Canada is without a doubt on a steady path to become an innovation powerhouse. Based on growth, performance, funding, and exit values, Canada is ranked among the best startup ecosystem in the world. In fact, outside of Silicon Valley, Waterloo has the highest startup density of any area in the world. And with a combination of economic freedom, low startup costs, government funding, accessible business tools, and plenty of talent, Canada is one of the best places to launch and/or grow your venture.
The Start-up Visa (SUV) program is an integral part of the overarching policy of bolstering innovation economy in Canada. This program attracts foreign entrepreneurs who can contribute to the new and innovative needs of the Canadian economy, and facilitates their entry and permanent settlement in Canada.
In contrast to the Entrepreneur (EN) Program which the SUV replaced in 2014, the decision on applicant’s qualification in the SUV program is delegated to Designated Organizations rather than immigration officers. If a Designated Organization approves the applicant for the program, it will issue a Letter of Support that will then enable the applicant to apply for and receive Permeant Residency. Each Designated Organization has its own criteria for endorsing innovative ventures.
In short, SUV will enable up to 5 entrepreneurs and their families to become Canadian Permanent Residents with a single innovative and qualified venture. Among other requirements, applicants need to show Language proficiency of CLB 5.
Start-Up Visa Program at a glance
|Section 98.01 of Immigration and Refugee Protection Regulations;
|No minimum net worth required;
|No minimum investment required;
|From none to +10 years depending on Designated Organizations;
|From none to post-secondary depending on Designated Organizations;
|Required (for Designated Organizations);
|Ownership in Proposed Business
|Each applicant must hold 10% or more of the voting shares of the venture company AND applicants and the Designated Organization shall jointly hold more than 50% of the total voting shares;
|Anywhere in Canada except Quebec;
|Scope of Business
|Depends on Designated Organizations (IT, ICT, IOT, AI, Fintech, Cleantech, Energy, Manufacturing, Medical and treatment, etc.);
|Depends on Designated Organizations (some conduct 3 rounds of interviews)
|Path to PR
|12-16 months (from receipt of PR application by IRCC)
|Requires proof of settlement fund for PR application that will range from $13,000 to $30,000 depending on applicant’s family size;
Possibility of obtaining a specific work-permit while waiting for PR decision only for Essential Persons;
Allows up to 5 individuals and their dependent family members to obtain PR with a single business venture;
What are Designated Organizations?
They are business groups that are approved by Immigration, Refugee and Citizenship Canada (IRCC) to invest or support foreign start-ups. Their support is the most important condition of eligibility for permanent residency under the SUV program.
There are three categories of Designated Organizations:
Typically angel investors are high net worth individuals or a group of high net worth individuals who invest in start-up companies at early stages, and in exchange of convertible debt or equity. Angel Investors invest their own money that can come from a variety of sources. In Canada Angel Investors must be Accredited Investors as defined by the Securities Commission in their province;
Not all Angel Investors in Canada are qualified to participate in the SUV program. Currently there are 9 Angel Investors designated by IRCC and therefore qualified for the SUV program;
As a legal requirement, designated Angel Investors must commit to an investment of at least $75,000 in the start-up company they choose to support for the SUV program;
VCs are professionally managed funds designed to invest in high risk high potential start-up companies or other small businesses. As opposed to Angel Investors, VCs often use money entrusted to them for investment and as such their intake procedures are more onerous than Angel Investors. Similar to Angel Investors the VCs take stake in their target companies;
Not all VCs in Canada are qualified to participate in the SUV program. Currently there are 23 VCs designated by IRCC and therefore qualified for the SUV program;
As a legal requirement, designated Venture Capitals must commit to an investment of at least $200,000 in the start-up company they choose to support for the SUV program;
In contrast to Angel Investors and Venture Capitals, Business Incubators do not usually invest in start-up companies. They however are organizations that help start-up companies grow and succeed. They are often seen as a good path to capital from Angles or VCs. Incubators vary in services they provide to their start-ups. These services can range from workspace and operating resources, management training, advisory and mentorship, access to capital sources, assistance with core business operations and etc. While some Incubators charge for their services, some provide these services either free or very inexpensively;
Not all Business Incubators in Canada are qualified to participate in the SUV program. Currently there are 29 Incubators designated by IRCC and therefore qualified for the SUV program;
There is no legal requirement for designated Incubators to invest in the start-up company they choose to support for the SUV program;
Which Designated Organization is right for our business?
