Innovation

Ottawa targets 'high-value' entrepreneurs with immigration program

The Globe and Mail

Canada's Immigration Minister Jason Kenney delivers a speech to the Economic Club of Canada in Ottawa March 7, 2012.

Ottawa plans to replace the immigrant entrepreneur program it shelved last year with a new system aimed at identifying and speeding the path for “high value innovators,” Citizenship and Immigration Minister Jason Kenney says.

The previous program, in place for a decade, “was administratively very burdensome and underwhelming in terms of the results.” When it was suspended last July, it had a backlog of nearly 10,000 applicants, and with an average of about 1,000 to 1,500 approvals a year it would have taken nearly eight years to clear, even without new applications. What will happen to the older files when the new program is launched remains unclear, Mr. Kenney said in an interview.

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Potential immigrants with experience and the ability to set up a small business would still be encouraged to apply, he said. But the new program, which he hopes to officially announce by the end of the year – after consultations with industry groups – will encourage immigrants “who can do much more in terms of adding value to the economy than opening up a convenience store.”

“We want the next Bill Gates or the next Steve Jobs. We want those folks with the brilliant ideas that are going to generate sustainable jobs for a long time to come,” Mr. Kenney said. “We want to create a policy which is more likely to attract entrepreneurs in areas like technology, energy and environmental innovations. These areas have a lot more potential than just running a kiosk at the mall.”

The new program will be in addition to existing categories in provincial nominee programs, which take applications from potential entrepreneurs who want to live and set up a business in their provinces, and send them to Ottawa for fast tracking, Mr. Kenney said.

The provincial nominee programs had become an approach of choice for would-be immigrant entrepreneurs even before the federal application window was shut, said immigration consultant Deepak Kohli, of Transcend Consultants in Brampton, Ont.

For several years it had become clear that Ottawa was uncomfortable with the old program, Mr. Kohli explained. “The bar was always being raised. They were requiring more documentation and quite slow in responding. They wanted financial statements and then required audited statements and then reviews of statements by particular auditors.”

The provincial programs have been much faster, he said. “They required four to five months compared to five years or longer under the federal program.”

The new federal approach has merit, he said. “There's value in selecting business people who can create job incubators in Canada. The trick lies in making Canada attractive for these individuals, processing their applications quickly and providing the right environment for growth of ideas, including easy availability of research facilities and workers, so that they can hit the ground running.”

A change in the system that could result in greater success rates for small start-ups would be to encourage newcomers to work with an existing company before setting out on their own, said Sarah Wayland, an employment and settlement consultant in Hamilton, who wrote a study about immigrants who started businesses in Ontario.

“I’m pleased to hear there will be a new program, but I am a bit wary because my research has found that people need to be in Canada a while in order to identify with the culture and build a successful business,” she said. Of 65 immigrant business people she surveyed anonymously in a recent report for the Toronto-based Maytree Foundation, none had come in under the federal entrepreneur program. They immigrated under other categories and started businesses after getting established.

“There have been many failures under the entrepreneur class because they were expected to just come to Canada and immediately buy or open a business,” she said. “The research shows that people who tend to succeed the best had been here a while getting ‘Canadian experience’ and often finding a mentor in their field before starting their business.

“They use the time to improve their language skills, learn Canadian ways of doing business and develop a network, so that when they do start their business they are more sure of themselves and are offering something that people will want.”

Restaurants, corner stores and franchises were the most common types of businesses created by immigrants under the old Entrepreneur Program, which required that applicants have previous experience, a net worth of $300,000, and plans to open and manage a business that would create at least one other full-time job.

“That’s not to diminish that kind of business, there is value in any kind of business activity,” Mr. Kenney said. “But quite frankly, we’d like to be focusing our attention on attracting bright entrepreneurs who have been capitalized to create companies in high-tech, value-added businesses that have potential to create hundreds of jobs over their lifetime rather than two or three.”

One idea the ministry is researching is a visa program in the United States that expedites immigration of foreign entrepreneurs who are backed by venture capital or investors, Mr. Kenney said.

“The market frankly is a much greater incentive in determining who can successfully integrate into the economy. If an angel investor or venture capital firm has backed and done their due diligence on some bright entrepreneur’s business plan and they’re actually supporting it with their dollars, it seems to me to be a reasonable basis for us to approve expedited residency in Canada.”

