1. to maximize return of investment, foreign investors may request startup to move to the investor’s country from Canada. This request may come in different forms:
   1. Require startups to physically move to foreign countries
   2. Require startups to set up foreign subsidiaries
   3. Require founders to relocate
   4. Require setting up joint ventures with foreign entities 
   5. Require licensing deals

There are specific consideration for each of the scenarios:

1. Require startups to physically move to foreign countries – 
   1. Benefit for Chinese investors include proximity to Chinese market, VC funds, and other local resources, which may make next round of financing easier and valuation higher
   2. Reasons for US investors to make this request include 

• • • History reason: before 2010, clearance certificates were required by Canadian tax law when foreign shareholders transfer the shares; this hindered US investment to Canadian companies
    • US tax laws used to set restrictions to VC firms who invest in foreign companies; the restrictions were removed later
    • Main reason is proximity to market and access local investment
      
      According to the speaker, the willingness of US investors to invest in Canadian startups is getting higher. It is also easier for Canadian companies to pursue investment in US, for example, Shopify went public on NYSE in 2015; Lululemon’s US subsidiary went public in Nasdaq.
      
      The decision of moving company to US depends on needs of R&D; it would be less beneficial to relocate to US if main R&D teams remain in Canada, because the Canadian company would:
      
      1. Loss Canadian Controlled Private Corporation (CCPC) status, and SR&ED tax benefit
      2. Loss cost advantage – salaries for Canadian R&D labor force are lower than US 
      3. Loss connection with Canadian ecosystem
      
      There are also flexible ways to meet relocation requirements, for example, keeping both foreign headquarter and R&D subsidiary as CCPC, which adds complexity to company management. 

2. Require startups to set up foreign subsidiaries – this is relatively simple; the company’s headquarter remains in Canada as entity to receive investment, while the subsidiary can take advantage of foreign local market, as well as foreign government financial support.

3. Require founders to relocate to the foreign country — this requirement is normally made by Chinese investors when the Canadian company establishes headquarter in China as entity for receiving investment. If the founder prefers not to move, he/she needs to negotiate arrangement with the investor.

4. Require setting up joint ventures with foreign entities – normally requested by strategic investors; joint ventures offer special advantage and challenges to the startup, especially for young founders, collaboration with partners from foreign culture is not easy. Other challenges come with joint venture model include valuation of intangible assets. 

5. Require licensing deals – traditional licensing can provide financial income for the startup, but the income may not come immediately and it is critical to ensure the technology is not easily reverse engineered. For startup, it is better to combine financing and licensing together, which offers immediate cash flow to the startup and connects the strategic investor with company management.