The UK Startup Visa – Driving future economic growth

Immigration
Image via Wikipedia

I’m extremely excited with the good work the UK government is achieving in approving the new Startup Visa program.

In summary, three types of visa applicants will benefit from this new program:

Investors who invest £5 million will be allowed to settle here after 3 years, and those investing £10 million or more will be allowed to settle after 2 years. This compares with the current minimum 5-year requirement.”

and,

Entrepreneurs who create “10 jobs or turn over £5 million in a 3-year period.” Additionally, “the standard investment threshold for an entrepreneur to qualify for a Tier 1 visa will remain at £200,000, but the government will allow high-potential businesses to come to the UK with £50,000 in funding from a reputable organisation. And entrepreneurs will be allowed to enter the UK with their business partners as long as they have access to joint funds. Additionally, a new type of visitor visa will be created for prospective entrepreneurs. They will be allowed to enter the UK so that they can secure funding and make arrangements for starting their business before they transfer to a full Tier 1 (Entrepreneur) visa while they are here.”

and lastly,

An Exceptional Talent visa (limited to 1000). “This innovative new route for exceptionally talented migrants will be limited to 1,000 visas per year. It is for those who have already been recognised or have the potential to be recognised as leaders in the fields of science, arts and humanities.” The limit to 1,000 of these is the only downer in the new reforms… hopefully this will change with time as the process to evaluate credible candidates is streamlined (currently this is set for review after 12 months).

For the full details of these new rules click here: http://bit.ly/h1gNOQ
And for the summary click here: http://bit.ly/gMqPy4

The way I see it, below is the cycle of economic growth, with entrepreneurship playing a pivotal role in the economic development of any nation:

Idea creation -> business creation -> funding -> hiring of people -> growth of company (more taxes the company pays that benefits the country) -> inspired stories of success -> the inspiration of new idea creation from new entrepreneurs -> and so forth..

I am very much partial to this idea of immigration legislation being closely tied to economic development for the benefit of the whole… I’ve seen it time and time again where, just like in a company, the compensation structure of employees largely dictates the behavior of the employees (because of what they are motivated to achieve). Likewise, immigration policy that incentivizes wealth creation, has the knock-on effect of supplementing the local economy as well as social programs.

Using the USA as an example, as an H1B visa holder, you are required to pay social security tax. However, you are not able to make any social security claims. The net effect is that the social security program is, in part, supported by visa holders, which provide financial support without being able to reap the benefits. Benefits, however, do accrue to everyone as the H1B holder is highly motivated to continue working because the opportunity that led him to that job is greater than alternatives elsewhere. Hence, everyone benefits, regardless of what anyone may think of the inequality between the visa holder and the citizen when it comes to specific benefits, such as social security.

On a personal note, I have been a visa holder of one country or another for pretty much my entire life. I’ve enjoyed the benefits of living in those countries and have willingly and happily paid the necessary taxes associated with the various social programs that I don’t necessarily benefit from, because I benefit from all the other aspects of living in the given society… personal safety, freedom of expression, good infrastructure, and the ability to create value.

As such, I believe the startup visa is clearly hitting the spot when it comes to addressing a country’s need to draw key talent from around the world. This talent is drawn to countries where the values that I mentioned before can be found. In turn, this talent drives economic growth which is then converted into a social benefit for all.

Back when I moved over to the UK in 2006, I was delighted by how forward thinking the UK was relative to other countries in immigration targeting value creators. I’m glad to see that the UK continues to lead on this front, and I hope the program’s success proves to be an inspiration to other countries.

UPDATE:

Here is the video interview between Paul Carr and my colleague Reshma Sohoni (@rsohoni) regarding the UK startup visa and why Seedcamp was excited to be part of helping craft the terms of the new visa program.

 

Enhanced by Zemanta

You may also like

4 Comments

  1. Congratulations to Seedcamp for helping with the U.K. startup visa. Hopefully, it will spur on the U.S. It’s unfortunate that we have still failed to pass startup visa legislation, particularly when tens of thousands of talented and skilled immigrant entrepreneurs are giving up on the burdensome U.S. visa process and heading home.

  2. Congratulations on a great first post.

    From my perspective, visas are an anomaly in the free market and should be abolished, much like customs for goods. The Choice by Russell Roberts (http://amzn.com/0131433547 ) is a great book on this topic.