Why Bring Your Start-Up Business To Canada?
Corporate interest in Canada has dramatically increased since 2016 when the World Bank’s “Doing Business Project” named it the third-best place in the world to start or have a start-up business. Overall interest in Canada has been always high as the country is consistently ranked as one of the Overall Best Countries in the world. Second only to Switzerland.
This led to something of a start-up boom (and made the Toronto-Waterloo region the densest start-up market in the world). Yet Canada’s position among the top global start-up markets is no surprise to people familiar with the country’s focus on building its start-up ecosystem. This process began in the early 2000s and has included actions like:
- The Canadian government committing billions of dollars to foster growth and innovation in the start-up industry, especially the tech sector, via both investment and tax incentives;
- Private venture capitalists, start-up incubators, and angel investors in Canada disbursing funds to support start-up firms at record-setting (and world-leading) rates for years; and
- New designs in both academic and immigration policy — including the Start-Up Visa Program — aimed at developing (and retaining) and aggressively court a diverse, highly-skilled workforce.
As a result, industry analysts agree that bringing your start-up business to Canada via the Start-Up Visa Program presents a unique opportunity to create sustainable success . It is worth noting that there are also other options to bring foreign-owned start-ups to Canada.
What Is The Start-Up Visa Program & What Makes It Unique?
Generally speaking, Canada’s Start-Up Visa Program is explicitly designed to tie the country’s immigration policies to its economic goals. The program does this, namely, by creating a straightforward path to rapid immigration (via temporary work visa) — followed by permanent-resident status and (eventually) citizenship — for foreign entrepreneurs.
Under the tenets of the Start-Up Visa Program, would-be immigrants apply with the explicit support of venture capitalists or angel investors in Canada who pledge to invest in their business ideas.
Unlike Canada’s previous Entrepreneur Visa, the Start-Up Visa Program looks to venture capitalists for assurance that an immigrant entrepreneur’s business idea is viable (and to hold them accountable for pursuing it). Compared with other countries’ business/start-up visa offerings — including the Global-Entrepreneur-in-Residence Program sometimes available in the U.S. and the International Entrepreneur Rule formerly in action — Canada’s Start-Up Visa Program offers entrepreneurs an unparalleled degree of freedom to work for themselves (not as an employee of the sponsoring party) and towards the success of their own business.
Who Can Apply For A Start-Up Visa?
Interested entrepreneurs must have a qualifying business to apply for a Start-Up Visa in Canada. This means that no more than 5 applicants claiming business ownership may apply, each applicant must hold at least 10% of voting rights attached to outstanding shares of the corporation, and (jointly) applicants must hold at least 50% of total voting rights within the firm. It is also wise to follow our top tips on how foreign entrepreneurs can start their businesses in Canada
Conditions to Gain Start-Up Eligibility
Additionally, applicants must meet four conditions to gain Start-Up Visa eligibility (the “Education” requirement was removed in 2016), plus the medical/security requirements for immigration. These conditions include:
1. Earning A Letter Of Support & Commitment Certificate For Start-Up Visa Eligibility
Start-Up Visa applicants must get a Letter of Support and a Commitment Certificate from a designated venture capitalist, start-up incubator, or angel investor in Canada. Obtaining these documents signals that your business idea is viable, and you have contracted with a reputable Canadian firm for support. Applications submitted without these documents are rejected.
2. Meeting The Investment Start-Up Visa Requirement
Applicants must meet a minimum standard for the level of financial commitment pledged to the start-up. Those applicants working with a venture capital firm must secure a commitment of $200,000, those working with designated angel investors in Canada must show proof of a $75,000 (or greater) financial commitment.
The applicants do not need to get financial investment from a start-up incubator but they need to be accepted into an accredited start-up incubator program in Canada.
Those who secure funding from more than one designated investor must meet the highest minimum investment requirement applied to the involved parties (if one venture capital firm is involved, the minimum will always be $200,000, for example) (if one angel investor then $75,000, respectively).
Start-Up Visa applicants do not need to invest any of their own assets.
3. Meeting The Language Start-Up Visa Requirement
Given the importance of communication in business success, Start-Up Visa applicants must demonstrate sufficient fluency in either English or French (for listening, reading, writing, and speaking) to meet or exceed Canadian Language Benchmark 5.
4. Arranging/Demonstrating Proof Of Sufficient Settlement Funds
Independent from the investment commitments for supporting your business, you must also show proof of sufficient funds to support yourself (and anyone planning to immigrate with you) to earn Start-Up Visa eligibility. The amount you must have varies depending on the number of people applying along with you.
You cannot count financial commitments made to your business towards this settlement fund account (even if you earn investment pledges exceeding the minimum), though in some cases your designated investor may be able/willing to separately assist you with settlement funding.
5. Meeting The Requisite Security & Medical Clearances For Immigration
Start-Up Visa Program applicants are subject to a criminal record check and must provide relevant, non-expired Police Certificates to facilitate this process. Canadian immigration officials also expect applicants to submit medical exam results from a panel physician (not your personal/family doctor) to ensure they are medically admissible.
