UK STARTUP / INNOVATOR VISA by Chris Ward
We’ve had a very interesting three years in politics with Brexit; May vs Corbyn vs Farage vs Boris, with no doubt many others to follow, as well as Trump in the Whitehouse.
Many main stream media are reporting ‘doom and gloom’ with sensational headlines claiming Brexit will end everything - remember the press are in the business of selling newspapers! What the mainstream media look at is a very short term view and despite the continued political buffoonery the UK economy is highly developed and market-orientated in which investment, production and distribution are driven by the price signals created by the forces of supply and demand.
It is the sixth-largest economy in the world with GDP at $2.74trn (2019) and the second largest for inward Foreign Direct Investment; inflation is at 1.8% (2019); bank base borrowing rate of 0.75% and un-employment is down at 3.7% (2019). The U.K. ranks very-high 0.920 (2018) on the Human Development Index and very-easy 8th (2020) on the ease-of-doing-business rank and is consistently one of the top destinations as a tax efficient business location.
The U.K. is in great shape.
In March 2019 the Entrepreneur Visa was discontinued and replaced with two new visa categories for non-EEA nationals wishing to setup a business in the UK:
•The Start-up Visa
•The Innovator Visa
To qualify for a visa in either category, applicants must first obtain an endorsement from an approved endorsing body who assess and identify innovative business ideas and talent. Applicants are then eligible for to apply for Indefinite Leave to Remain (ILR) after having held the Innovator visa for 3 years. Those who do not qualify for the Innovator visa from the outset may apply for the Startup visa as a bridge to obtain the Innovator visa after a period of 2 years. So, what is the Start-up Visa and Innovator Visa and who are they for?
The Startup Visa: is for early-stage, but high potential, entrepreneurs who are starting a business in the UK for the first time. They may have already begun setting up their business, but it should have not yet commenced trading.
•Applicants do not need any funds to invest in their business at this stage and must not have previously set up a business in the UK.
•Successful applicants are granted a one-off, two year visa, during which time, the applicant will spend the majority of their time developing their business.
•The applicant may also take on other work outside of their business to support themselves.
•The applicant can also bring their family members (spouses/partners and children under 18) to the UK.
•At the end of two years, Startup visa holders can switch to the Innovator category to extend their stay and develop their businesses in the UK.
The Innovator category: is for more experienced businesspeople seeking to establish a business in the UK.
•Applicants will need a minimum of £50,000 or higher, depending on what is needed as per the business plan, available to invest in their business. This can be from the applicants own funds or funding from an endorsing body - which is subject to strict criteria.
•Successful Innovators are granted leave for 3 years at a time and can also bring their family members (spouses/partners and children under 18) to the UK.
•Innovators must work entirely on developing their business ventures and may not take on other employment outside of their business. This includes anything that effectively amounts to employment, such as using their own business to hire out their labor to another employer.
•After 3 years, Innovators can apply to extend their stay for a further 3 years or to settle permanently in the UK. Each of these 3 stages (initial application, extension, settlement) requires endorsement from an endorsing body.
The role of endorsing bodies
Endorsing bodies include business incubators, accelerators and business development organisations that can support entrepreneurs in getting their business up and running. All endorsing bodies will have their own set of sector-criteria, however, the general requirements an endorsing body will assess an applicants business idea against are:
•Innovation: The applicant has a genuine, original business plan that meets new or existing market needs and/or creates a competitive advantage.
•Viability: The applicant has, (or, for the Startup visa, is actively developing), the necessary skills, knowledge, experience and market awareness to run the business successfully.
•Scalability: There is evidence of structured planning and of potential for job creation and growth into national and international markets (national markets only are required for the Startup visa).
If successful, the endorsing body will issue an endorsement letter which the applicant will use to support their visa application; stay in contact with the business founders at 6, 12 and 24 months to ensure satisfactory progress and issue further endorsements for extension and settlement applications.
•The applicant must demonstrate that they will spend most of their time in the UK working for their business on the Startup visa, although the applicant may take a part-time job during this time.
•If applying for the Innovator Visa, applicants need to show that they will spend all of their working time in the UK working on their business; unrelated part-time work is not permissible.
•While the Startup visa has no minimum investment amount, applicants that later switch to the Innovator visa or who are applying for the Innovator visa from the outset will need to invest a minimum of £50,000 or higher, depending on what is needed under the business plan.
•Although teams are possible under the visa, each team member must show their own £50,000 investment.
The Start-up Visa and Innovator Visa provide a fabulous opportunity for the serious entrepreneur to establish their business in the UK which could grow exponentially with the right support and funding. And given the UK’s access to global markets, through new trade agreements, following our departure from the EU, then, as an entrepreneur you can capitalise on this great opportunity.
Any entrepreneur who is 100% committed to the success of their business can obtain ILR in as little as 2 to 3 years through genuine business growth, such as, doubling business and customer portfolio’s, reaching £1m in annual revenue, creating exports of £0.5m and job creation.
As a niche consultancy we support entrepreneurs in getting their business up and running in the UK. We work together to create a strategic plan using our experienced consultants and market intelligence. We understand risk and challenges facing an entrepreneur and their business and by working together we solve business problems with simple solutions and implementable actions that create a customer centric business while balancing the needs of the entrepreneur. Through our bespoke mentoring, business planning and strategic direction we can work with you to take your business to the next level.
Christopher Ward is a Senior Partner and Director of Investments at InvestIMM.
Chris has over 20yrs experience working with corporates and as an entrepreneur
and is a Member of the Institute of Consultants. Chris has a bachelor’s degree in
engineering as well his higher certificate in Business Management and Consulting.