Key highlights
- The startup and innovator visa will be merged to become the Innovator Founder route
- The new visa route will also eliminate the requirement for founders to have £50,000 ready to invest in their startup
- The new visa route will also ensure that the endorsing bodies deliver a simpler and more ethical process
The United Kingdom is set to introduce a new visa route for international entrepreneurs looking to relocate to the country to start a business.
This will take place from April 13, where It will replace the existing startup and innovator visa as the startup and innovator visa paths are currently available to foreign entrepreneurs.
This new visa route will also eliminate the requirement for founders to have £50,000 ready to invest in their startup, a scheme that has been discovered to be different from the global talent visa, the UK’s flagship program for international tech talent, which is currently being revamped as a result of the failure of the Tech Nation visa.
However, it is unclear whether policymakers will eliminate the most controversial aspect of the startup and innovator visa schemes which is – the endorsement system, which has resulted in some founders paying large fees or giving away equity in their startups in order to get back their visa application.
Endorsing bodies currently rip off founders
Under the current system, the only way for founders to apply for startup and innovator visas is to obtain support from startup endorsing bodies, private UK endorsing bodies, or a few dozen universities.
The majority of these endorsement bodies are startup incubators, accelerators, and community builders, such as Techstars, Entrepreneurs First, and Innovator International.
What founders have said
According to one health tech founder as well as others, some endorsing bodies charge as much as £30k to join their program and receive the letter, while others even ask for equity.
These endorsing bodies are supposed to decide which startups are innovative or impactful enough to be granted a visa. Some founders have even stated that the ones who demand money in exchange for joining their program were disinterested in what the startup actually did. They did not care to look at the founders’ pitch deck.
- ”Some establishments take equity for joining the programme, or others say, ‘Pay us £15k, pay us £30k, then we’ll write you this endorsement letter”, some founders have indicated.
- “Some of them asked for pretty heavy amounts of equity. 10% might not sound like much, but at such an early stage, by the time you get to be a revenue-making company or profit-making company, no one wants to invest with a founder that’s really diluted”, according to a tech startup founder from Australia.
- “Let’s be honest, the endorsing bodies are commercial enterprises. So obviously, their business ventures need to be successful,” says Pat Saini, head of immigration at Penningtons Manches Cooper, a law firm. “If they spot a good business idea, they want to potentially take equity in the business. And again, that leaves a bad taste in people’s mouths as it appears they are giving away equity or money to get a visa”.
- “The endorsement process is a ripoff,” says another immigration lawyer.
Backstory
The UK Home Office issued 377 startup visas and 299 innovator visas in 2022. The two current routes will essentially be combined into a single route known as the Innovator Founder route under the new regulations, which are set to take effect on April 13.
The innovator visa will no longer require founders to invest (or have invested) at least £50,000 in the business, plus they will be able to work outside the UK while developing the startup.
What this means
What will happen to the endorsing body system is still unknown. However, to support the growth of new innovative ideas, it is crucial that the UK continues to draw in entrepreneurial talent from abroad.
The UK needs to introduce a reformed endorsing body to support the operation of the route, which will deliver a simpler, easier system for applicants to enable innovative and entrepreneurial founders from Nigeria and other parts of the world to set up their businesses in the UK, at the same time obtain a visa.
