Strict UK visa rules putting foreign entrepreneurs off Britain

More than half of wannabe start-up migrants applying for a UK entrepreneurs' visa are rejected, a report warns.

by Elizabeth Anderson
Last Updated: 27 Mar 2014

The UK's appeal to world-class entrepreneurs is being jeopardised by red-tape, bureaucracy and inadequate immigration rules, a new report has warned.

Since it was launched in 2008, demand for the UK's Entrepreneur Visa has grown from 40 applications in 2008 to 1321 at the end of 2013. However, as application rates have risen, so have the rejection rates: more than 50% of people were rejected last year, with 1514 entrepreneurs turned away.

The visa works on a points-based system, where applicants are scored on the level of investment they have attracted and their language skills. Spurned entrepreneurs are instead migrating to Canada on the Start-up visa or moving to Berlin, which has 'more straightforward rules,' the report by migration advice service Migreat said, which questioned 60 entrepreneurs about their experiences with the UK visa system.

Alex, a young Australian national who resides outside of the UK, is a Seedcamp11 winner and co-founder of a leading web-platform. The company has raised two successful rounds of funding for a total investment of £1.7 million. Despite this, his visa application has been stalled for months. The company has contracted three lawyers to collect the documentation from his investors and banks. Alex is working remotely from Australia and 'commuting' on a short-term business visa while his team tries to obtain the proper letters from Venture Capital (VC) firms and banks.

'The current tone of hostility towards immigration and the stricter rules sends a message that the UK is closed to business, and supports the perception of a system designed to fail them,' the report concludes.

Figures show that 1 in 7 UK firms is owned by a foreign-born entrepreneur, creating 14% of total UK jobs. The research by Centre for Entrepreneurs and DueDil pointed to the success of Caffé Nero, run by a Californian who moved to the UK three decades ago, which now employs more than 4,000 people and operates 600 stores globally, opening one new store a week.

In the UK, entrepreneurs are expected to create two full-time jobs in three years to renew their visa. Elsewhere, the rules are more flexible: in Singapore, to be granted a two year visa extension entrepreneurs must create two local jobs in their first year and four in the second.

Migreat recommends four proposals to make the immigration process easier for entrepreneurs. These include returning applicants' passports more swiftly and changing the rules on the timing of raising finance.

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