The Immigration Rules require a potential applicant to demonstrate access to either:
£200,000 in funds from any source; or
£50,000 from a regulated source such as a Government or Devolved Government Department; a UKTI endorsed seed funding competition or a FCA regulated Venture Capital Firm.
The Applicant must then satisfy the Home Office that he or she is a genuine entrepreneur and intends to invest this money in the business.
A frequent comment on the Immigration Rules in this area, is that they do not sit well with the way many people fund start up businesses. For example, where an applicant intends to rely on funds being made available by a 3rd party a signed legal declaration must be provided by that 3rd party along with other supporting evidence. An increasingly common way of raising funds for a new business venture is crowd funding, which as my colleague Katy Conlan describes, involves a large number of individuals investing small amounts in a business venture. It would be a logistical nightmare for a Tier 1 (Entrepreneur) visa applicant to provide the Home Office with the required documentation for a visa application if they had raised any of their funds through this method and if they could not do so the application would be refused.
Another criticism of the current rules is that many common investment schemes, such as Enterprise Investment Schemes (EIS), are not necessarily considered to be regulated sources of funding. Therefore an individual could raise £50,000 in investment into their business through an EIS, which is administered by a regulated investment firm, but because the funds are not from the regulated firm the individual would not qualify for a visa.
Finally, angel investors, not matter how reputable, do not count as a qualifying source under the £50,000 route and an individual must show that £200,000 has been raised as a [prerequisite of qualification for a visa. To put this in context, an individual could raise £150,000 from Dragons Den and not qualify for a visa even through the funds are being provided by one or more of the UK's most high profile respected investors.
The MAC will look at all of these issues, as well as to how the Home Office should assess whether or not an entrepreneur is genuine and the requirements for extending visas, which require careful planning in order to avoid a refusal.
I hope to work with my existing clients to highlight some of these issues to the MAC and would be interested to hear from any entrepreneurs or investors who are keen to see the route reflect the reality of starting and investing in a new business.
If you have any comments or would like to discuss Tier 1 (Entrepreneur) visas and the evidence required to demonstrate funding is available please get in touch using the details below.