A new federal program kicks off Monday aimed at luring foreign entrepreneurs to set up shop in Canada, but investors warn the competition for funds will be stiff against homegrown startups.
The Startup Visa Program is designed to fast-track permanent residency for immigrant entrepreneurs who are able to secure funding from designated Canadian investors, as well as meet certain language and education criteria.
Ottawa hopes the new class of visa will bring bright minds and their businesses to Canada, creating jobs and a boost to the economy. Start-up investors say entrepreneurs outside of Canada regularly approach them but they haven't found an easy way to get involved, until now.
Still, investors caution that foreign entrepreneurs will need to outshine their Canadian peers to get the funding needed to move to Canada.
"They have to work really hard. This isn't some kind of slam dunk," says Rob Douglas, president and co-founder of the Golden Triangle Angel Network (GTAN) , which includes investors in the high-tech-focused Kitchener-Waterloo region of Ontario.
"They've got to have a company that can compete with anything that we see on a regular basis in the Golden Triangle region or other parts of Canada, and stand up to the due diligence test and make sure the due diligence can be properly and easily facilitated."
As the applications come in, starting Monday, Mr. Douglas says his group will be looking for unique, innovative technologies, as well as evidence of strong management skills.
"You invest more often in the management of the company than you do in the products or services they produce," he explains.
GTAN is one of the three angel investor groups and 25 venture capital funds Ottawa announced on Thursday as currently eligible to participate in the Start-Up Visa Program, based on criteria such as amount of funds they have under management and number of deals done in the past year.
For immigrant entrepreneurs to qualify for the visa, they must secure a minimum investment of $200,000 from one of the designated venture-capital funds, or a minimum investment of $75,000 from one of the angel-investor groups. The designated fund or group must fill out a four-page application for as part of the process and submit to Ottawa. The foreign entrepreneurs will also have a series of application to fill out for both funding and permanent residency, the final approvals for which will be made by Citizenship and Immigration Canada. The process is expected to take roughly three-to-six months.
The program was announced in January, replacing the Federal Entrepreneur Program that started in the 1970s. That program was suspended in 2011 by the government, which saw it as being no longer effective. The ministry claims the new program will help make the immigration system more responsive to Canada's economic needs.
Citizenship, Immigration and Multiculturalism Minister Jason Kenney says he believes there are thousands of young entrepreneurs outside Canada with business ideas that will be of interest, and that it will be up to the venture funds and angel investors to decide which ones are best.
"My dream candidate is someone who has maybe studied at the Indian Institute of Technology and they have a brilliant start-up concept, they've attracted Canadian investment," Mr. Kenney says.
"Rather than starting that business in Bangalore, we are saying, 'Come to Canada and come quickly. Start the business here, create the jobs in this country and you'll have the venture capitalists here not just providing you with capital but mentorship, which is also important.'"
The minister is speaking at an IT conference in Silicon Valley in May, where he plans to sell the program to try to attract entrepreneurs in the U.S. high tech sector. Applicants for the program are expected to come from around the world, including Europe, the Middle East and the Asia-Pacific.
Ottawa has set aside 2,750 visas a year for startup entrepreneurs and their families. However, Mr. Kenney said he expects the applications will be limited, especially at first given the narrow focus of the program. He said the program will focus on quality of the applicants and establishing a track record of success.
Canada got the program idea from the United States, where Mr. Kenney says a bill has been sitting in the House of Representatives for years but hasn't moved forward due to the "total dysfunctionality of the immigration politics in the United States."
Mr. Kenney adds it will likely take a couple of years for the government to determine how well Canada's program is working, and whether it should continue.
"Success will be measured by the number of people who participate and how well they do in Canada's economy," Mr. Kenney explains. "I am not looking for all of their businesses to be the next Microsoft. I hope they make great Canadians, they make decent incomes and contribute to our productivity."
Ottawa designed the program in conjunction with Canada's Venture Capital and Private Equity Association (CVCA) and the National Angel Capital Organization (NACO).
"We are looking for the best in the world," says CVCA executive director Richard Remillard. "Our members are looking for companies with well over above-average growth prospects … if you want a robust tech industry to complement the existing industrial structure of Canada, and to fill a gap on the innovation industry side, this is one of the ways of doing it."
The benefit of the program will be its ability to attract top start-up talent, says NACO chair Michelle Scarborough.
"What we don't do very well as Canadians is market ourselves as being entrepreneurial, willing to take risks, levering our capabilities in the global marketplace. If we can bring people together that want to build really high-potential, high-growth companies headquartered in Canada … that would be the ideal. And that those people will stay here."
Special to The Globe and Mail