Raisable Founders Hub, I鈥檝e made it my mission to help founders, especially immigrant entrepreneurs, avoid the unnecessary mistakes I made.

My approach boils down to a few simple steps: shift your mindset, build a relevant network, validate your idea deeply, and then build your strategy. This is critical for founders navigating today’s funding frenzy.

Here鈥檚 what I wish I鈥檇 known when I first set foot in Silicon Valley:

Understand the principles by which the Valley lives

Silicon Valley runs on trust, and trust is something that needs to be earned. Therefore, it鈥檚 best to start building it long before you arrive: Do your research and connect online with people you鈥檇 like to meet up with. Make sure you have something to offer. The Valley rewards those who contribute first.

Building a startup here is different from anywhere else due to extremely high costs, relentless competition and a generally much faster pace of doing things. All of this will test your adaptability 鈥斕齱hich is a key skill investors will be on the lookout for.

The right mindset can鈥檛 be bought, but it can be developed by immersing yourself in the ecosystem and engaging with the right people.

Surround yourself with like-minded people

Silicon Valley is filled with people who will challenge everything you do from day one. The people you surround yourself with can either fuel your growth or drain your momentum. Don鈥檛 waste time chasing generic networking opportunities. Instead:

• Be intentional. Engage with communities that align with your mission 鈥� founders in your vertical, fellow immigrants, AI enthusiasts and so on, who are a few steps ahead of you and have already walked the path you are on, made their own mistakes, and know the best way forward.
• Offer value first. Share your expertise, contribute to discussions, and offer your participation or help at events. Don鈥檛 lead with an ask, lead with insight.
• Engage smartly. Attend events where meaningful conversations happen. Research speakers, ask sharp questions and follow up with genuine interest.

The bottom line is: Focus on nurturing authentic connections that can flourish into long-term collaborations.

Ask for advice first, then intros

Many founders obsess over getting investor introductions. But an intro without the right preparation is a wasted opportunity.

Instead of fixating on warm intros, focus on validating your ideas. Explain to everyone you meet how your solution solves a specific problem and why your team is the best to do it. Absorb their feedback and use it all as an opportunity to refine your pitch. Every discussion helps you understand how to frame your value proposition more effectively. Seek out great mentors. The best ones don鈥檛 give you answers 鈥� they help you ask better questions.

Finally, not every interaction needs to lead to fundraising, the goal should be to build a sustainable company 鈥� so be open to any and all opportunities or connections that come your way. You never know, the next person you meet could become a future co-founder, adviser, customer or even a lifelong friend.

听 is a startup mentor at and , and founder at Raisable Founders Hub.

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• Are H-1B Changes 鈥楢 Strategic Opening鈥� For Startup Creation Or An 鈥業nsurmountable Founder Tax鈥�?

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Building a startup is exciting but can also be a long, uncertain and often exhausting ride. It is certainly not for the faint of heart. Founders put years of their lives into these companies 鈥斕� usually at great personal, financial and professional risk, with little financial reward until a big exit happens or, in much more rare cases, on the creation of liquidity following an IPO.

And, those exits are taking longer than ever. IPOs are rare, acquisitions can take 10-plus years, and, in the meantime, the expenses of everyday life do not hit pause 鈥� mortgages, families and other responsibilities keep rolling in, with compensation often below market and benefits delayed until sale or post-IPO, if at all.

Given their risk profile, many, if not most, startups do not succeed at the levels that founders and their investors seek.

With this backdrop, more founders are now looking to 鈥渟econdary transactions鈥� as a way to get some liquidity during the building phase, before a sale or IPO. A secondary deal typically involves a founder selling some of their personal shares, often timed around a new fundraising round.

It doesn鈥檛 鈥� and shouldn鈥檛 鈥� mean that they are checking out. Instead, the deal provides founders with an opportunity to unlock a portion of the value they鈥檝e created without having to wait for a public offering or full-blown acquisition, mitigating risk while remaining highly motivated to pursue continued success.

From where I sit as legal counsel to startups, early-stage and emerging growth companies, as well as the investors who support them, I strongly believe that secondaries, when done right, can be a smart and strategic move.

Considering the risks

But founders need to consider the risks of secondary financings as well: There are complicated legal, tax and governance questions that need to be carefully considered.

