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February 27, 2024

The Start Up Visa Program and Canada’s Tech Talent Strategy

Jacqueline Bart and Clara Morrissey

Introduction

Canadian Immigration has been developing in recent months with the goal of attracting foreign entrepreneurs. The Start Up Visa program provides a pathway to permanent residence in Canada for entrepreneurs who intend to create a new business in Canada, in partnership with a designated Canadian organization. The government of Canada has recently announced improvements to the program under the Tech Talent Strategy. These improvements make the Start Up Visa a more attractive option for foreign entrepreneurs looking to establish their business in Canada.

Start Up Visa Program Requirements

a) Business Ownership

To qualify for the Start Up Visa program, the applicant must intend to create a start-up company in Canada and receive a commitment from a designated organization. Up to five (5) business partners can apply together as owners. At the time the commitment from the designated organization is received, each applicant must hold ten percent or more of the voting rights attached to all shares of the corporation. Additionally, the applicant or applicants and the designated organization together must jointly hold more than fifty percent of the total voting rights attached to all shares of the corporation.

The Start Up Visa Program is not intended to be a passive investment program. The applicant must be providing active and ongoing management of the business. The business must be incorporated in Canada and essential business operations must happen in Canada.

b) Letter of Support from a Designated Organization

To apply for permanent residence, the applicant or applicants must receive a letter of support from a designated organization. Immigration, Refugees and Citizenship Canada (IRCC) has designated a number of venture capital funds, angel investors, and business incubator organizations to issue letters of support under for the Start Up Visa program. As of this date, there are 28 designated venture capital funds; eight designated angel investors; and 52 designated business incubators. The applicant or applicants must either secure an investment of CAD $200,000.00 from at least one designated venture capital fund, an investment of CAD $75,000.00 from one or more designated angel investors or be accepted into one of the designated business incubator programs. Each of the designated organizations has their own internal criteria for issuing a letter of support.

c) Language Proficiency

The applicant or applicants must demonstrate language proficiency in either English or French at a Canadian Benchmark 5 Level. Canadian Benchmark Level 5 is moderate proficiency and is relatively low in comparison to the language proficiency requirements for other Canadian economic immigration programs. All applicants must provide language test results in order for their application to be accepted for processing, even if English or French is their first language.

d) Settlement Funds

The applicant must demonstrate that they have sufficient funds to support themselves and their family in Canada. Funds for settlement must be held by the applicant personally and are separate from any investment capital which the applicant has secured for their business from a designated organization. The amount of funds required is based on the low-income cut-off and varies by family size. Funds must be readily available and unencumbered by dept or other obligations.

Application Process

Once the applicant or applicants have received the letter of support form a designated organization, they can apply to Immigration, Refugees and Citizenship Canada for permanent residence. If multiple business partners are applying together, they must all meet the program criteria. If the application for one essential business partner is refused, all applicants linked to the same business proposal will also be refused. For this reason, it is important that applicants are careful about with whom they partner and ensure that all partners meet the program requirements and are admissible to Canada.

Immigration, Refugees and Citizenship Canada (IRCC) will evaluate the business ownership structure, business plan and commitment from the designated organization, as well as the applicant’s individual qualifications and admissibility to Canada. During processing of the application, the IRCC Officer has the option to request a peer review of the applicant’s business and commitment certificate from the designated organization. Peer review involves an independent assessment of the commitment from the designated organization, conducted by a panel of industry association experts. Peer review can be requested either because the IRCC Officer has specific concerns about the genuineness of the proposed business, or as a general quality control measure.

While overall processing times for assessment of Start Up Visa program applications can be long, the applicant can also apply for a temporary work permit in order to travel to Canada and work on establishing their business prior to approval of the permanent residence application.

Advantages and Disadvantages of The Start Up Visa Program

The Start Up Visa program has several advantages. It provides a direct pathway to permanent resident status in Canada for applicants who meet the program requirements. It also allows for up to five (5) essential business partners, as well as their accompanying spouses and dependent children to apply for permanent residence on the basis of one proposed business. Canada’s federal Express Entry immigration pathway for skilled workers prioritizes young applicants who have a high level of formal post-secondary education and high proficiency in English or French. Additionally, applicants under the Express Entry immigration program do not receive points for self-employed work experience in Canada. The Start Up Visa program provides an alternative pathway to permanent residence for applicants who may not score high enough to be selected under the Express Entry points system, and who intend to be self-employed in Canada.

