I am working for a US software company as a full time SDE on OPT. I am looking forward to a possible H1B and eventual green card through employment. I am thinking about funding a web 2.0 company with my friends in India. We plan to sell subscription based service on the internet (possible USA customers). I am thinking about providing some seed funding for the company and help them pay various fees using my credit cards. I do not wish to do anything that might put my H1B and green card possibilities into jeopardy. What are my options here?
I don't think there is a restriction on funding businesses or companies as an employee with respect to your H1-B or Green Card.
However you need to look at your employment contract, your NDA and your non-compete. Sometimes they contain a clause that assigns IP ownership of all work performed by you during contract to the employer. You also need to ensure that there is no conflict of interest between your new venture and the business of your employer.
If you're on an H1-B you cannot be an active part of a company - you can only be a passive investor. If you're doing anything else for the company, you may be breaking H1-B laws.
This law even extends to "potential danger" if, for e.g., you earn income as an Amazon affiliate or make money through Adsense. The law was designed in an age when the Internet was in infancy, but rules are rules.
Your options are severely limited - you could, for e.g, do work for them out of the goodness of your heart, but you can't be on payroll, you can't be paid for it in a way that is taxable in your US income. Is it tracked by USCIS? not very likely, I've heard of (ignorant) people doing side business on H1B and happily paying taxes to the IRS and nothing bad happened to them. But it's NOT legal.
Let me also add in case you're thinking of H4 variants / using a H4 etc.
The same laws also prevent someone on H4 from profiting from their own business, even if it 100% online. For e.g. if your partner is a highly qualified engineer who starts a completely online business, as a sole proprietor, something he/she should start from anywhere in the world, then he/she would have to not do it simply because she's on US soil on a visa. The original H4 stipulation preventing the H4 from working was to keep them from taking a citizen's job, but it fails all logic when it comes to founding your own business.