Worldwide: The Evolution Of The UK Innovator Program

In March 2019, the Home Office announced that the Tier 1 – Entrepreneur visa would close and at the same time, ushered in a new program to take its place: the Innovator visa. Although the move was sudden, it was not completely unexpected since the UK government had received numerous concerns to strengthen the security of the Entrepreneur visa against those who abuse the immigration system.

By way of background, in 2015, the Migration Advisory Committee (MAC) conducted a review of the program as instructed by the Prime Minister. The MAC's report found that applicants of the Entrepreneur visa did not appear to engage in much business activity and that there were many instances of migrants establishing low growth potential businesses, which were also not particularly innovative. In addition, there was evidence of fraudulent applications, for example, applicants were submitting identical business plans or were not investing the required amount.

With this, the Home Office was motivated to replace the Entrepreneur visa with a program that implemented the recommendations provided by MAC in order to maximize the UK's economic benefit. The recommendations included: lowering the investment threshold and placing emphasis on the applicant's skills, qualifications, and previous business experience. The goal was to introduce interim monitoring of the applicant's business progress and to have the selection of Innovator visa applicants made by industry experts rather than immigration officers.

Innovator Visa vs Entrepreneur Visa

Although the Innovator visa is in many ways similar to the Entrepreneur visa, there are three key differences interested investors should note:

1. Lower investment amount – The Entrepreneur visa required a minimum investment of GBP 200,000, whereas the Innovator visa only requires a GBP 50,000 investment.
2. Shorter time to gain permanent residency – On the Entrepreneur visa, it would take 5 years to gain permanent residency, which could only be accelerated to 3 years if the applicant created 10 new full-time jobs that existed for 12 months or generated a turnover of at least GBP 5 million. However, on the Innovator visa, an applicant may gain permanent residency in 3 years without needing to satisfy any conditions.
3. Flexibility with business requirements for settlement – To apply for settlement, applicants on the Entrepreneur route had to show that they created at least two full time jobs that had existed for at least 12 months prior to their application. However, on the Innovator visa, the applicant has the choice of picking two out of seven business conditions to satisfy:

At a glance, it appears that the Innovator visa is far more favorable to applicants than under the Entrepreneur visa. Whilst this may be true, it should be noted that the Home Office aims to be more selective with the applicants it approves under this new route compared to the Entrepreneur visa.

The Impact of Closing the Investor Visa

In February 2022, the Home Office shut the Tier 1 – Investor Visa (which was a passive investment route requiring a GBP 2 million investment into a UK company) as it had given rise to security concerns, including people acquiring their wealth illegitimately and being associated with wider corruption.

With the announcement of its closure, the Home Office also mentioned it will be making reforms to the Innovator route to prevent abuse to the UK's immigration system and ensure it works more effectively than the Investor visa to support the UK's economy.?Specifically, that settlement for Innovator applicants is now conditional on applicants executing an investment strategy that can show tangible economic impacts.

Notably, the closure of the Investor visa signals the end of passive investment pathways to settlement in the UK, at least for the time being.

The Innovator Visa Today

The Innovator visa is now the primary pathway for experienced entrepreneurs to gain a foothold in the UK market. This program is ideal for investors who wish to establish an 'innovative,' 'viable,' and 'scalable' business and can invest at least a minimum of GBP 50,000 into their business. This is an active investment route, which means that the applicant is expected to carry out an essential role in the day-to-day management and development of the business.

To apply for this visa, an applicant needs their business idea to be endorsed by an endorsing body. To obtain an endorsement, applicants must prepare and submit business documents such as a business plan, financial forecasts, the applicant's CV, and proof of investment funds to the endorsing body.

There is no particular industry or sector the applicant's business is restricted to, nor is there a requirement for the business to incorporate or utilize technology in its solution There have been business ideas approved that incorporate no advanced technology but have provided a fresh, new way to solve an existing problem. Ultimately, this comes down to how effectively the business plan is drafted and how persuasive it is to convince the endorsing body that the business idea is innovative, original, and different from existing competitors in the UK.

In general, even with business ideas that utilize advance technologies, gaining endorsement can be challenging as the business documents are carefully examined by industry experts. There are a whole host of reasons an endorsing body can reject an application, including, but not limited to:

That being said, with the assistance of proper expertise, applicants stand to have a higher chance in satisfying the endorsement requirements and receiving an endorsement letter, which is a crucial document required when applying for an Innovator visa.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.