The federal government's Start-up Visa Program, launched two years ago to lure immigrant entrepreneurs to grow their companies in Canada, is finally picking up steam.
Citizenship and Immigration Canada said Friday that 16 applicants have been approved for permanent residency. They're behind a total of eight companies, two of which have already been snapped up by larger technology companies.
The government says there are 60 applications currently being processed for permanent residency. These are for entrepreneurs behind 34 projects. An additional 25 projects have secured financial support from dedicated investment groups under the program. The next step is for the entrepreneurs behind those projects to apply for permanent residency. While that's still a very small number compared to the 2,750 visas set aside each year for start-up entrepreneurs and their families, it wasn't until last summer that the first applicant was approved.
The process is taking longer than some expected, in part because of the high volume of applicants that potential investors must wade through, as well as the due diligence required, which is even more time consuming when dealing with international companies.
"It's happening, it's just happening slowly because there are some challenges," says Yuri Navarro, executive director of the National Angel Capital Organization (NACO.)
NACO is working on a process, with the support of consultancy KPMG, to help fill in the information gaps and streamline the process of connecting foreign entrepreneurs with angel investors.
The Start-up Visa Program was launched in April 2013 as a five-year pilot, replacing the Federal Entrepreneur Program that started in the 1970s. That program was suspended in 2011, after being considered no longer effective.
To qualify for the Start-up Visa Program, a foreign entrepreneur must first secure a minimum investment of $200,000 from a designated venture-capital funds, or a minimum investment of $75,000 from a designated angel-investor group. There is no set amount of investment required for the incubator stream, but investors can provide funding.
The program links applicants with experienced start-up investors who help support their business expansion. The model is said to be more suited to angels and incubators that invest in earlier-stage funding. Some Canadians investors have shied away from the program, finding it easier and more comfortable putting their money in homegrown companies.
One of the exceptions is Jonathan Bixby, an investor behind a handful of entrepreneurs who have received permanent residency under the program. He's actively seeking more potential applicants. Mr. Bixby was scouting for start-ups in Bulgaria earlier this spring, and is heading to India and Romania later this year.
"Canada is the easiest product to sell in the world," says Mr. Bixby, citing factors such as open markets, political stability and quality of life.
Mr. Bixby, who invests out of both Stanley Park Ventures and Oak Mason Investments and is founder of investor platform HIGHLINE, sees the Start-up Visa Program as a way to find promising companies in foreign markets and help them scale in Canada's higher-value market.
"I'm a capitalist," says Mr. Bixby. "It's an arbitrage opportunity."
Mr. Bixby was one of the investors behind Zeetl, whose Ukrainian-born founders became the first to get permanent residency through the Start-Up Visa program last summer. Three months later, Zeetl was bought by Hootsuite Media Inc., one of Canada's most successful social media companies. He's also backing Cognilab, an online psychology experiment company whose Mexican-born co-founder, Jose Barrios, recently received his permanent residency through the program.
Another of Mr. Bixby's investments, consumer lending platform Lendful, currently has its CEO going through the Start-up Visa Program. Lendful's Australian-born cofounder, Alex Benjamin, has been in Canada for three months and submitted his application for permanent residency through the program in the past couple of weeks.
Mr. Benjamin chose to start and grow his business Canada, seeing it as a market ripe for expansion in alternative borrowing.
"We see a huge opportunity here in bringing that experience online," he says. "The access to the tech community and good leaders in the space is also highly attractive. For what we're doing, that's really valuable."
The Start-up Visa Program was also a catalyst, Mr. Benjamin says.
It's difficult to find the right foreign companies to fund, even through the program, says Boris Wertz, founder and general partner at early-stage investing company Version One Ventures.
While his firm receives a lot of inquires each week for entrepreneurs around the world, most ideas aren't mature enough, or don't fit his investment themes of marketplace and software service companies.
"If you're in the sweet spot, it's one of the most efficient ways to get into the country …. and continue to focus your energy on building the company," says Mr. Wertz.
"I would love to find more ways to leverage the Start-up Canada Program, to bring more mature companies into the country and brand Canada as a great place for build tech companies."