Challenges to the Innovator Visa in 2019

Original Article featured in The Sunday Times:

We welcome Innovators – until they apply for Visas

Growing up in Johannesburg in the early 1990s, Kimberley Wu felt like the “token Asian in a primary school of 1,000”. Her family had emigrated from Taiwan when she was three, settling in South Africa as it emerged from apartheid. “As an immigrant you grow a skin and learn to toughen up pretty fast,” she said.

That resilience has been put to the test since she moved to Britain two years ago. At first, she worked as a nanny for a Russian family in Chiswick, west London. It was never her true calling: Wu has degrees in zoology and international business, and six years’ experience as a retail buyer. She dreamt of starting her own business.

Earlier this year, she used her savings to set up Grain Guru, an online rice and noodles shop that also offers nutritious recipes for customers in need of a health kick. At least that is what it used to do. For the past two months, Wu, 32, has been unable to run her company, which employs two part-time staff.
The visa that allowed her to come to Britain has expired and the temporary replacement stipulates that she cannot earn money here. Her efforts to secure the right to remain in Britain under a new visa system for entrepreneurs have been unsuccessful.

It is a story that is becoming depressingly common — and one with potentially grave consequences as the country edges towards a no-deal Brexit.

Immigration experts say the innovator visa, launched in March for foreign founders who have started or plan to launch “innovative, viable and scalable” businesses, is failing. The number of visas issued is barely in double digits, according to legal sources. More than 1,100 of its predecessor, the entrepreneur visa, were granted last year.

The trickle of approvals comes as Boris Johnson’s government gears up to leave the EU in October, with or without a deal, while proclaiming that Britain is open for business. Last week, Johnson outlined plans for a fast-track visa system to attract top scientists, but there is no clear route for entrepreneurs, especially those such as Wu who do not run high-concept technology start-ups.

“I’m coming with new ideas, but you don’t want me”, she said. “I’m here to hire and service a gap in the market, not for grants or loans. The government has nothing to lose and everything to gain.”
The problems for Wu and other non-EU business owners stem from a process that requires them to receive approval from an endorsing body and go through an accelerator programme — often in return for giving up equity — before they apply for an innovator visa.

“If the objective is to control immigration, it’s an absolutely brilliant idea,” one senior immigration lawyer said. “If the objective is to improve the economy with the brightest entrepreneurs, then it’s an absolute disaster.”

A freedom of information request to the Home Office asked how many applications had been made for the innovator visa. The request, submitted by London immigration solicitors Qore Legal, was rejected on the grounds that it was not in the public interest.

The 29 endorsing bodies, some run by banks and investment funds, have been overwhelmed by applications. However, many have strict entry criteria, often skewed towards tech companies, which means most founders are not accepted. Also, each body is restricted to providing 25 endorsements a year, unless they seek permission to offer more.

The Home Office said it expected to recruit more endorsing bodies. “We are partnering with some of the UK’s leading business development experts and universities who will assess and approve applicants’ business ideas,” it added.

The new visa was brought in to replace the entrepreneur visa, which was itself criticised for being too complex. The change was not unexpected as the idea of partnering with organisations that could endorse the brightest talent had been mooted since a report in 2015 by the Migration Advisory Committee, which advises the government.

However, the entry requirements are seen as draconian. Many of the endorsing bodies demand that company owners give up shares — a common policy among tech accelerators, which also applies to British applicants for such schemes. They also expect entrepreneurs to go through an incubator programme of three months or more.

Both criteria are difficult for experienced founders to swallow. Even if the terms are acceptable, most of the endorsing bodies ask applicants to pitch their businesses in person, another layer of difficulty for those living overseas.

“The implementation has been woeful, failing to consult properly and leaving entrepreneurs, advisers and potential endorsing bodies in the dark,” said Philip Salter, founder of the Entrepreneurs Network think tank. “Fixing it should be a top priority for the new government.”

Something needs to change. The new system has created a mass of uncertainty, with immigrant entrepreneurs unsure how to start, or whether they stand any chance of success, and endorsing bodies swamped by speculative applications. Legal experts have started to ask whether the visa is an example of Home Office ineptitude — or a carefully designed strategy to reduce immigration.

Theresa May supported reducing net migration to tens of thousands a year and creating a “hostile environment” as home secretary and then prime minister, but came nowhere near hitting her target. Last year, net migration to Britain stood at 258,000, according to the Office for National Statistics, with the majority from outside the EU.

“Reducing migration wasn’t the purpose [of the innovator visa], but it’s been perhaps a happy side effect,” said Jonathan Hendry, a partner at Qore Legal. “The endorsing bodies appear to be a last-minute list of people the government thought might be able to do the job. There seems to be a lack of intelligent thought on how to reform the immigration system and how to optimise it for the UK’s economic needs.”
There have certainly been teething problems. At least four of the original endorsing bodies have dropped out after struggling to cope with applications.

The boss of one body said he did not know whether it had supported any visas, more than four months after the scheme was set up.

Others are more positive. “It is a good beginning for opening up immigration,” said Vanessa Vasquez, head of legal affairs at the start-up investor Seedcamp, another of the endorsing bodies.

Seedcamp endorses founders of companies only in which it has invested and does not accept unsolicited applications. Vasquez said the system could be improved if innovator visas were granted to non-founders as well, allowing senior teams to move to Britain to build their companies. “What would help is if it were extended to offer visas to the key hires in a small team,” she said.
The Home Office appears to have recognised the need for changes and has written to the endorsing bodies, asking to meet them by the end of the month.

There are other routes available for entrepreneurs. The start-up visa, also introduced in March, gives students and recent graduates authorisation to work on creating companies. About 2,000 exceptional talent visas are available each year, spread across different industries, although Johnson said last week that he would lift the cap. Tech Nation endorses those in the digital sector. Also, “golden visas” are available to those who can show they have £2m to invest.

Concerns remain about the ability — or willingness — of the immigration system to attract the talent required for the UK to remain competitive. Thousands of tech jobs go unfilled each year because of a lack of qualified candidates.

“The main issue is about knowledge transfer,” said Russ Shaw, founder of the trade body Tech London Advocates. “We’re in a global tech race and we need the talent to come and share ideas and make our businesses stronger. That is what is at stake here.”

For Wu, there is more at stake than helping Britain compete in a global tech race. Her current visa expires in two months. If she is not accepted by one of the endorsing bodies, she plans to take Grain Guru to Ireland or Canada.

“You feel unwanted,” she said. “You feel no matter how much knowledge and skills you have amassed from everywhere else you’ve been, you are not valued.”

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