The Problem With Start-up & Innovator Visa Endorsing Bodies
On 29 March 2019 the Home Office introduced the new category of Start-Up and Innovator visas, outlined in an earlier Chamber’s blog post. Under this new system, prospective applicants must receive an endorsement from one of the approved Start-Up and Innovator Visa Endorsing Bodies, listed here, in order for their application to be considered by the Home Office. Start-Up and Innovator Visa Endorsing Bodies have a significant and central role but one month on from their introduction what do we know about them?
What are Start-Up and Innovator Visa Endorsing Bodies?
Endorsing Bodies is an umbrella term for organisations and higher-education institutions which have expertise in identifying, investing and developing businesses in their respective sectors. They can be incubators, accelerators, government agencies and business development organisations. The main requirement is a proven track record of supporting UK entrepreneurs, which is supported by a UK or devolved government department that can vouch for its suitability.
What do Start-Up and Innovator Visa Endorsing Bodies do?
The Home Office Guidance published on 29 March 2019 effectively shows that the previous ‘genuine entrepreneur’ test has been outsourced to Start-Up and Innovator Visa Endorsing Bodies.
A Start-Up and Innovator Visa Endorsing Body will look for three key requirements in any business plan: Innovation, Viability and Scalability. A degree of discretion is given as to any other factors an Endorsing Body will take into account: ‘You will have your own measures of what makes a good business idea and we encourage you to develop your own approach’.
Further duties of the Endorsing Body include maintaining contact with the business founders, monitoring progress against the submitted business plans and contacting the Home Office should any issues arise.
The Difficulties of Endorsement by Start-Up and Innovator Visa Endorsing Bodes
A Numbers Game
At present there are just over 20 listed Endorsing Bodies, not including Higher Education Institutions. While the number of Endorsing Bodies is not fixed, and as far as we know is not subject to any upper limit, this is a relatively small number of bodies for Innovators to select from.
Home Office Guidance suggests that each Endorsing Body will initially have up to 25 endorsements, with the option of increased allocation suggested but not detailed, to allocate in each given year. Some Endorsing Bodies, such as Scottish Edge, have requested even fewer than 25 allocations based on previous demand from overseas.
Some Endorsing Bodies require participation in an existing incubator/accelerator programme to qualify for an endorsement. Applicants hoping to receive an endorsement as a first step to obtaining a visa will have to compete not only with other non-EEA nationals but with UK and EEA applicants too. Royal Society Edinburgh and Bethnal Green Ventures, are just two of the Bodies requiring acceptance on to a programme before even considering endorsing visa applicants. Some Endorsing Bodies have fixed application windows, recruiting once or twice a year, for entry on to these programmes. This highlights just two of the initial issues facing a Start-Up/Innovator applicant: low capacity and high level of competition.
The Right Fit
There is a lot of variation among the Endorsing Bodies with some advertising themselves as ‘sector agnostic’ and open to a range of business ideas, SeedCamp and Natwest for example, while others are much more specialised and sector-focussed.
Examples include CyLon (focus on cyber-security only), TechX (focus on oil and gas industry) and Deep Science Venture (pharma, energy, food and agriculture). Others such as Zinc welcome business ideas relating to a particular theme with their current Mission 3 being ‘to add 5 more years of high-quality to later life’. Other Endorsing Bodies have a regional focus and require investment and/or relocation to a specific area, for example Ignite (focus on North-East) and Med City (London and the South-East). Whether or not your business plan and your professional background are the right fit for an Endorsing Body is just another variable to be borne in mind and another obstacle to surmount in making a successful application.
Furthermore, as mentioned in the Home Office Guidance, there is no requirement that Endorsing Bodies have to operate an ‘open system’. In effect that means that Endorsing Bodies have the option to offer endorsements to people with whom they already have a relationship or knowledge of, potentially adding another difficulty to prospective applicants.
The requirement to participate in particular incubator/pre-accelerator/accelerator programmes brings another issue to consider carefully: the hard deal. Many Endorsing Bodies state that in return for acceptance in to a programme, the investment of funds into your business and the expertise and support offered they will require an equity stake in the proposed business. While this might be well suited to some start-up ventures it will be a cause of concern for those considering the Innovator route who may not require additional investment funds and who will have sufficient professional skills and experience to steer their businesses to success in the UK market. Thorough research is required and caution advised in identifying the most appropriate Endorsing Body to approach.
Having a strong business plan which is viable and able to expand within the UK market will not be enough under the Start-Up/Innovator route. Endorsing Bodies are tailor made to spot innovation, promote disruption of traditional markets and identify niches for potential growth. Their introduction into the endorsement process seems to fit with the Home Office’s new focus on Innovation. Prospective applicants need to be able to confidently state that their business plan brings something new to the UK market and is not simply competing with similar local traders. It is possible that a more cost efficient model, one with a superior but similar product or enhanced customer service may not be innovative enough.
New Bodies, New Rules
Endorsing Bodies, as explained above, are primarily organisations focused on identifying, supporting and developing the ideas of entrepreneurs within the UK. The task of endorsing non-EEA nationals’ business plans is a new and additional role. There are still a lot of unanswered questions as to how each Body will adapt and how its processes will work in practice. Whether immigration lawyers and specialists can act as intermediaries in the process of receiving endorsements remains unclear on the whole (note that some immigration lawyers have stated explicitly that they will only deal directly with the applicant). Some have announced that they are ready to accept applications, some give prospective opening dates while others remain silent. There is a sense of uncertainty, caution and hesitance among many in giving definitive answers to prospective questions as they iron out their own processes and figure out their place in the new business immigration landscape.
What are the alternatives?
Endorsement is a significant first hurdle to clear in receiving a Start-Up or Innovator Visa. As we monitor the situation and await further information from the Endorsing Bodies about their procedures, criteria and timescales it may be worth considering alternative routes to investment and establishing businesses in the UK. An earlier blog post outlines some of those potential options, which should be of particular interest to those who may struggle to identify an appropriate Endorsing Body for their business idea or whose business plans may lack the requisite focus on innovation.
Contact Our Immigration Barristers
For further advice about making an Innovator or Start-up visa application, advice on appropriate Start-Up and Innovator Visa Endorsing Bodies or alternative applications contact our immigration barristers on 0203 617 9173 or complete our enquiry form below.