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Visas for entrepreneurs: how developed countries create jobs for immigrants
Mariana Andrei - Communication Coordinator
8 October 2014
The article „Visas for Entrepreneurs: How Countries are Seeking Out Immigrant Job Creators”, signed by Madeleine Sumtion and published by Migration Policy Institute, addresses the challenges of the visa programmes for entrepreneurs adopted in various countries and the solutions chosen by governments to overcome them.
According to Madeleine Sumption, in the industrialized world, even governments that are sceptical about the benefits of immigration tend to open their doors to qualified immigrants. The higher the skill level of immigrants, the fewer restrictions governments tend to impose. Immigration is more and more seriously considered as a means to revitalize economy and to create jobs, through entrepreneurship. Thus highly qualified immigrants with entrepreneurial skills are particularly targeted by a series of programmes to facilitate and encourage business start-ups in developed countries.
In May Australia announced a restructured visa programme for immigrants with entrepreneurial skills. Ireland has recently made it easier for potential entrepreneurs to obtain visas. The United Kingdom, which introduced a new entrepreneur visa in 2008, added in April facilities for graduates of UK universities with entrepreneurial abilities. In 2009 New Zealand adjusted its immigration programme to facilitate permanent residence for the most successful entrepreneurs.
The creation of entrepreneur visas
Immigrant entrepreneurs existed even before the "entrepreneur visas". Immigrants who are already permanent residents or naturalized citizens may set up and run companies with no visa-related constraints, as they have already acquired the knowledge and necessary networks to create local companies. However life can be more difficult for aspiring entrepreneurs without permanent residence rights. In countries such as the United Kingdom, the United States, Spain, or Singapore, the standard work visa requires a sponsoring employer. Immigrants with work or study visas who want to start a business might have to wait several years for the permanent residence visa. This creates the risk that good ideas will be lost or that potential job creators will take their business plans elsewhere. Many countries (such as France, Germany, Italy, the Netherlands, Spain, Denmark, and Sweden), have addressed this issue by visas which allow self employment for skilled professionals. Other states have adopted visa programmes for elite entrepreneurs who can create jobs for local workers. In countries that provide limited options for self-employed immigrants (such as the United Kingdom), entrepreneur visas offer immigrants who might not otherwise qualify for work permits a status that allows them to establish and operate their own businesses. In others, such as Canada and Australia, visas are available for immigrants who do not have a sponsoring employer.
How do entrepreneur visas work?
The most common strategy of governments is to admit immigrants with potential and monitor their success over time. Thus Australia, New Zealand, the United Kingdom, Ireland, and Singapore offer temporary or "conditional" visas that can be renewed or changed to permanent ones if immigrants demonstrate business success within a few years. These programmes have similar structures but different approaches. "Entrepreneur visa" holders are expected to have an active role in managing the company. For passive investors there are other, more costly options.
How is the entrepreneurs' potential assessed?
The first step for obtaining an entrepreneur visa is the start-up capital. In most countries funding may come from any legal source, including the entrepreneur's personal savings. Prospective entrepreneurs may qualify for the Irish programme with EUR 75,000 (USD 93,000), and for the United Kingdom programme with GBP 200,000 (USD 309,000). Applicants to the Australian program will be expected to demonstrate at least AUD 800,000 (USD 787,000) in businesses and personal assets, while in New Zealand there is no minimum official threshold for investments and applications are judged on a case by case basis. In addition to the starting capital some countries also look at the immigrants' business proposals. Prospective immigrant entrepreneurs in New Zealand, for example, must submit a "sound business plan," says the author.
According to the new Australian programme, entrepreneurs who receive AUD $1 million guarantee based on the business plan assessment in the country will receive immediate permanent residence and do not need to provide any further evidence of business success. The United Kingdom allows immigrants to qualify with £50,000 (instead of the usual £200,000 threshold) if their funds come from qualified funding sources. Requesting guarantees from investors ensures a screening of elite entrepreneurs. Given that only few immigrant entrepreneurs receive funding from passive investors, despite their high potential, additional criteria have been adopted to enable the entry of talents. An example in this line is the Australian business innovation visa; under this program, applicants must pass a test covering: English language ability, business experience, experience in export-oriented or fast-growing businesses, and possession of registered patents or trademarks. Some countries also facilitate qualification for certain immigrant groups. The UK Graduate Entrepreneur scheme, for example, requires a lower investment threshold for international students from UK universities and allows for an extra two years to collect this sum if they are endorsed by a university or college.