As of this date, the most significant disadvantage of the Start Up Visa program are the relatively long processing times in comparison to alternative immigration pathways. However, long processing times are mitigated by the fact that Immigration, Refugees and Citizenship Canada recently announced the introduction of a three (3) year temporary open work permit for Start Up Visa Program applicants. The work permit allows the applicant or applicants to come to Canada and start working on the business on the ground prior to the approval of their permanent residence application. Additionally, the government of Canada has recently committed to reducing processing times under this program, as outlined below.

Canada’s Tech Talent Strategy and The Future of the Start Up Visa Program:

In June 2023, Immigration, Refugees and Citizenship Canada announced Canada’s Tech Talent Strategy. The Tech Talent Strategy is a policy plan intended to attract skilled tech workers and new businesses to Canada. As part of the Tech Talent Strategy, IRCC announced a number of measures to improve the Start up visa program.

a) Allocation of Additional Space in the Immigration Levels Plan

With the aim of reducing processing times under the Start Up Visa program, IRCC allocated more spaces to start up visa applicants under the 2023-2025 multi-year immigration levels plan. IRCC indicates that processing and accepting more applications will help to reduce the current backlog.

b) Three-Year Open Work Permit

Previously, applicants who submitted a Start Up Visa Program application could apply for a one (1) year employer-specific work permit. As part of the Tech Talent strategy, applicants can now apply for a three (3) year open work permit.

Allowing applicants to apply for an open, rather than employer-specific work permit, is intended to permit more flexibility in salary. On an employer-specific work permit, the business is required to pay the work permit holder a specific salary as outlined in the offer of employment filed in support of the work permit. This can be problematic for start up company founders, who often do not take a full salary in the first several years of the business. This decision reflects the fact that temporary workers who are Start Up Visa applicants are necessarily the owners and operators of their own company, and as such government concerns regarding exploitation of temporary workers are less applicable in these cases.

Additionally, the open work permit has the benefit of allowing Start Up Visa applicants to work for other employers outside of their own company if desired. This can allow the applicant to, for example, take on additional part-time or freelance work in order to support themselves while they work toward establishing their company.

Any of the up to five (5) co-applicants who are deemed essential and urgently needed in Canada by the designated organization can apply for a temporary work permit. IRCC will assess the work permit applications on a case-by-case basis. The applicant will need to provide an explanation as to why they are essential and urgently needed in Canada, along with supporting evidence outlining their qualifications and their proposed role in Canada.

c) Commitment to Priority Processing for Start Ups with Committed Capital Investment

Finally, as part of the tech talent strategy, IRCC has committed to prioritizing applications supported by committed capital investment or endorsed by a business incubator that is also a member of Canada’s Tech Network. This prioritization will apply to both applications currently in the backlog and newly submitted applications. IRCC has indicated that additional strategies for improving program effectiveness will be announced in future, and as of this time remain forthcoming.

Conclusion

The Start Up Visa program provides a pathway for permanent residence for entrepreneurs who have an innovate business idea and intend to create a new business in Canada. Long processing times have been a disincentive for some applicants to apply to the Start Up Visa program. However, the government of Canada is taking positive steps to address this issue under the Tech Talent Strategy, particularly the introduction of a three-year open work permit and a commitment to reduction of processing times. These new measures will make the Start Up Visa a more attractive option to foreign entrepreneurs.

    Clara A. Morrissey

    BARTLAW LLP Canadian Immigration

    Clara A. Morrissey, B.A., M.A., J.D. Clara Morrissey is a Senior Associate with BARTLAW LLP Canadian Immigration in Toronto Ontario. They can be reached at (416) 601-1346, [email protected] or refer to their website at www.bartlaw.ca.

    Jacqueline R. Bart

    BARTLAW LLP Canadian Immigration

    Jacqueline R. Bart, B.A. J.D., LL.B., C.S. Jacqueline Bart is the Managing Partner of BARTLAW LLP Canadian Immigration in Toronto Ontario, and a Law Society of Ontario certified immigration specialist. They can be reached at (416) 601-1346, [email protected] or refer to their website at www.bartlaw.ca.

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