In 2016, Canada’s business immigration Start-Up Visa program is expected to become a more popular financing option for start up companies across Canada.
Over the past few years, Canada’s long standing federal business immigration programs were largely eliminated with the cancelation of the former Federal Immigrant Investor program and the Federal Entrepreneur program. Its replacement programs include the Start-Up Visa Program and the much smaller Immigrant Investor Venture Capital (IIVC) Pilot Program launched in early 2014. The latter program is geared to ultra high net worth individuals but remains uncompetitive in the market.
Industry insiders believe the federal Start-Up Visa Program with an annual quota of 2750 applications could realize a potential annual market capitalization exceeding $800 million during the next 3-5 years and become a major alternative to the Quebec Immigrant Investor Program.
The Federal Start Up Visa Program issues Canadian permanent residence to qualified immigrant entrepreneurs. The program seeks to attract innovative entrepreneurs to Canada and link them with Canadian private sector businesses via government approved (angel investor groups, venture capital funds or business incubators) who will act as facilitators for the establishment of their start-up business in Canada.
The program operates under three stages. Under the first stage, an investor is matched with a suitable qualifying business. Under the second stage, the successful applicant will quickly receive a temporary work permit. Under the final stage, the approved investor and family members will receive Canadian permanent residence. Current processing delays are approximately six (6) months to receive visas.
Under a pass fail system, the investor must meet the following conditions:
- Obtain written commitment from a government designated entity in the form of a Commitment Certificate or Letter of Support confirming one of the following options:
- Business Incubator confirms the investor’s qualifying business has been accepted into its business incubator program;
- Angel Investor Group confirms it is investing at least $75,000 in the investor’s proposed business;
- A Venture Capital Fund confirms it is investing at least $200,000 in the applicant’s business.
- Have a business operating in Canada (or whose incorporation is conditional upon the attainment of permanent residence by the applicant), which meets the criteria of a qualifying business in which the investor owns at least 10% or more of the voting rights.
- Have a suitable business background and sufficient unencumbered, available and transferable settlement funds to carry out an investment and settle in Canada.
- Completed at least one year of post-secondary education.
- Demonstrate sufficient proficiency in English or French through standardized testing (Canadian Language Benchmark level 5).
- Intend to reside in a province other than Quebec.
- Complete medical and security requirements.
Investor applicants with submited applications can expect to receive a decision on the application for a work permit in 1-2 months and receive permanent residence in less than 6 months.
Advantages of the Canada Start Up Visa Program
- Currently the fastest path to Canada for a business investor and family with a suitable qualifying business.
- No condition attached to the immigrant visa as compared with Provincial Entrepreneur programs.
- Investors matched with reputable angel investors, venture capital funds or business incubators will receive introductions to business advisors, mentors and strategic planning professionals who will help bring a qualifying business to the international marketplace.
- Successful investors can realize future returns in accordance with the negotiated % of share ownership in the business, to the extent returns are realized.
- Interview waiver.
The biggest challenge facing investors is choosing the right government approved angel investor group, venture capital fund or business incubators who will assist in identifying a suitable qualified business.
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