Canada Start-Up Visa program: What cap on applications means for Indians

Canada's Start-Up Visa programme, designed to attract immigrant entrepreneurs, has recently introduced significant changes. Previously seen as a route to permanent residency for budding business founders, the programme now faces restrictive annual caps that could dampen many entrepreneurial aspirations.

From April 30, Canada has set a cap on the number of permanent residence applications linked to the Start-Up Visa programme. The cap limits applications to 10 startups per designated organisation per year. This decision, as stated by Immigration, Refugees and Citizenship Canada (IRCC), aims to tackle the existing backlog and enhance the processing speed of applications.

Key changes to the Startup Visa programme:

1. Capping PR applications: The programmeme now restricts PR applications to 10 startups per designated organisation, resulting in about 820 applications yearly across 82 entities like venture capital funds, angel investors, and incubators.

2. Priority processing: Revised regulations prioritise startups backed by Canadian capital or affiliated with Canada’s Tech Network, fostering local entrepreneurship.

3. Investor support: The programme offers a direct route to permanent residence without personal investment or net worth requirements, but applicants must show financial stability on arrival. Support from designated partners, such as venture capital funds or business incubators, is still essential.

Impact on entrepreneurs

"Currently, there are approximately 82 such designated organisations, which include venture capital funds, angel investors, and business incubators", Ajay Sharma, an immigration consultant and founder of Abhinav Immigration Services said,

This means that no more than 820 applications will be accepted each year, assuming the number of these organisations remains constant. This cap could potentially leave many entrepreneurs, who have already secured initial funding or support from business incubators, without a clear path forward.

Despite these new limits, the Start-Up Visa programme has been a critical component in fostering economic growth within Canada. Entrepreneurs who secure a Start-Up Visa can begin their business ventures in Canada with a temporary work permit and simultaneously apply for permanent residency.

The Organisation for Economic Co-operation and Development (OECD) ranked Canada as the top destination for start-up founders in 2023. Since its launch in 2013, the programme has enabled about 900 entrepreneurs to become permanent residents, resulting in the creation of over 300 startups.

Is Canada moving backwards?

Recent changes to Canada's Start-Up Visa programme have sparked a debate on whether the country is regressing in its approach to attracting international entrepreneurs. However, Ajay Sharma argues that the introduction of caps is a positive step, not a setback.

Rationale behind the change

The key issue prompting this adjustment is the quality of applications previously submitted under the programme. "Everyone and anyone was filing under the programme, and some projects were quite weak," Sharma explains. The absence of quotas allowed designated organisations to accept projects liberally, sometimes those which did not robustly meet eligibility criteria.

Benefits of the new system

The new cap of 10 projects per designated organisation per year is expected to enhance the quality of both the projects submitted and the scrutiny they undergo. "Now, they will be more careful. The quality of the projects accepted under the programme will improve because they only have 10 slots," says Sharma. This stricter selection process is intended to benefit all parties involved: the organisations, IRCC, and the applicants themselves.

According to Shalini Lambah, Chief Executive - India, Migrate World, DUDigital Global, "The processing times are now upwards of 35 months and this reduces the ability to attract genuine entrepreneurs who want to launch innovative businesses in Canada".

"I see these changes as opportunities for growth rather than setbacks. Canada's allure for Indian entrepreneurs, with its entrepreneurial-friendly environment, openness to innovative ideas and talent, and its proximity to the United States, remains as strong as ever," she said.

Impact on Indian entrepreneurs

A significant consequence of these changes is the likely increase in programme fees charged by incubators, VCs, and angel investors. "With fewer projects allowed, the overhead costs per project may rise, leading to higher fees for applicants. This could mean that potential applicants will need to invest more to secure a spot in one of the designated organisations," he said.

Alternative paths for entrepreneurs

Sharma also points out that the Canadian Start-Up Visa programme is not the only pathway for entrepreneurs looking to enter Canada. "There are other categories available for experienced businessmen and entrepreneurs, such as provincial entrepreneur nominee programmes, the C11 visa category, and intra-company transfers," he notes. These alternatives offer various avenues for business immigration, suggesting that while the Start-Up Visa programme is becoming more selective, there remain ample opportunities for business-minded individuals to pursue their goals in Canada.

Note:

— The International Mobility Programme (IMP) grants the distinctive Canadian work permit visa, the C11 category work permit. It is offered to international business owners and investors who want to operate a business in Canada as self-employed persons.

— BC Provincial Nominee Programme (BC PNP) Entrepreneur Immigration (EI) is a way for international entrepreneurs wishing to immigrate to British Columbia (BC) to set up businesses that support innovation and economic growth in the province.

— The intra-company category permits international companies to temporarily transfer qualified employees to Canada for the purpose of improving management effectiveness, expanding Canadian exports, and enhancing competitiveness in overseas markets. The entry of intra-company transferees is guided by the Immigration and Refugee Protection Regulations and the general provisions of this section, and is supplemented by provisions contained in international trade agreements for citizens of signatory countries.