By Moustafa Daly
There is a growing global competition to attract entrepreneurs and skilled individuals, mainly in the tech industry. And these individuals are finding more options to relocate and obtain a second residency or citizenship.
Several countries have made the news recently with significant changes to their immigration policies and startup visa programs to foster their startup ecosystems. Canada recently announced increased flexibility in its startup visa program, offering longer-term open-work permits. Meanwhile, Japan actively seeks to relax rules for startup visas to entice foreign talent and boost its startup market. Contrarily, Finland's government faces backlash for its perceived hostility toward foreigners, particularly within the startup community.
Using the results from the Organization for Economic Co-operation and Development (OECD)'s Talent Attractiveness 2023 report, several factors influence these individuals' decisions to move to other countries or territories, primarily the opportunity to do business, income and tax, and quality of life.
Today, the OECD countries with the most welcoming stance toward international entrepreneurs are Sweden, Switzerland, Canada, Norway, and New Zealand.
Sweden leads because of its migration-friendly policies that include a fast track to permanent residency and, significantly, no capital or job creation requirements. Any entrepreneur seeking to relocate to Sweden would only need to demonstrate their startup’s viability and growth potential to qualify for an entrepreneurial visa in Sweden, making it a popular destination with relatively easy requirements.
Canada remains top OECD destination for startup founders
Attractiveness to startup founders relies on different factors including regulations, access to venture capital, market conditions, and access to capital and knowledge.
In the 2019 OECD report, Canada was the top destination for international entrepreneurs before losing the spot to Sweden this year. Except for the “skills environment” factor, Canada made it to the top spot across the board. However, it remains a top destination for “startup founders” – applicants only have to demonstrate a viable startup idea as opposed to presiding over an established startup as with the international entrepreneurs’ category.
Significantly, Canada is the only OECD country, in addition to Australia, that grants startup visa applicants with permanent residency from day one.
The U.S. is still a startup magnet but lags in immigration policies
The U.S. is the second most attractive destination for start-up founders due to its well-established startup sector and long history of embracing foreign startup founders. In fact, 55% of the country’s most successful startups have been founded by immigrants as of 2023, according to the OECD report.
However, where the US falls short is in its immigration policies, that have been found to include barriers for foreigners, particularly their spouses and families as immigration policies don’t grant dependents with immediate access to the labor market there. Also, foreign entrepreneurs don’t have a direct pathway to permanent residency under the existing regulatory frameworkin the US. .
Often, successful foreign startup founders would need to pursue other types of U.S. visas that include a route to permanent residency after the conclusion of their startup visas – which typically are issued for a maximum of five years. The direct stream of the EB-5 program is one of the employment-based alternatives available.
“The United States and United Kingdom are leading start-up nations, with very strong entrepreneurial cultures and many unicorn companies created in the past decade. However, the migration policy framework to attract start-up founders is not as developed, as for example in Canada and France,” reads the report.
France leads with startup policies, but other countries struggle for residency paths
With the most favorable policies for startup founders, France ranks third among OECD countries in this category, on the back of widespread availability of funding opportunities and relaxed visa policies for applicants.
Meanwhile, some surprising contenders find themselves at a disadvantage, including nations known for their robust start-up culture and infrastructure, like Estonia, Japan, and Israel. Despite boasting easy access to venture capital and advanced digitalization, their low OECD rankings primarily stem from their migration policies. Particularly, their pathways from a startup visa to permanent residency are notably challenging.
“Japan only grants start-up founders a very short-term initial visa permit and imposes a strict review after just six months,” the report says. “Israel is the only country covered where start-up founders have no possibility of acquiring permanent residency. Furthermore, Japan and Israel allow family to join the main applicant, but only as a visitor without access to the labor market.”
Which countries attract skilled migrants the most?
An important component of a country’s attractiveness to entrepreneurs is the availability of skill in the market, which is why the skilled migrant category remains relevant to the potential success of startup founders and entrepreneurs seeking to relocate to a new market.
As such, the OECD countries most attractive to foreign skilled migrants are New Zealand, Sweden, Switzerland, Australia, and Norway.
New Zealand climbed up to the top spot due to its superior ranking across all indicators. Contrarily, the U.S. and Canada don’t feature top in this category due to their “unfavorable visa and admission policies” for highly skilled migrants If their visa policies were more favorable, they would have ranked second and seventh in the skilled migrant category, the report states.
Towards the bottom of the ranking are Mexico, Turkey, Costa Rica, and Colombia. Despite having commendable performance in the income and tax dimension, these OECD nations fall short across all other categories.
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