Venture capitalists are eager to become overseas scouts to lure potential technology stars to Canada as part of the federal government's plan to fast-track immigration of promising entrepreneurs.
A statement from the immigration ministry last week said a Startup Visa program launching next year would set aside as many as 2,750 immigration places for innovators with investment backing from Canadian venture capitalists. But in an interview with The Globe and Mail, Immigration Minister Jason Kenney cautioned that he doesn't want to he held to that number.
"I would be surprised if we get a few dozen entrants the first year," Mr. Kenney said. "We're starting this as pilot program. But if it works and picks up momentum, I can easily see hundreds of immigrants a year coming through this program."
The federal government put a moratorium on new entrepreneur visas more than a year ago because the program had an eight-year backlog of applicants, and the vast majority of the 1,000 immigrants admitted each year opened small family businesses that didn't create new jobs. A major change to the system is that applicants will have to be sponsored by Canadian venture capital or angel investor groups and be identified as having the potential to employ several Canadians in the first year of operation.
Immigrant entrepreneurs must secure an investment from the sponsoring fund, though the minimum amount has not yet been set, Mr. Kenney said.
The new program is slated to launch in January, and it will green-light applications at "lightening speed" compared with the earlier program, "because it will be starting without a backlog and it's a priority for us. I think the timing for approval will be at most a few months," Mr. Kenney said.
The program was developed through a series of consultations this summer between Ottawa and representatives from more than 20 startup accelerator programs, venture capitalists and angel investors. "There were concerns about ensuring it is not abused," said Boris Wertz, who was in on the discussions and is principal and founder of Version One Ventures and the GrowLab accelerator in Vancouver. "But I think in general there is a great optimism among government officials and the entrepreneur community that this can provide a much better basis to attract entrepreneurs to start business in Canada."
Richard Remillard executive director of Canadian Venture Capital Association in Ottawa, said his members "are looking to find the next Bill Gates or Steve Jobs, and that person could be in Bangalore or Singapore."
The association – Canada's largest, with 160 funds as members – was also involved in consultations with the ministry. About 80 of CVCA's member companies invest in overseas startups, representing about 100 overseas investments a year. That compares with about 400 investments in Canada, he said.
"We're looking at having to work more closely than before with Canadian offices abroad and trade commissions and consul-general offices. As awareness of this program spreads, we'll look at those offices abroad as part of the scouting system for the industry." Mr. Remillard explained.
The immigration ministry will still have to vet all Startup Visa requests like other immigration applications, Mr. Kenney said. "The visa will require security and medical checks and there may be some other criteria we set up, like a minimal language requirement. There's no point in bringing people here to start a business if they speak zero English or French."
Mr. Kenney said he wants to begin promoting the program overseas to get a jump on the United States, which is also planning to launch a startup visa program.
That plan is an amendment to the U.S. Immigration Act that would allow entrepreneurs sponsored by a qualified investor who invests at least $100,000 to get a conditional permit to come to the country to set up shop. The temporary permit would become permanent after two years if the business generates at least $500,000 and employs at least five people. The visa plan has been put on hold due to the leadup to the next U.S. election.
"We want to say, 'look, the United States may have a dysfunctional immigration system, but Canada is open for business,'" Mr. Kenney said.
Canada's plan is admirable, but there needs to be a bigger push toward implementation, says Alan Diner, partner and immigration practice leader at Baker McKenzie, who was a founder of the Ontario provincial nominee program. "The minister is justified in changing the program to find and bring in young entrepreneurs who can create growth and jobs rather than just open restaurants or laundromats," he said. "But let's get the program running and up to speed as fast as possible, because otherwise these young innovators will end up going to another country to set up their businesses."
He said he still has doubts that Canada has enough venture capitalists to generate hundreds of new entrepreneur immigrants a year. "And I'm not aware that there are big bundles of capital that are not going to use."
But Mr. Remillard said venture capital firms are hoping to find higher quality candidates for investment. "Our focus in the discussions was our role to look at the investment merits of the entrepreneurs. The same rigour with which our folks do their due diligence to potential investments will get applied to this new program," he said.
And the advantage is they will do their innovation and hiring in Canada rather than overseas, he explained.
"I think Canada has a huge power of attraction now," Mr. Remillard said. "We can offer political stability, an economy that's market friendly. In a world where financial eruptions can occur, Canada is looking pretty good as an environment for newcomers to start a business."