What HNWIs need to know about Canada’s Start-Up Visa
An article written by Ronit Sharma IMCM, Founder & Managing Director of Immigrant Investor Group Inc. for the IM Yearbook 2023.
Ronit Sharma, Founder & Managing Director of Immigrant Investor Group, outlines the key advantages of Canada’s Start-Up Visa Programme.
Canada is a G7 country with one of the world’s best performing economies over the past decade. It offers a cosmopolitan, family friendly lifestyle with several world-class cities that provide well diversified business environments, excellent education institutions, vibrant social scenes, and a wealth of cultural events. These are some of the reasons why Canada is a popular place for start- ups, entrepreneurs and innovators.
The Start-Up Visa Programme (SUVP) to Canada is the premier investor immigration programme to Canada, which is currently being used by high-net-worth Individuals (HNWIs) seeking a long-term residency / citizenship plan for their family.
From pilot to permanent
In 2013, the Government of Canada launched the SUVP to Canada as a pilot programme and in 2018, the programme was made permanent. The objective of the programme is to attract talented entrepreneurs to Canada who have innovative and technology-related ideas which may be successfully launched in Canada. The SUVP is sector agnostic as long as the start-up is innovative, unique and disruptive, thereby qualifying and meeting the government’s guidelines.
The government has trusted various Designated Organizations (DOs) such as incubators, angel groups and venture capital groups to administer and mandate the programme. The role of the DO is to ensure that start-ups meet the government’s criteria and make a minimum investment. They also need to issue a letter of support, which will then be submitted with the applicant’s immigration application. The investment requirements with the DO’s are limited to the angel group stream and venture capital group stream and are CA$75,000 and CA$200,000 respectively.
Co-investment and co-partnership
What is unique about the SUVP to Canada is that the government allows for co-investment and co-partnership structures with a maximum of five individuals per startup. Most applicants in the queue applied for the incubator stream, which is the easiest and least expensive route to apply as no investment capital is required. This, however, allows for low quality start-ups in the system, and unfortunately, there is a greater chance of being rejected. Immigrant applicants should be cognizant of the offerings in the marketplace and should not focus on the price. Instead, the focus should be on the genuineness and viability of the start-up and ensure that the required early-stage capital is being raised.
Over the past decade, second residency and second citizenship programmes have expanded globally. However, investor immigration to Canada has been in existence for approximately 30 years and has always been a top choice among HNWIs. Canada does not offer immediate global mobility but a medium to long term second residency solution so the children can study, real estate investments can be made, business opportunities can be explored and eventually a retirement plan can be crafted.
From a North American standpoint, the SUVP competes directly with the US EB 5 Immigrant Investor Programme which is currently priced at US$800,000. In this regard, the SUVP to Canada is priced quite competitively in the range of CA$250,000 to CA$350,000. Immigrant Investor Group Inc. works with a few select angel groups and venture capital groups who have real start-ups that require early-stage capital to launch.
Increased quota allocation
The current official government processing time to obtain Canadian permanent residency under the SUVP to Canada is 32 months. However, in October 2022, the government aggressively increased the quota allocation for applications under the SUVP over the next three years, and it is anticipated that the processing times will come down again to 18 to 24 months. One major advantage of the SUVP to Canada is that once an applicant receives Canadian permanent residency, it is unconditional from the first day. Therefore, even if the start-up fails, the applicant will retain their Canadian permanent residency.
The SUVP to Canada has essentially replaced the Quebec Immigrant Investor Programme where immigrant applicants had to invest CA$1,200,000 to the government for five years at zero percent interest which was funded via a one-time finance payment of CA$360,000. The last intake period of the Quebec Immigrant Investor Programme was August 2019.
In conclusion, the SUVP to Canada is a win-win programme. Canada’s start-up ecosystem can develop the next unicorns and high-net-worth families can obtain Canadian permanent residency which will eventually lead to Canadian citizenship.