These steps technically happen after submitting the Start-Up Visa application, though they are necessary for application acceptance.
People who meet these Start-Up Visa eligibility requirements should apply for the Start-Up Visa by submitting form IMM 5759 (available here).
How To Get Support From Start-Up Incubators Or Angel Investors In Canada:
For many entrepreneurs, securing startup capital and “buy-in” from investment capitalists or angel investors marks a significant turning point in their business development. That said, seeking investment commitment from designated organizations and angel investors in Canada as a part of the Start-Up Visa application process requires a unique focus.
Step 1. Identify Relevant Designated Start-Up Incubators, Venture Capital Firms, & Angel Investors In Canada
For example, angel investor organizations often outline nuanced specialty areas or requirements for businesses interested in securing a financial commitment from their members, with readily accessible information pointing to the following designations:
- Angel Investors In Canada Focusing On Technology Start-Ups: Canadian International Angel Investors; Golden Triangle Angel Network (especially AI, communications, robotics, medical technology); Southeastern Ontario Angel Network; TenX Angel Investors Inc.; VANTEC Angel Network Inc. (especially agri-food, cleantech, digital health platforms);
- Early Development Angel Investors In Canada: Canadian International Angel Investors; Golden Triangle Angel Network; TenX Angel Investors Inc.
- Cross-Sector Angel Investors In Canada: Ekagrata Inc.; Keiretsu Forum Canada; Oak Mason Investments Inc.; York Angel Investors Inc.
Find the full list of designated organizations is available here.
Step 2: Contact Relevant Designated Organizations (& Wait For Them To Research Your Business)
Step 2a: Create & Submit A Business Plan For Angel Investors/VCs:
Some designated organizations may not require applicants to provide a comprehensive business plan at the outset of their investment discussion. That said, the majority of investors will expect at least a well-defined and supported business idea, and creating a business plan would not be harmful (find a basic guide to business planning here).
Most organizations will ask for a pitch deck or executive summary of your business plan in your initial contact. Though you should see specific organizations’ websites for more information about their requirements. You may need to prepare business plans, financial and incorporation documents, references, and any other relevant information the investor may require to make a decision.
Step 2b: Submit A Query To Start-Up Incubators:
Like venture capital firms and angel investors in Canada, start-up incubators ask for equity in return for providing support for your business. Unlike other equity investors, applying to a start-up incubator often requires additional pre-application research (finding out more about their curriculum and contacting alumni of their programs to ask about the experience of working with them).
Additionally, though there are many similarities between the pitch decks and planning processes for all start-up investment discussions, pitching a business idea to a start-up incubator requires a different type of presentation than other equity investors (learn more about that here). Moreover, many designated angel investors in Canada work with start-up incubators, so gaining admittance to the former and commitment from the latter is easier.
Step 3: Receive An Invitation To Meet
If any designated organization(s) you contact is sufficiently interested in your business idea to find out more, you’ll be invited to give a pitch deck presentation. What you present should reflect what was in the initial pitch deck or executive summary submitted. No matter whether your pitch aims to secure the interest of investors or incubators, it should be brief, remain tightly focused on-point, and include:
- The value statement for your firm/idea.
- An outline of your team and how your human resources are unique and value additive.
- A brief explanation of the competitive landscape for your product/service.
- Statements establishing the existence and interest of a specific target market, as well as a basic plan for how you will reach them.
- 12-month, 3-year, and 5-year forecasts.
- An overview of expected expenses (both startup costs and operational overhead).
- Your implementation timeline.
- A detailed explanation of what you are asking for and how you will use it.
Step 4: Receive An Offer Of Investment Commitment
If investors want to offer financial support, you’ll receive an offer with equity asks and expectations of repayment.
Most investors expect to have access to your company’s financials and projections by now and will base their conditions and contingencies on those statements.
What Happens After You Apply For A Start-Up Visa?
After submitting your application to Canada’s Start-Up Visa Program, you can expect the following outcomes/timelines:
After You Submit Your Application:
- Applications generally take 12-16 months to process; though it is possible to apply for and receive a temporary work permit enabling entry before the application is approved.
If Your Application Is Accepted:
- The Start-Up Visa Program fast tracks entrepreneurs’ immigration, enabling successful applicants entry to Canada within weeks of acceptance.
- At/from the time you receive your permanent Canadian residence as a part of the Start-Up Visa Program, you must:
- actively manage the business from within Canada on an ongoing basis.
- ensure that some essential function of business operations takes place within Canada.
- incorporate the business in Canada.
- If your business fails, it will not impact your permanent resident status.
What Happens If Your Start-Up Visa Application Is Denied?
There is no limit on reapplying, no appeals process, and no mandatory waiting period. You can reapply immediately after the denial of your initial application. However, submitting a new application without reviewing it and fully understanding what went wrong can be both costly and ineffective.
Get Experienced Advice Before You Apply For Canada’s Start-Up Visa Program
Sobirovs Law Firm team can help you bring your start-up business to Canada together with your family and business partners. You can focus on your startup idea and we focus on your permanent residence in Canada. Book a consultation to work with an immigration lawyer today!