To start, most founders typically can鈥檛 sell their shares whenever they want. The company鈥檚 governing documents, stock agreements and/or investor documents often place restrictions on transferring shares, including company and investor rights of first refusal and co-sale rights. Board approval is almost always required, and investor sign-off is usually required as well. These restrictions on selling shares aren鈥檛 just red tape 鈥� they protect the company鈥檚 structure and make sure that everyone鈥檚 interests remain aligned.

Then there鈥檚 the question of who鈥檚 buying the founder shares. Whether it鈥檚 a new investor or someone already on the cap table, buyers will usually want to do their due diligence.

Founders need to be careful about the information they share about the company to potential investors: A founder sharing material nonpublic information might create regulatory issues or enhanced competitive and market risk 鈥� especially if the company is relying on exemptions under securities laws.

Don鈥檛 forget tax considerations

Taxes are another important question. If a founder is selling qualified small business stock or exercising options before a sale, there can be serious tax implications for the seller, buyer and company. Limits under Rule 701 of the Securities Act of 1933, investor thresholds and valuation concerns under IRS Rule 409A can also come into play.

Founders should always, in advance of contemplating a secondary sale, seek advice from both legal and tax advisers. What seems like a straightforward transaction can get complicated quickly.

Beyond the technical requirements/considerations of a secondary sale, it鈥檚 critical that entrepreneurs and the company think about how the sale might affect team dynamics, future fundraising and the cap table. If the reasons for the sale are not communicated clearly, it might spook employees or send unintended or improper signals to investors, both current and future. And investors will generally expect to see founders maintaining sufficient holdings to motivate their continued best efforts.

We generally advise founders to time secondary sales around meaningful milestones, such as a major product launch, a successful funding round, or strong business traction. A founder selling 5%-10% of their holdings is usually seen as reasonable, particularly when in connection with other strong business milestones. Anything much higher can start raising eyebrows.

Investors are increasingly receptive to founder secondary sales so long as they trust that the founder still has enough 鈥渟kin in the game鈥� to remain fully committed for the long haul.

A tool, not a shortcut

In my experience, when structured thoughtfully, secondary sales can strengthen alignment. Founders who can relieve a bit of financial pressure are often in a better place to focus, make smart decisions, and keep building their company. The messaging is that the secondary sale is not about cashing out, but creating some financial breathing room and mitigating risk.

At the end of the day, a secondary sale isn鈥檛 a shortcut. It鈥檚 a tool. Used the right way, it can help founders manage risk without losing sight of the larger goals. As legal advisers, our role is to help navigate the transactional complexity while ensuring that secondary sales comply with applicable law and the company鈥檚 long-term vision stays intact.

Done well, these transactions aren鈥檛 just about taking money off the table 鈥� they鈥檙e about sustainability, a focus on the future. Building something great takes time, sometimes a lot of time, and founders can gain the financial breathing room to stay in the game for the long run.

is co-practice group leader of 鈥檚 Transactions Practice Group and a co-practice group leader of the firm’s Emerging Growth Companies & Venture Capital group. He advises founders and investors in early-stage tech and life sciences companies on corporate and transactional matters, from formation to exit.

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But in late January, Papaya CEO moved the company鈥檚 funds out of Israel, citing the country鈥檚 risky business climate amid political turmoil. She joins a growing group of tech leaders alarmed about Prime Minister ‘s plans to give parliament veto powers over the Supreme Court.

Such reforms have not only triggered widespread protests , but also raise questions about the future of the country鈥檚 technology industry. The Israeli government is moving to allow the Knesset, its parliament, to appoint justices, override Supreme Court decisions, and remove the high court’s power to judge government legislation.听

鈥淭here is so much at stake here, if this reform passes,鈥� said , a founding partner at , a seed investor based in Silicon Valley that invests in Israeli founders. This will impact 鈥渋nvestments coming into the country, founders staying or not staying in the country.鈥澨�

Since the first vote on such reforms passed in January, the response has been swift from both tech investors and startups. Dozens of public and private tech companies they are taking funds out of the country. Guez, however, estimates that many more have done so quietly, amounting to what could be $7 billion to $10 billion in funds moved out of the country.

鈥淚t’s a new thing for the tech community to step outside the comfort zone of not being political and jumping into it and showing their force,鈥� said Galili.听

Since the first vote was passed in January, Galili said, this issue has dominated her calls with startup founders.听

These judicial reforms were not discussed in advance of Netanyahu鈥檚 recent election in November 2022. 鈥淵ou can argue whether or not the majority chose these reforms,鈥� said Guez. 鈥淚t wasn’t even discussed. It’s a surprise for us, and it seems like the majority are saying, this is not what we are after.鈥澨�

鈥楽ignificant concerns鈥�

U.S.-based , an active investor in Israel for three decades, has had a local office there since 2007 and estimates it has in Israeli startups including , , and in the past 10 years. But in February the firm advised its portfolio of startups in a private memo to hold only .

