JETRO Global Connection -Accelerate Innovation with Japan-

Report
What is the Startup Visa for foreign nationals who are planning to launch their own business?
Startup Capital Kyoto: Becoming a Global City for Startups (2)

(Japan)
March 15, 2022

*This article was originally published in Japanese. All information in this article is as of November 11, 2021.

With the spread of the novel coronavirus, Zoom has now grown into the most used video conferencing system in the world. The company was founded in the United States by Eric Yuan, who is from China. Eric has an experience that his applications for visa for the United States had been rejected eight times. But he continued to send in his visa application, and was finally rewarded for his persistence by receiving approval on his ninth try. If he had given up on going to the United States while he made a few tries, Zoom may never have been introduced to the world.

Today, more than 20 countries, mostly in Europe and South America, started implementing the Startup Visa that gives temporary residency status to foreign nationals like him who have a high level of technical skills and wish to launch startups with the aim of making it grow quickly in a short period of time. In this second article of the series, we will look into the Startup Visa system being implemented around the world by looking at examples from some of the countries.

Startup Visa being increasingly offered around the world

There is recent global interest in the Startup Visa.Originally, Australia and other countries had already introduced a visa known as the entrepreneur visa that approves temporary residency status of foreign entrepreneurs for their working in a variety of fields.

However, mainly in European countries, there was growing concern that they could not expect to achieve major economic development if they continued to rely only on the existing domestic industries and human resources. These countries therefore began implementing the Startup Visa in order to attract talented personnel coming into their countries, with the goal of building up their innovation economy and creating new employment opportunities.

Characteristics of Startup Visas

Upon studying the websites on Startup Visas at different countries, we found that applicants are either required or encouraged to fulfill the following elements in order to acquire a visa. In addition to these factors, as well as regular visas, applicants are required to have a certain amount of funds for living expenses and language skills. Also, they have to submit their educational and criminal records.

  • Innovation (Ireland, Italy, United Kingdom, Estonia, Australia, Austria, Canada, Korea, Cyprus, San Marino, Singapore, Spain, Thailand, Taiwan, Shanghai City in China, Chile, Denmark, New Zealand, Finland, Brazil, United States, Portugal, Malaysia, Latvia, Lithuania): Seeks innovative products and services that do not exist in the present market. Business launches in existing fields such as the restaurant industry are not eligible. The new business should create new job opportunities, instead of further intensifying competition in the existing industry.
  • Global scale-up (Ireland, Estonia, Australia, Chile, Brazil, Finland): Seeks companies that are expected to grow not only within the country but at a global scale. In particular, for countries with a small-sized market, global expansion is essential in order for a company to achieve significant growth.
  • Approval by private institutions (Netherlands, Canada, Singapore, Taiwan, Chile, Brazil, France, United States, Portugal, Malaysia): Seeks the acquisition of approval by a private supportive institution such as venture capitals, accelerators, and incubators, before submitting a visa application to a government agency. Getting the involvement of a private supportive institution not only helps to accumulate knowledge on providing support to startups, but also promotes the growth of startup companies, thereby leading to the further development of an innovation ecosystem. This also helps because it would be difficult for government agencies that specialize in immigration control to make judgement on startups, and may also have the objective of preventing excessive applications from unqualified entrepreneurs.
  • Secondary job permission (United States, Canada, San Marino, Finland): The visa will be issued for the purpose of operating a startup company, but it is difficult to expect significant income immediately after the business is launched. In this situation, this visa gives approval for the applicant to work in an area outside of the startup business, under certain conditions.
  • Application by multiple members (Canada, Cyprus, San Marino, Taiwan, Shanghai City in China, Chile, Denmark, United States, Portugal, Malaysia, Latvia): Application is accepted for team members (up to about five persons). This probably reflects the idea that the success rate would be increased if a business is founded by multiple persons.
  • Accompaniment of family members (Ireland, United Kingdom, Estonia, Australia, Canada, San Marino, Singapore, Spain, Thailand, Chile, Denmark, New Zealand, Finland, France, United States, Portugal, Latvia, Lithuania): Gives approval not only for the applicant, but also for the applicant’s partner such as their spouse and their children.

