By Moustafa Daly
Since the closure of its Tier 1 Investment visa in February 2022, businessmen and entrepreneurs seeking investment-based migration to the UK could so by investing £50,000 in an innovative new or existing business venture via the Innovator Visa route, or use the Start-up visa route which didn’t require a specific investment threshold.
Now the UK is merging these two routes into a new one, Innovator Founder visa, and scrapping minimum investment requirement altogether.
“The Innovator Founder route is for a person seeking to establish a business in the UK based on an innovative, viable and scalable business idea they have generated, or to which they have significantly contributed,” read the government’s official announcement of the changes.
The new Innovator Founder visa will be valid for a renewable 3-year period, whilst the old Start-up visa was only valid for one year. Individuals can apply for the Innovator Founder visa from outside the UK, and can also switch their other UK visas to an Innovator Founder visa while already in the country.
Applications for the Innovator Founder visas will be available starting April 13, 2023. Start-up and Innovator visa applicants, both now closed off to new applications, have until that date to finalize and submit their pending applications.
The endorsing body system is here to stay for UK program
The removal of the investment threshold is seen as a positive development. “Cancelling the £50k threshold is a good move in that it makes the rules more flexible for those who have a genuine and innovative proposal and genuinely require less than £50k to deliver it,” says Atef Elmarakby, managing director at UK immigration law firm Good Advice UK.
He cautions, however, against the endorsing body system, which was maintained in the new changes albeit with easier requirements. It requires applicants to obtain endorsement letters from a wide range of UK organizations like private incubators, government agencies, universities, and investment law firms, among others, confirming that their business ideas are innovative, viable and scalable.
“The endorsing body system still prevails, which is the main deterrence for genuine applicants, whether it be because endorsing bodies require applicants to have additional funds, or due to the lack of accessibility to being endorsed given that most endorsing bodies have their own restrictions in how they accept applications and who can apply,” explains Elmarakby.
The endorsing body system has been heavily criticized during the course of the now-expired Start-up and Innovator visas as it entailed a long and costly process, with some founders reportedly having to pay extortionate fees to endorsing bodies in order to secure endorsement letters, or in some cases having to give up a part of their equity to the endorsing body, as per media reports.
Though the condition is maintained for the Innovator Founder Visa, the Home Office recently announced it will be made easier, cheaper and more straightforward. First off, a flat fee of £2000 has been set for an endorsement letter; it would now be illegal for organizations to charge applicants more than that to secure endorsements.
Also, the list of endorsing bodies has been cut from over 60 to just three, and applicants need an endorsement from only one entity to qualify for the visa.
However, Elmarakby sees that the new changes pose new sets of restrictions that may be counterproductive.
“The Home Office has tightened the Endorsing Body's internal requirements for what they class as innovative and the types of businesses they can endorse, with strong business plans categorized as those that apply new technologies,” he explains, adding that this would effectively result in lower endorsements than ever as many businesses would be unable to meet the stricter requirements.
“This may not necessarily translate into better quality applicants simply because individual endorsing bodies’ thresholds continue to be highly inaccessible,” he cautions.
Why is the UK keeping the endorsing body system for the new visa?
It is presumed the government’s decision to keep the endorsing body system is due to its view that it’s the best way to gear the new visa towards truly innovative businesses and individuals,” explains Elmarakby.
However, there could be a much simpler reason at play. In other countries like the US and Portugal, there have been reported delays to RCBI applications processing which have sparked many lawsuits, caused primarily by the overstraining of resources of the government agencies that give the approvals and perform due diligence on the applications.
The UK’s decision to keep the endorsing body system may be to avoid a similar fate: “They are reluctant to task government officials with deciding whether a business plan is not only genuine but also innovative,” said Elmarakby.
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