Every start-up is different and the decision to seek support from a Designated Organization (i.e. Angel, VC or Incubator) requires a multi factored evaluation that identifies, amongst other things: the stage of the start-up company (i.e. formation, validation, or growth), its needs and peculiarities, its growth potential, its field, and its compatibility with the target organization’s portfolio.
What if our supporting Designated Organization is de-designated?
If this happens before you submit your application to IRCC then your application will be refused if submitted. However, if De-designation happens after you have submitted your application to IRCC, there is a small chance that your application will be approved. It is therefore very important that you conduct your own due diligence about the Designated Organizations that you want to target for support to make sure that their practices are in line with IRCC requirements and regulations and more importantly to avoid a refusal on your application.
Does the business have to be incorporated in its home jurisdiction?
From IRCC’s perspective there is no such requirement. However, some Designated Organizations require that your venture be legally organized and/or incorporated before they support it.
How should the Canadian corporation be structured for qualification under the SUV program?
Immigration and Refugee Protection Regulations (IRPR) requires the Canadian corporation be structured such that:
Every applicant holds at least 10% of the voting rights attached to all outstanding shares of the corporation; AND
The aggregate ownership of the Applicant(s) and the supporting Designated Organization be more than 50% of the total amount of the voting rights attached to all outstanding shares of the corporation;
What if I only have an idea?
It really depends on the idea. Albeit most of Designated Organizations only support ventures that have passed the ideation phase, there are a few that support ventures still in early stages. If your idea meets the intake criteria of those Designated Organizations then you can get a Letter of Support, and can apply for PR under the Start-Up Visa Program.
Who are Essential Persons?
An “essential person” is a person among the start-up group who is considered to be essential to the business and who has been identified as such by the Designated Organization providing the letter of support. All group members can be designated as Essential.
Essential Persons are designated as such when there are urgent business reasons for their early entry into Canada (i.e. to start working on the start-up venture). Therefore, these persons are eligible for a work-permit specific to their role at the start-up company and come to Canada before a decision on their PR application is rendered.
If an applicant who is deemed an “essential” person withdraws their application or their application is refused, all applications linked to the same start-up business will be refused.
Do I/We have to move to Canada after getting a Letter of Support?
To the very least the Essential Persons of the business shall come to Canada after getting their letter of support. Regardless of the agreed upon terms between your venture and the supporting organization, your group’s delay in coming to Canada and starting the work can lead to negative inferences drawn about your intentions. This can jeopardize your PR application. Nevertheless, questions of intention and eligibility are complicated and must be assessed on a case by case basis.
What are my responsibilities after getting a Letter of Support?
From a business perspective your responsibilities are to work towards the success of your start-up venture. From an immigration perspective you will need to abide by the terms of your letter of support. Otherwise the designated organization may withdraw its support and report you to IRCC. This will result in the refusal of your PR application.
Does the Letter of Support guarantee permanent residency?
No. If you do not abide by the terms of your letter of support, the Designated Organization will have to report you to IRCC and your application will be refused. Also, if your supporting Designated Organization is de-designated your PR application will most likely be refused. IRCC also has certain powers and discretions to assess your intention while you are supported by a Designated Organization.
Is permanent residency conditional on the success of the start-up business?
No. SUV program is designed in light of the realities of the start-up world where the rate of failure is incredibly high. Therefore, the success of your venture is not a factor for your PR eligibility.
What if a member of our start-up group is refused?
If that person was an Essential Person, then every one’s applications will be refused. But if that person was not an Essential Person, other applications can survive and be approved.