Startup Visas not only provide approval for residency, but also provide support to assist the growth of that company. For example, in Chile, temporary residency status is given to foreign entrepreneurs whose company is participating in an acceleration program offered by the Chilean government called the Start-Up ChileExternal site: a new window will open . We can see that this policy focuses on not only the visa acquisition by foreign entrepreneurs, but also the development of a startup ecosystem. Start-Up Chile provides funds (not by share acquisition) of up to a maximum of 10 million to 75 million pesos (about 1.4 million to 10.5 million yen, with 1 peso calculated at approximately 0.14 yen) depending on the size of the company. In addition, the program provides co-working spaces with free of charge, the use of such services as AWS and HubSpot for up to an equivalent of 300,000 dollars, opportunities to receive training, as well as consultation opportunities with experts. This program that started in 2010 has been used by more than 2,000 companies, of which 72.6% were startup companies from outside of the country.

Growing international competition for human resources to launch new businesses

Startup Visa implementation is expanding in various countries, and now,an international competition is growing for acquiring human resources for launching new businesses.

Canada not only offers foreign entrepreneurs temporary residency status but also gives approval for permanent residency. As the pace of a declining birth rate and aging population is accelerating, foreign entrepreneurs are expected to enhance the economic growth and to expand employment opportunities. As a result, founders of about 200 companies have acquired permanent residency in Canada. ApplyBoard, which is a platform for supporting foreign students, was created by an entrepreneur from Iran that made use of the Startup Visa. It has grown into a unicorn company with a present value of more than one billion dollars and is currently employing more than 500 persons.*2

In this situation, the United States and China are also beginning to take actions in implementing the Startup Visas. In May 2021, the United States Department of Homeland Security announced that it will resume the International Entrepreneur Rule (IER). The IER allows temporary entry into the United States to foreign entrepreneurs who satisfy certain requirements, such as having demonstrated the potential of generating rapid economic growth and creating new employment opportunities. This system was adopted in 2017 at the end of the Obama administration, but it was suspended by the following Trump administration, which was hesitant about accepting foreign workers into the country. Since the establishment of the Biden administration, there has been rising expectation that the IER will be reinstated, such as with the report on the Startup Visa issued in March 2021 by the National Venture Capital Association in the United States.

China, which is developing a startup ecosystem centered around entrepreneurs who are originally from China, is also advancing its efforts in implementing the Startup Visa. In September 2020, Shanghai became the first area nationwide to implement, on a trial basis, a system to provide support for foreign talents and their team members to acquire work permits. On December 24, 2020, the first ever work permits given to foreign entrepreneurs were issued to two Japanese entrepreneurs.*3 Most websites on Startup Visas are offered in the local language and in English, but the website for the one in Shanghai City also gives explanations about the visa system in Japanese. China is attracting attention whether this system will be expanded into other areas throughout its country.


*1 In addition to this, Israel has also been offering the Innovation Visa for foreign entrepreneurs since 2017 on a trial basis.

*2 “If The U.S. Won’t Welcome Immigrant Entrepreneurs, Canada Stands Ready To Do SoExternal site: a new window will open”, Forbes, June 12, 2021 *in Japanese only

*3 “又一全国首创!上海颁发首批外籍创业人才工作许可证,启动薪酬购付汇便利化试点External site: a new window will open”, Science and Technology Commission of Shanghai Municipality, December 2020
全球求贤 上海发布最新“英雄帖External site: a new window will open ”, Xinhua News Agency, December 24, 2020

Startup Capital Kyoto: Becoming a Global City for Startups

  1. Why should we support foreign entrepreneurs to start business?
  2. What is the Startup Visa for foreign nationals who are planning to launch their own business?
  3. What is the Startup Visa in Japan?
  4. Examples of support provided by the Startup Visa in Kyoto and how companies are using them
  5. Issues for the Startup Visa in Kyoto
Report by:
OI Hiroki, JETRO Kyoto

Inquiry regarding our contents

Innovation Promotion Division