Obtaining the permanent residence right
Conditional entrepreneur visas can typically be renewed or converted to permanent residence after two to four years if the immigrant creates a successful business. An exception is the Australian Venture Capital Entrepreneur programme, which provides immediate permanent residence. The most important criterion for defining business success is job creation. Applicants' businesses must typically create between two to five jobs for citizens or permanent residents of the host country. New Zealand and Ireland however do not have set thresholds for revenues and job creation. Irish immigrant entrepreneurs must simply maintain an operational business, while New Zealand applicants must demonstrate that their business benefits the country economically (through job creation, tax payments, or exports). When designing entrepreneur visa programs governments must also decide how quickly entrepreneurs should meet the success criteria.
Shorter time periods set by governments to demonstrate business success may prevent immigrant entrepreneurs from taking risks or from adjusting their business plans in sensible ways, if these decisions would jeopardize their visa status. Reforms to Ireland's entrepreneur program this year were explicitly designed to address this problem and immigrants now do not need to demonstrate job creation. Similarly, the Australian program that came into force in July 2012 allows immigrants to extend their provisional status from four to six years with support from their state/territory of residence, which enables them to change their business plan if they do not meet the permanent-residence requirements sooner.
Entrepreneur visa holders who fail to qualify for the permanent residence are either required to leave the host country or to obtain an ordinary work visa.
According to statistics, countries such as the United Kingdom and New Zealand have admitted very small numbers of immigrants through entrepreneur visas (a few hundred people per year). Immigrants may start businesses even in the absence of entrepreneur visas, but the process takes longer and is reserved to those who have already spent several years in the host country. For the others there are either entrepreneur visas or visas for self employment. In addition to the number of immigrants qualifying for various types of visas, the flexibility of the immigration system is essential, which makes it possible to attract more immigrant talents.
Source: http://www.migrationpolicy.org/article/visas-entrepreneurs-how-countries-are-seeking-out-immigrant-job-creators
According to Madeleine Sumption, in the industrialized world, even governments that are sceptical about the benefits of immigration tend to open their doors to qualified immigrants. The higher the skill level of immigrants, the fewer restrictions governments tend to impose. Immigration is more and more seriously considered as a means to revitalize economy and to create jobs, through entrepreneurship. Thus highly qualified immigrants with entrepreneurial skills are particularly targeted by a series of programmes to facilitate and encourage business start-ups in developed countries.
In May Australia announced a restructured visa programme for immigrants with entrepreneurial skills. Ireland has recently made it easier for potential entrepreneurs to obtain visas. The United Kingdom, which introduced a new entrepreneur visa in 2008, added in April facilities for graduates of UK universities with entrepreneurial abilities. In 2009 New Zealand adjusted its immigration programme to facilitate permanent residence for the most successful entrepreneurs.
The creation of entrepreneur visas
Immigrant entrepreneurs existed even before the "entrepreneur visas". Immigrants who are already permanent residents or naturalized citizens may set up and run companies with no visa-related constraints, as they have already acquired the knowledge and necessary networks to create local companies. However life can be more difficult for aspiring entrepreneurs without permanent residence rights. In countries such as the United Kingdom, the United States, Spain, or Singapore, the standard work visa requires a sponsoring employer. Immigrants with work or study visas who want to start a business might have to wait several years for the permanent residence visa. This creates the risk that good ideas will be lost or that potential job creators will take their business plans elsewhere. Many countries (such as France, Germany, Italy, the Netherlands, Spain, Denmark, and Sweden), have addressed this issue by visas which allow self employment for skilled professionals. Other states have adopted visa programmes for elite entrepreneurs who can create jobs for local workers. In countries that provide limited options for self-employed immigrants (such as the United Kingdom), entrepreneur visas offer immigrants who might not otherwise qualify for work permits a status that allows them to establish and operate their own businesses. In others, such as Canada and Australia, visas are available for immigrants who do not have a sponsoring employer.
