Ottawa launches business incubator visa

Posted on in Policy Context – Business
October 22, 2013.   By Tobi Cohen, Postmedia News

The federal government is expanding its new startup visa program for immigrant entrepreneurs even though it has yet to issue a single visa since the program launched six months ago.

Immigration Minister Chris Alexander announced Monday a new business incubator immigration stream to complement existing venture capital and angel investor streams.

As part of the program, entrepreneurs seeking permanent residency in Canada must first gain the support of an angel investor group, venture capital fund or new business incubator before they can apply for the startup visa.

The backers are supposed to provide seed money and mentorship to fledgling companies in order to help them attract investors and grow their startups into sustainable businesses that can create jobs in Canada. They’ll sometimes receive equity or a stake in the company in return.

“By linking immigrant entrepreneurs with investors and business incubators who have expertise working with startups, we believe this program will address many of the challenges immigrant entrepreneurs typically faced in the past,” Alexander said in a speech at the Canadian Association of Business Incubation’s annual conference in Toronto.

“Many immigrants to Canada are unfamiliar with Canada’s business environment when they first arrive. A lack of credit history in Canada or access to Canadian social and professional networks can also pose barriers for a foreign entrepreneur.”

Alexander later indicated the government has yet to process any applicants but suggested that’s not necessarily a bad thing. An early challenge for private sector partners was separating the wheat from the chaff as many were “overwhelmed with calls” from people who weren’t qualified for the program.

“They know the difference between a good idea and a bad one,” he said of the angel investors, venture capitalists and business incubators vetting the business proposals.

“It will be very difficult for someone who’s not a real entrepreneur with a bona fide idea to get very far in this program and we, as a government, don’t want to get into the business of picking winners in what is a totally private sector-driven field.”

Alexander’s predecessor Jason Kenney first introduced the startup visa to replace the old entrepreneur stream. He long complained that the previous program tended to attract shopping mall food court kiosk and corner store owners, rather than more “innovative entrepreneurs” like “the future Bill Gates and Steve Jobs.”

The old program was shelved in 2011 pending changes but the government still has to get through a large backlog of old entrepreneur applications. According to Vancouver lawyer and immigration policy analyst Richard Kurland, it could take as long as nine

years to get through the backlog at the current rate.

Figures obtained by Kurland suggest there were nearly 10,000 entrepreneur applications still pending as of April of this year. Between April 1, 2012 and March 31 the government issued 439 visas under the program.

He argues the government should either eliminate the backlog through legislation as it did with the old federal skilled worker backlog when it revamped that program, or encourage applicants to apply to immigrate through provincial business programs instead.

Unlike the angel investor and venture capital streams, the business incubator stream “will not require a financial investment,” Alexander said Monday. Applicants must instead secure entry into a designated Canadian business incubator program. The new stream will officially open on Friday.

The government has earmarked 2,750 visas for the five-year pilot project.

Kurland said the new startup visa isn’t his ideal solution as it guarantees applicants permanent residency even if their private sector-backed business fails. It’s something the government considers a chief selling point and is using it to woo promising foreigners in Silicon Valley who can’t secure U.S. green cards.

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