The long backlog of applicants was the result of a policy mistake when the current immigration act came into effect a decade ago, Mr. Kenney said. “It imposed on Canada an obligation to process to finalization every application it received in every program, which was crazy given that Canada will always have surplus of applications over our capacity to admit people. Over time, this surplus led to an unacceptably long wait time.”

In a speech to the Economic Club of Canada in Ottawa Wednesday, Mr. Kenney made it clear the immigration backlog is system-wide, and he discussed the possibility of legislating away the total of more than one-million applications waiting to be assessed.

The government plans public consultations on the new approach to the entrepreneurship program in the coming months, starting with industry associations. “We want the market to play a greater role in selection, either through arranged job offers for skilled workers or Canadian investors backing foreign nationals for business ventures,” Mr. Kenney said. The government would also promote the program in a broad range of countries, according to the ministry, as the majority of immigrants under the former entrepreneur class came from just four places: China (and Hong Kong), Egypt, India and Korea.

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PROVINCIAL IMMIGRANT NOMINEE PROGRAMS

Agreements with Ottawa allow provinces to nominate candidates for accelerated immigration

Immigration remains a federal responsibility, but agreements with Ottawa allow provinces to nominate candidates who want to invest and run a business for accelerated immigration. Here are the requirements for entrepreneurs applying under provincial nominee programs:

Alberta

No specific entrepreneur category, but the nominee program includes a self-employed farmer category, for those able to invest at least $500,000 in a farming operation.

British Columbia

Applicants must show that they can develop and actively manage a business that will provide significant economic benefits to the province. Excluded businesses include coin laundries, payday loan offices and home-based businesses.

Saskatchewan

Entrepreneur applicants must have at least three years of entrepreneurial or relevant business management experience and a verifiable minimum net worth of $300,000, and ability to invest at least $150,000. A $75,000 refundable deposit is required.

Manitoba

Applicants must have three years of successful experience in senior management, have a minimum net worth of $350,000, and the ability to invest at least $150,000. An exploratory visit for a week to Manitoba is required along with a $75,000 cash deposit to guarantee establishment of a business in the province.

Ontario

A business investment component of Opportunities Ontario’s nominee program requires a minimum $3-million to invest in a new or existing business, and business ownership or management experience. Applicants must have a comprehensive business plan that creates at least five permanent full-time jobs and be actively involved in the day-to-day management of the business.

New Brunswick

Applicant must demonstrate business ownership or senior management experience, have good knowledge of English and/or French, a minimum net worth of $300,000, and have a minimum of $125,000 to invest in a new business. A five-day exploratory visit is required before applying, and a comprehensive business proposal and deposit of $75,000 is required if approved.

Newfoundland and Labrador

Applicant must have a minimum of five years of senior management or entrepreneurial experience and a minimum net worth of $450,000, of which at least $350,000 should be in liquid assets. A Performance Agreement must be signed, promising a minimum business investment of $200,000 in a new or existing business. An exploratory visit to the province, a business plan and a deposit of $100,000 is required.

Nova Scotia

No specific entrepreneur immigration category. A provincial program provides loans to help immigrants start businesses after they immigrate.

Quebec

Applicants must prove they have a net worth of $300,000, and a minimum of two years recent experience running a business on a day-to-day basis. They must have a working knowledge of French and create a business or partnership in Quebec with an equity of at least $100,000, which employs a Quebec resident who is not a family member.

Prince Edward Island

The island’s immigrant entrepreneur nominee program has been temporarily suspended because of a federal investigation. The program required immigrants to have a minimum net worth of $400,000, and be prepared to make a minimum business investment of $200,000 to establish a new enterprise. A complete business plan and a refundable deposit of $100,000 are to be submitted along with the application.

Yukon

Applicants must have a minimum net worth of $250,000, with a minimum of $150,000 to invest in a new business or an existing one, leading to equity ownership of at least one-third of the business. The applicant will manage day to day. Applicants must make an exploratory trip to Yukon to meet with officials and demonstrate reasonable skills in one of Canada’s official languages and show a minimum of five years of senior management or entrepreneurial experience.

- Wallace Immen

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