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The UK’s new Start Up and Innovator visas: Worthy of “endorsement”?

12 Jun 2019

On 29 March 2019 the Home Office introduced new categories of visa entitled “Start-Up” and “Innovator”. They give a potential indication of the broad approach that might follow in terms of other changes leading us to the current Government’s vision for a new “skills based” immigration system (see our report on the Government’s White Paper here) to be rolled out by January 2021.

Adam Williams, who heads up our Business Immigration Team, assesses how the new visas have shaped up so far.

What are the Start Up and Innovator visas?  
 
In short, they are a replacement for the previous Tier 1 (Entrepreneur) and Tier 1 (Graduate Entrepreneur) visas, which were recently withdrawn to new applicants. Aimed at budding and experienced “business people” respectively, the new visas are intended to facilitate the successful establishment of new businesses in the UK by talented foreign entrepreneurs (in the case of the ‘Start Up’ visa) or the growth of a scalable businesses by individuals with funds to invest in them (in the case of the ‘Innovator’).

What’s good about these new visas?

There are a few highlights. For example, unlike the requirements of the old ‘(Graduate Entrepreneur)’ visa, would-be applicants for a Start Up visa do not need to demonstrate they already have money to invest in the business. 

There is also a move away from requiring applicants to have graduated from a UK university, which in theory opens up the visa to a much wider pool of talented foreign entrepreneurs. 

The Home Office has also taken a forward-thinking approach to the assessment of an applicant’s business idea, by outsourcing it to a selection of independent ‘endorsing bodies’.

In addition, these new visas do not restrict the visa holder’s ability to work for an employer unconnected with their own business idea, meaning applicants have the potential means to generate a supplemental income legitimately whilst in the UK. 

What’s not so good?

There’s quite a lot to be concerned about, particularly in relation to endorsing bodies. 

Having the support of an ‘endorsing body’ is critical to eligibility for either visa. Yet, the ‘endorsement’ process has come under severe criticism from the outset. Out of the lists of endorsing bodies published by the Home Office for each visa (found here and here), several organisations were not yet assessing applicants or issuing endorsements weeks after the visas were introduced. Even more worrying, other listed organisations were reported as being unaware of the visas or their listed status, when potential applicants made enquiries. One endorsing body, Codebase, announced its withdrawal from the scheme altogether in May 2019.

Aside from being required to assess candidates in three broad respects (innovation, viability and scalability) there is also a huge degree of flexibility and discretion afforded to endorsing bodies, with the Home Office actively encouraging them to develop their own approach. Some will be sector specific, others not. Some will only consider endorsing business ideas from applicants already known to them (e.g. someone who is already in the endorsing body’s own incubator programme), others will not stipulate. There are benefits to this level of flexibility, but it also creates a level of uncertainty and complexity in terms of finding a suitable sponsor and achieving endorsement.  

The core requirements which a business venture must meet in order to be eligible for endorsement are, nonetheless, considerably more onerous than the equivalent under the old Tier 1 (Graduate Entrepreneur) visa. At present all three of the following must be satisfied (from Paragraph 5.2 of Appendix W to the Immigration Rules):

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 is actively developing, the necessary skills, knowledge, experience and market awareness to successfully run the business.  

Scalability - There is evidence of structured planning and of potential for job creation and growth into national markets.

This is arguably setting the bar too high for fledgling businesses, and may impede the endorsing bodies’ ability to ‘back’ a large number of potentially viable businesses in the knowledge that several will ultimately fail, but a few will become very successful.

Something of a mixed bag then, and so far certainly not the broad success that the Government would have hoped. However, given time and some careful tweaking and improvement of key areas like the endorsement process, it is hoped that these new visas will achieve their full potential as a facilitator of successful new businesses and foreign investment in to the UK.

For further information in realtion to this article or for further details on developments in business immigration, please contact Adam Williams. 

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