The future of Canada’s Start-up Visa Program

The popularity of Canada’s Start-up Visa Program (SUV Program) is growing at a pace that was not anticipated by Immigration Canada. With about 1,000 new applicants every month, Canada is faced with a dilemma: how to operate this program with a target of only 1,000 to 2,000 applicants per year, when the backlog grows from 8,000 to 12,000 in a single trimester.

Launched in 2018, the Start-up Visa Program applicants were enjoying processing times in a matter of a few months in the beginning, but since 2020, the processing times have been increasing at a fast pace: from 7 to 9 months in Q1 2020, official processing times have reached 33 months[i] in Q1 2023.

As stakeholders like to remind us, any startup company needs to launch fast to remain pertinent, otherwise the technology would become obsolete fast and the momentum of the company would lead to the failure of the project. This message was absorbed by Immigration Canada, and good news has been released to address the issue.

Canada’s government offers support

Former Immigration Minister Marco Mendicino was saying in June 2021: “Coming out of the pandemic, the clear message we are sending with the Start-up Visa program is that Canada is open for business.[ii]”

New Immigration Minister Sean Fraser put actions to back those words, and on Nov. 1, 2022, a significant increase of immigration levels was announced, including an explosion of more than double the number of selected applicants under the Start-up Visa Program[iii].

Canada has increased permanent resident number

In each of the coming three years, Canada is planning to select about 500,000 new permanent residents every year, including for the Economic Category (which includes a vast majority of SUV applicants, and the Federal self -employed) from 3,500 to 5,000 per year.

2022: 1,500 target

Low range: 1,000

High range: 2,000

Federal Business (SUV) increased that number to:

2023: 3,500 target

Low range: 2,350

High range: 4,000

2024: 5,000 target

Low range: 3,500

High range: 7,000

2025: 6,000 target

Low range: 4,000

High range: 8,000

Impact on wait time for SUV applicants

If you have applied under the Start-up Visa category, or if you are about to apply soon, this significant increase of targets means that more people will be selected every year, hence the processing times would be decreasing.

More changes to be expected in Canada

The announcement was the easiest thing to do for IRCC to address the backlog: the queue was increasing at an intolerable pace, so agreeing to accept a lot more people was the easiest way to solve the problem in the short term. This decision does not mean, however, that no more changes are to be expected. As long as the pace of Start-up Visa application is increasing at such a fast pace, accepting more applicants cannot be the sole solution. A more in-depth solution must be brought forward so that the best startup projects may receive priority and be processed in a matter of months.

Whether by creating a point system similar to the Express Entry System, or by prioritizing startups that are more capitalized, or creating separate queues for the three streams of the Start-up Visa program, or any other alternative, Immigration Canada has to figure out a way to bring back processing times below one year for projects that are better for Canada, as opposed to the very high number of startup projects that are very likely to fail.

Fake startup projects jamming the SUV system

It is unfortunate, but a lot of applicants are being duped into exploiting a flaw of the SUV program system, which allows applicants to participate in the SUV Program with a project of a startup without the slightest intention to operate the said startup once the Canadian Permanent Residence is obtained. Despite the great ease of getting a Letter of Support (LOS) which is essential to “apply” under the SUV program, applicants should consider the red flags and never agree to apply under the SUV program with a startup that would never have the intention to operate in Canada or not have the financial capacity in the bank to have a legitimate chance of exploiting the business.

Three streams of the SUV Program: Incubator stream, Angel Fund stream and Venture Capital stream

Incubator stream is the easiest SUV route 

 There are about 42 Incubators [iv] in Canada that are designated organizations allowed to issue Letters of Support (LOS) to startups, allowing investors of those startups to apply for Permanent Residence (PR) under the Start-up Visa Program. These Incubators would typically charge a fee to render services, but they would typically not invest any money in the startup they support. Since the Incubator is not investing any money in the startup, the investors are not required to invest a single penny in their startup, making this the cheapest alternative. Furthermore, for applicants under the Incubator stream, a number of consulting companies would offer cheap business plans tailored for the SUV application process. It results in a significant number of “unqualified applicants” being able to easily afford the cost of a LOS, and thus submitting their PR application under the incubator stream. For applicants that have a legitimate application under the Incubator stream, it is a pity that they are stuck in a stream because if there are plenty of rotten apples in a basket, who wants to select an apple from such a basket?

Angel stream and VC stream are SUV best options

There are about eight Angel Funds (AF) and 26 Venture Capital (VC) Funds in Canada that are designated organizations allowed to issue Letters of Support (LOS) to startups, allowing investors of those startups to apply for Permanent Residence (PR) under the Start-up Visa (SUV) Program. These designated organizations have the obligation of investing capital, with the collateral impact that they typically also require investments from the investors. These startups are typically capitalized with at least CAD75,000 with an Angel Fund, and CAD200,000 with a VC, in great contrast with the capital of $0 for the incubator stream companies. As we can certainly understand, Canada can’t afford to ignore that prioritizing startups supported by AF and VC have stronger chance to have a tangible impact on Canada’s economy, job creation, and creating wealth for Canada. 

Sources:

[i] https://www.canada.ca/en/immigration-refugees-citizenship/services/application/check-processing-times.html

[ii] June 3, 2021 tweet from then Immigration Minister Marco Mendicino

[iii] https://www.canada.ca/en/immigration-refugees-citizenship/news/notices/supplementary-immigration-levels-2023-2025.html

[iv] https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/start-visa/designated-organizations.html

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