How do entrepreneur visas work?
The most common strategy of governments is to admit immigrants with potential and monitor their success over time. Thus Australia, New Zealand, the United Kingdom, Ireland, and Singapore offer temporary or "conditional" visas that can be renewed or changed to permanent ones if immigrants demonstrate business success within a few years. These programmes have similar structures but different approaches. "Entrepreneur visa" holders are expected to have an active role in managing the company. For passive investors there are other, more costly options.
How is the entrepreneurs' potential assessed?
The first step for obtaining an entrepreneur visa is the start-up capital. In most countries funding may come from any legal source, including the entrepreneur's personal savings. Prospective entrepreneurs may qualify for the Irish programme with EUR 75,000 (USD 93,000), and for the United Kingdom programme with GBP 200,000 (USD 309,000). Applicants to the Australian program will be expected to demonstrate at least AUD 800,000 (USD 787,000) in businesses and personal assets, while in New Zealand there is no minimum official threshold for investments and applications are judged on a case by case basis. In addition to the starting capital some countries also look at the immigrants' business proposals. Prospective immigrant entrepreneurs in New Zealand, for example, must submit a "sound business plan," says the author.
According to the new Australian programme, entrepreneurs who receive AUD $1 million guarantee based on the business plan assessment in the country will receive immediate permanent residence and do not need to provide any further evidence of business success. The United Kingdom allows immigrants to qualify with £50,000 (instead of the usual £200,000 threshold) if their funds come from qualified funding sources. Requesting guarantees from investors ensures a screening of elite entrepreneurs. Given that only few immigrant entrepreneurs receive funding from passive investors, despite their high potential, additional criteria have been adopted to enable the entry of talents. An example in this line is the Australian business innovation visa; under this program, applicants must pass a test covering: English language ability, business experience, experience in export-oriented or fast-growing businesses, and possession of registered patents or trademarks. Some countries also facilitate qualification for certain immigrant groups. The UK Graduate Entrepreneur scheme, for example, requires a lower investment threshold for international students from UK universities and allows for an extra two years to collect this sum if they are endorsed by a university or college.
Obtaining the permanent residence right
Conditional entrepreneur visas can typically be renewed or converted to permanent residence after two to four years if the immigrant creates a successful business. An exception is the Australian Venture Capital Entrepreneur programme, which provides immediate permanent residence. The most important criterion for defining business success is job creation. Applicants' businesses must typically create between two to five jobs for citizens or permanent residents of the host country. New Zealand and Ireland however do not have set thresholds for revenues and job creation. Irish immigrant entrepreneurs must simply maintain an operational business, while New Zealand applicants must demonstrate that their business benefits the country economically (through job creation, tax payments, or exports). When designing entrepreneur visa programs governments must also decide how quickly entrepreneurs should meet the success criteria.
Shorter time periods set by governments to demonstrate business success may prevent immigrant entrepreneurs from taking risks or from adjusting their business plans in sensible ways, if these decisions would jeopardize their visa status. Reforms to Ireland's entrepreneur program this year were explicitly designed to address this problem and immigrants now do not need to demonstrate job creation. Similarly, the Australian program that came into force in July 2012 allows immigrants to extend their provisional status from four to six years with support from their state/territory of residence, which enables them to change their business plan if they do not meet the permanent-residence requirements sooner.
Entrepreneur visa holders who fail to qualify for the permanent residence are either required to leave the host country or to obtain an ordinary work visa.
According to statistics, countries such as the United Kingdom and New Zealand have admitted very small numbers of immigrants through entrepreneur visas (a few hundred people per year). Immigrants may start businesses even in the absence of entrepreneur visas, but the process takes longer and is reserved to those who have already spent several years in the host country. For the others there are either entrepreneur visas or visas for self employment. In addition to the number of immigrants qualifying for various types of visas, the flexibility of the immigration system is essential, which makes it possible to attract more immigrant talents.
Source: http://www.migrationpolicy.org/article/visas-entrepreneurs-how-countries-are-seeking-out-immigrant-job-creators
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