鈥淲e are confident in the resilience of Israeli high-tech given its limited exposure to the local economy, but have significant concerns that the current climate may result in a chilling effect on non-tech foreign investment and domestic consumption in Israel that goes beyond the challenging macro environment,鈥� the firm obtained by Israeli newspaper last month. 鈥淥ur primary business concern is the continued weakening of the shekel and the smaller risk of foreign currency controls as the outflow of funds from Israeli banks continues to gather steam. While both concerns may feel exaggerated at this moment, investor and public perception can abruptly make both risks a reality.鈥�

Moving funds

Last week, , an Israeli unicorn, announced $300 million in funding at a $10 billion valuation, but said the new funding will not be moved to Israel amid the ongoing political conflicts.

Guez, too, acted quickly after that first vote, moving Papaya Global鈥檚 funds out of Israel to Europe and the U.S. As a CEO it鈥檚 always necessary to assess business risks. But Guez went further and was public in her criticism, seeing it as her responsibility to be vocal.

The Israeli government is starting to 鈥渄emolish everything that we’ve built around here,鈥� she said. It’s almost impossible to raise a round in Israel currently, she said, because the risk level is so high. The funding environment is 鈥渃ompletely frozen,鈥� she said.听

In a country with internal conflicts, the Supreme Court is one of the most important institutions, she said. 鈥淓liminating the Supreme Court 鈥� this is the end of democracy.鈥�

Nascent industry

SA国际传媒 data shows startups headquartered in Israel raised close to $8.9 billion in 2022 鈥斕齞own from $9.8 billion in 2021, a 10% decline year over year. That contrasts with overall global funding, which fell 35% year over year in 2022.听

The billions invested in Israeli startups is a testament to its lead in cybersecurity, health, energy, agriculture and foodtech.听

In the first two months of 2023, Israel-based startups have raised more than $500 million, down 72% from funding raised in January through February 2022.听

However, the amount invested in Israeli startups is much higher if you take into account that many Israeli companies have dual headquarters or are headquartered outside of Israel.

The growth in large Israeli technology companies is a fairly recent phenomenon. Five to six years ago, when Guez started fundraising for Papaya, the overriding notion was that you could not build big companies in Israel, and that founders would have good ideas and then sell.听

In the past five years, more than $50 billion was invested in Israeli tech companies, SA国际传媒 data shows. And more than 30 or 40 companies went public, Guez said.

The significance of the technology industry for the Israeli economy was highlighted in a from the . High-tech exports represented over 50% of exports for the first time in 2021 鈥� with the majority of that in high-tech services. More than 10% of Israelis work for technology companies.听

Global outlook

The Israeli technology community is international in its outlook.听

鈥淚srael doesn’t have a local market. Israeli founders have to be global from day one,鈥� according to Galili, who works with Israeli startups on their strategy to go to market in the U.S. Israeli startups will build their R&D in Israel but also incorporate and set up banking in the U.S. and other parts of the globe.

Israeli startups are also dependent on global investors, many of whom have set up local investment arms in Israel due to the strength of the technology industry. Galili predicts that as much as 85% of dollars invested in Israeli startups come from outside of Israel.听听

What is the impact?

Founders are looking at what their alternatives are. Technology industry startups have options to relocate to almost anywhere in the world. 鈥淓veryone is discussing this,鈥� Guez said.

For now, Galili says the talent in Israel remains a draw to keep startups in the country despite the turmoil. 鈥淢ost of the impact is the uncertainty we have right now,鈥� said Galili.听

Going forward, Israeli startups who in the past incorporated their company in Israel might decide to do so in Delaware or elsewhere to protect their intellectual capital in a country where the judicial system is not compromised.听

The current political tensions might be misunderstood as being about the political right versus the political left, Guez said, but 鈥渋t’s really about the right to live in a democracy.鈥�

Protests against Netanyahu鈥檚 plans . 鈥淎s time goes by you see more and more people from the right are joining and saying, 鈥楾his does not reflect our opinion. This is not what we voted for,鈥� 鈥� Guez said.

鈥淭he general environment is that we understand that we need to unite and to fight for things that matter in this country,鈥� she said.

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