On 9 March 2023, the Home Office published its Spring Statement of Changes in Immigration Rules. The statement contained the announcement that the government will be making changes to the Innovator visa category which will make the Start-up route unnecessary and obsolete. Consequently, they will be closing this category to new applicants from 13 April 2023 onwards and changing several important criteria for the old Innovator Visa route, and rebranding it as the Innovator Founder Visa. This article will provide an overview of the changes, will identify why these changes were deemed necessary, and will highlight why we believe that these changes represent a change in the right direction for both the Home Office and foreign entrepreneurs looking to start an innovative new business in the UK.
The Innovator Founder visa combines many of the best features of the two previous visa schemes:
These changes would universally be deemed positive for foreign entrepreneurs looking to start a new business in the UK. However, the biggest complaints from foreign entrepreneurs in recent years in connection with start-up and innovator visas have been in relation to the endorsing body system.
The Start-Up and Innovator routes have been available to foreign entrepreneurs who wish to establish a new business in the UK since March 2019. These two visas replaced the Tier 1 (Entrepreneur) and Graduate (Entrepreneur) visas which had preceded them and were designed to address the criticisms levied at the previous entrepreneur visas. There were several important criticisms made of the older visas that these new visas attempted to address, chief of which was related to what was called the "genuine entrepreneur" test.
In 2013, the "genuine entrepreneur" test was introduced as a means to help the Home Office screen out low-quality and potentially fraudulent applications. Entry Clearance Officers (ECO's) were given the responsibility to assess "the viability and credibility of (the applicants) business plan and market research of (their) chosen business sector". The subjective nature of this assessment caused widespread concern, especially given that the immigration officers responsible for these decisions would almost invariably not be properly qualified to make an accurate assessment of the credibility of the applicant's proposed business and the viability of their specific plans.
Consequently, the Start-Up and Innovator routes had new requirements, with applicants having to show that:
The endorsement process is a critical part of the visa application process. Endorsement is required to prove that the business idea is innovative, scalable, and has the potential to contribute to the UK economy. The endorsing body is responsible for assessing the business idea, the founding team, and the potential for success. The endorsement letter is then used to apply for the visa.
It makes perfect sense to have business ideas assessed by endorsing bodies with entrepreneurial experience, commercial insight, and technical knowledge rather than by Entry Clearance Officers who are ill-prepared to make a sound judgment about the viability or otherwise of a particular enterprise. However, this change to a system of endorsing bodies brought about a fresh set of problems.
Under this new endorsing body system, entrepreneurs looking to apply for start-up and innovator visas had to get a letter of endorsement from one of more than 50 private UK endorsing bodies, or one of a few dozen UK universities. The idea was that many endorsing bodies collectively offering a wide range of sector-specific and region-specific expertise would be the best way to support applicants in this visa category and improve outcomes for UK PLC and the Home Office. However, Home Office officials have seen over the course of the last four years that the endorsement system as presently constituted does not work well either for the entrepreneurs or for the Home Office.
Since early 2022, the Home Office has been looking at alternatives to the existing endorsing body system and these were announced alongside the announcement that the Start-Up and Innovator visa routes would be merged and rebranded as the Innovator Founder Route.
To address both of these issues, the Home Office has decided to reduce the number of endorsing bodies from more than fifty to just three - Geminus Innovation (t/a Innovator International), Envestors, and the newly established UK Endorsement Services. They have also capped the fees that endorsing bodies can charge for their services Applicants still must have a business idea that has been assessed by one of the three newly approved endorsing bodies as being innovative, viable, and scalable. However, the Home Office will now ensure that these endorsing bodies deeply understand what the Home Office is looking for from Innovator Founder visa applicants and will ensure that the endorsing bodies apply the criteria for endorsement uniformly regardless of which of the three endorsing bodies receives an application. It will no longer be possible, as was previously the case, to "shop around" the various endorsing bodies to find someone that was willing to support a business idea after having been rejected by one of them.
The net result of this should be a more rigorous endorsement process from all three endorsing bodies which will maintain common standards and a single interpretation of what constitutes an innovative, viable, and scalable business. However, at the end of the rigorous endorsement process, we anticipate that a much higher proportion of those people that receive a letter of endorsement will not subsequently be rejected for not having an innovative, viable, and scalable business idea.
The changes announced alongside the new Innovator Founder visa are positive in many ways but will also create new challenges for applicants during the endorsement process.
In other words, competition for endorsement will increase significantly as a result of these changes. Overall, though, the new changes to the endorsement system for UK visas are expected to benefit overseas entrepreneurs. By simplifying the process and eliminating hidden costs, the UK government is sending a message that it welcomes international talent and is committed to supporting the growth of innovative businesses in the country.
Given the competitive nature of the UK Innovator Founder route and the uncertainty inherent in the process as the new rules and guidelines are put into practice and tested, you may need to lean on our expertise in order to maximise the chances that your attempts to secure an endorsement are successful. If you are considering starting a business in the UK and are interested in the Innovator Founder Visa, please reach out today for a free, no-obligation initial consultation.