a) Although I agree it is a gray area,the USCIS is probably not going to come after you for "working" for your company for free while you waited for the H1-B approval.

b) Noone has to know.

c) Although different apporaches exist,my opinion is that you should have probably already made something that a lot of people use even before you talk to the VCs.By doing this you were working for your company without an H1B.But this issue can be solved if you refer to point - B above.

"Noone has to know"

Except the investors, who would realise immediately. It's all very well to say that USCIS "shouldn't" and "probably won't" do things, but:

1) That doesn't reassure me much. I don't want to be deported.

2) That shouldn't reassure an investor much, either. If they realise you are going against immigration law they might run from your company at sprinting pace once they realise the founder could be deported.

I want these kind of changes because I want to be legitimate.

Yes I do agree with your points.It would have been a lot easier to get funded if you were a citizen.

-But at least now the dream is POSSIBLE as opposed to IMPOSSIBLE.

-You have to make up for these shortcomings by making something that much more awesome.

-And lastly if a VC is not willing to take this simple risk,maybe he should drop the letter V from his designation.

I am quite close to a lot of deals and I can definitely say that most people who are considered a-list investors today are both:

a) willing to invest in someone who is waiting for a visa

b) willing to use their contact network to get their investment secured with a visa for the founders. I've seen this happen multiple times - good lawyers pulled into the deal to expedite visa issues.

It is in the investor's best interest.

I had my H-1B visa transferred between companies last week. Took seven business days, not months. My new company paid for premium processing, which is supposedly guaranteed to complete the process in 15 calendar days.

The process isn't complete though, correct? You have authorisation to work for your new employer, but the actual transfer is complete- that takes months.

Not that there's anything to worry about usually, it's just the kind of uncertainty that really isn't helpful when you're setting up a company.

Not correct ... as soon as the transfer goes through you can start work at the new company.

That's why I said:

"You have authorisation to work for your new employer"

But the actual transfer is not complete. You are not guaranteed to be able to continue your work. The chances of problems are small, but it does happen.