This research is in line with the implementation of Canada’s program to entice H-1B visa holders in the US to come to Canada, which attracted so many applications it reached the 10,000 limit in less than 48 hours.
A new study by Saerom Lee and Britta Glennon from the Wharton School at the University of Pennsylvania investigated whether immigration policies that provide visas to skilled entrepreneurs influence the founding location choice of immigrant entrepreneurs.
The study found that the introduction of Canada’s Start up Visa Program in 2013 increased the likelihood that US based immigrants have a start-up in Canada by 69%.
The study used a dataset of 1.2 million US based individuals who “founded a company either in the US or Canada between 2006 and 2021.”
The research also found that immigrants to the US from Asian countries were the most likely to start a business in Canada. “Our study also finds that, compared to immigrants of other ethnic groups, Asian immigrants were more responsive to this policy change,” write the authors. “Furthermore, our results suggest this responsiveness varies by the presence of Asian immigrants in their prior location. That is, the larger the Asian immigrant enclaves in the origin location, the less likely that U.S.-based Asian immigrants in this location move to Canada to start a business.”
They conclude by discussing how not only does immigration policy impact the founding location decisions of immigrant entrepreneurs, but that this decision also involves weighing factors like social ties and the presence of co-ethnic communities in both origin and destination locations.
Who is eligible for the Start up Visa?
The purpose of this program is to recruit foreign national entrepreneurs who will create new jobs and drive economic growth in Canada.
In order to be eligible, applicants for a Start-Up Visa must meet the following requirements:
- Meet minimum language requirements in English or French (CLB 5 in all abilities);
- Have sufficient funds to settle in Canada;
- Plan to settle in a province other than the Province of Quebec;
- Pass Canadian security and medical clearances;
- Prove your business is supported through a designated organization; and
- Show your business meets ownership requirements.
Immigration, Refugees and Citizenship Canada (IRCC) has designated a number of venture capital funds, angel investor groups, and business incubator organizations that participate in the Start-Up Visa program.
Successful applicants are required to secure a minimum investment for their start-up. If coming from a designated Canadian venture capital fund, the investment must be at least $200,000. If coming from an angel investor group, it should be at least $75,000.
Applicants are not required to invest any of their own money. If their Canadian start-up is unsuccessful, individuals given permanent residence through this program retain their permanent resident status.