Innovator visa route effectively closed to overseas applicants
Since applications opened for the new innovator visa in April, it has seen numerous problems and remains effectively unobtainable to overseas migrants. In a previous article, we gave a detailed look at how the innovator route works. Herein, we build on criticisms that have arisen from its execution and add further insight to how applications are turning out in practice.
The innovator visa was set to replace the Tier 1 (Entrepreneur) category. Its main new feature is that applicants must be endorsed by organisations involved in encouraging entrepreneurs and new businesses – in other words, endorsing bodies. However, this has inadvertently been its ruin.
The idea in principle was a good one,and was in line with the Migration Advisory Committee’s 2015 review of entrepreneur visas which recommended third party endorsing. It also came about because Home Office case workers were not necessarily the best people to assess the viability of business plans. Therefore, it was logical to source this assessment out to businesspeople, or ‘industry experts.’ The problem is that it was not thoroughly considered as to how endorsement may work in practice.
Few endorsing bodies are ready to endorse. The Innovator has been a route years in the making, and yet nobody thought to give the endorsing bodies any prior notice. One organisation had just one conversation with the Home Office about becoming an endorsing body, and the next they heard about it was their appearance on the list of endorsing bodies.
What is most concerning is the fact that the majority of these endorsing bodies, as is generally the nature of seed funds and accelerators, offer or facilitate investment for equity. There is little room, therefore, for the entrepreneur who would opt not to give away a stake in their business.
Limited scope of endorsing bodies
Another problem is that the scope of the endorsing bodies is limited. They largely consist of tech incubators and accelerators. Some exceptions exist, for example MedCity (life sciences) and Deep Science Ventures. However, the endorsement offering is very obscure and almost impossibly high-flying stuff.
Let’s consider Zinc, for example, which has a nine-month full-time company builder program, with each program having a singular mission to solve “a social problem in the developed world which affects at least 100 million people”. What then about less ambitious business ideas so to speak, that might not aim for such a challenging feat, but nevertheless may make a real and valid contribution to the UK economy?
Consider if Amazon founder Jeff Bezo’s idea for a website that sells books would have required endorsement, and whether he would have obtained it. There is nothing generally mercantile here, with the exception, perhaps, of NatWest et al. This seems an ill-considered and serious limitation.
So, how is endorsement gained? Whilst some endorsing bodies have been very helpful, the vast majority are not providing much information. Most of them do not have information relating to endorsement on their website and many ignore enquiries.
The update to the endorsing body list on 1st May 2019 states:
Please note that neither the endorsing bodies nor the business helpdesk will answer hypothetical or speculative enquiries.
It seems preposterous to expect migrants not to seek information on how to become endorsed from endorsing bodies.
From what we can gather, for most of the endorsing bodies, an applicant must be accepted on their programs to be considered for endorsement. Just a few accept open applications. Therefore, it’s pretty much effectively unattainable.
As you might expect from bodies designed to promote business growth in certain areas of the UK, it is all regional. This means it is good in one sense, as regions should not be neglected, however there are extremely limited options for migrants who wish to settle in London or the south-east, which is an attractive choice for numerous migrants in reality.
The innovator visa does not seem to be really aimed at migrants at all.
The battle of migrants vs native entrepreneurs
At its heart, endorsement seems to pit migrant entrepreneurs against resident entrepreneurs, who all end up all competing for limited places on limited schemes. The migrant entrepreneur must battle through native entrepreneurs, with their home advantage, just to gain even a foothold for a visa application. Whilst this is seemingly unfair on the migrant, the situation also disregards the Migration Advisory Committee warning over the “crowding-out of native entrepreneurs”.
The guidance for endorsing bodies possibly contradicts the Home Office’s warning, stating that the department “will not accept requests to become an endorsing body from organisations which do not also support British citizen entrepreneurs, and which have been set up purely to facilitate immigration”. This almost suggests that facilitating immigration is a negative thing, and the restrictive approach to endorsing bodies has created a big issue at the centre of the new innovator visa. The foundation of this new program, the endorsing bodies, are ill-equipped for the task; in other words, to facilitate immigration.
In this sense, the innovator visa route is effectively closed to overseas migrants. Even the small amount of endorsing bodies who are running open applications, such as MedCity, require the applicant’s attendance at a pitch and interview or something to that degree. To our knowledge, there is no self-contained online application process which might be completed remotely.
Resident Tier 2 or Tier 4 migrants may be able to partake in such programs, but such demands may seriously clash with their work and studies. They are too, therefore, at a disadvantage.
How then, can an overseas innovator look for and gain an endorsement? Can they come to the UK as a visitor to do this? The answer is no. Such an activity does not fall under the ‘permitted activities’ for visitors. The only potential open, then, is the prospective entrepreneur activities:
A visitor who can show support from one or more endorsing bodies for the Start-up or Innovator categories in Appendix W, as listed on the gov.uk website, may come to the UK for discussions to secure funding from any legitimate source, which they intend to use to set up a business in the UK.
Then there are the overseas applicants who need to visit the UK in order to attend an endorsing body’s program, but who do not require funding. It is not a permitted visitor activity. In any case, a prospective entrepreneur requires a supporting letter from the endorsing body, which they are unlikely to get without being able to attend their program, or at the very least meet the endorsing body to pitch their idea.
And what about the start-up route, which enables good applicants to obtain the innovator? This route was supposed to take over from the Tier 1 (Graduate Entrepreneur) program, with universities as endorsing bodies for start-up migrants, and being open to all applicants no matter who or where they were.
We have not, however, been able to locate a single start-up endorsing body that is ready and prepared to endorse anyone but students or recent graduates, and these are usually their own.
To summarise, at this moment there is no way for migrants to invest in existing UK business. The Migration Advisory Committee noted that this “Investor-lite activity…may be injecting much needed capital investment to businesses that could struggle to raise finance from alternative sources”.
An important source of fundraising for UK businesses is closed in the middle of Brexit.
Foreign nationals who want to come to the UK to invest in legitimate businesses cannot via a visa.
Considering all of this, it is no surprise to find that there have been absolutely zero applications for the innovator visa in the first few weeks of the program.
People with a sound background in business and viable, brilliant business ideas (perhaps like that of Bezos, selling stuff through a website) have nobody to endorse them. They will remain home, with their excellent business ideas, unable to develop and expand it on UK soil nor help to grow and expand the UK economy.