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Angels in Disguise? Tier 1 Innovator Route Endorsement

Article published on 28 January 2019

In December 2018 Parliament announced that the Tier 1 Entrepreneur immigration route would be replaced with a new ‘Innovator’ route. This change will come into effect in the spring of this year (2019), with further details soon to be announced. This follows the announcement of a new Start-up visa route, which will be an expansion of the Graduate Entrepreneur Visa. With what we know so far, we have attempted to predict how the new Innovator route will be different from the Entrepreneur route to prepare those looking to apply through Tier 1 in the future.

What do we know about the Innovator Route so far?

The Statement of Changes issued by Parliament in December 2018 says the following:

We are announcing that we will build on this offer further by introducing a new Innovator route, for more experienced business people. This will replace the current Tier 1 (Entrepreneur) route and have a similar emphasis on endorsement by a business sponsor, who will assess applicants’ business ideas for their innovation, viability and scalability.

Lauren Appleby, photo by White Rose Visas

From the statement we can assume that these changes will make the route harder to access, as importance is placed on ‘experienced’ business people. It looks likely that business plans will be reviewed by informed UK business people or other experts, rather than by Home Office caseworkers.

The title of the route suggests that applicants’ business ideas in the future will need to be innovative in some way. We have seen examples of this in the Graduate Entrepreneur route, such as Brunel University’s Innovation Hub scheme, but the name change suggests that innovative ideas will become more of a focus for these applications as well.

The biggest change suggested by this statement is the need for an endorsement by a business sponsor, similar to the Graduate Entrepreneur route. This may mean, although we are not certain yet, that there will no longer be a Genuine Entrepreneur Test requirement, and instead applicants will require endorsement from a relevant sponsor.

Who will provide endorsement for the Innovator Route?

The Home office is yet to announce who will provide this endorsement, or what they mean by a business sponsor. However it seems likely that the recommendations of the Migration Advisory Committee will be listened to. This report from September 2015 discussed many of the changes that are currently being prepared.

In this report the MAC mention that business plans should be reviewed by experts, and that this assessment should involve ‘innovation potential’ as well as viability and scalability, the three things mentioned in the Statement of Changes. They also suggest the introduction of the Start-up visa. This shows us that this report was clearly at least considered before changes to the route were announced.

The MAC proposed several possible solutions as to who could provide endorsement:

Government Agencies

One possible solution is for endorsement to be given from other relevant government agencies, such as UK Trade and Investment. UKTI run a Global Entrepreneur Program designed to help relocate overseas entrepreneurs and early-stage technology businesses/start-ups to the UK. The Scottish Government also assess all migrants applying through their entrepreneur programmes. The MAC propose that participants undergoing these assessments or similar would be able to skip the Genuine Entrepreneur Test because they have already satisfied a genuineness requirement by being accepted by these government bodies.

Piggy bank, Photo by rawpixel on Unsplash

Accelerator Programmes

An accelerator programme, also known as a seed accelerator, is a program designed by one company for the purpose of investing in and mentoring another start-up company. Some approved accelerator programmes, such as those listed by the Global Entrepreneur Program above, are already accepted on the Tier 1 Entrepreneur route and allow for a reduced investment from the applicant themselves. There is a possibility that a larger list of approved programmes could be made, and that Tier 1 Innovator successes will be dependent on receiving investment from one of these companies in order to be seen as genuine.

Angel Investors

An angel investor is a wealthy individual who invests in early-stage or established companies, in return for equity. This MAC report collects evidence from The UK Business Angels Association (UKBAA) who said that investors provide both finance and guidance for entrepreneurs. However, it also mentions that the Home Office would need to create some form of regulation on angel investors, meaning there might be a list of those who can provide investment under the visa route, similar to the list of higher education institutions on the Graduate Entrepreneur route. The report mentions a potential partnership with UKBAA in order to approve this network.

Venture Capital Firms

Venture capital firms offer investment to businesses in return for equity. Whilst accelerator programmes usually provide mentorship and focus on early-stage companies, venture capital firms usually don’t do this, however tend to provide more money with their investments. The MAC’s report leans more towards using accelerator programmes than venture capital firms, but as they are still mentioned often in the report there is the possibility of their inclusion as endorsement providers. There are also options that combine venture capital funds with angel investors, such as The Angel CoFund mentioned in the report.

What might Innovator Route funding look like?

It is worth mentioning that the MAC believed it would be too restrictive to move towards a system that completely relies on third-party endorsement. For instance, some argue that not every business requires an accelerator programme to succeed, so it should not be an essential requirement for all businesses to be endorsed by them.

The MAC also state that if endorsement is given then the investment from the applicant should be lower than it is now. They suggest a sum of £50,000 from the applicant and £50,000 from the approved endorser. They then indicate that they would keep the £200,000 investment option active but have business plans reviewed by experts, rather than case-workers. Their system would then look like the table below:

2015 MAC recommendations for the Tier 1 Entrepreneur route

However, until the Home Office release further information, we don’t know whether or not the £200,000 investment option and Genuine Entrepreneur Test will remain. We do know from this provided evidence that one of the above endorsement options is likely to be required, and that there will most likely be a list of approved endorsers for the Innovator visa. We also know for certain that innovation will be more important than before, and that the route as a whole will be harder to access than the Tier 1 Entrepreneur route it is replacing.

If you have any further concerns or questions regarding the changes being made to the Tier 1 route in the spring, please do get in contact with us here at White Rose Visas and one of our qualified immigration advisers will be able to assist you. We will look to offer a standard and enhanced support package for Tier 1 Innovator applications when the route launches, and in the meantime are able to assist with any Tier 1 Entrepreneur applications planned before these changes take place.

Natalie Pashley, photo by White Rose Visas

Natalie Pashley, Senior Immigration Adviser and Head of Immigration, comments:

It looks highly likely that the endorsement suggestions made in the 2015 MAC report will be used for the Innovator route when it launches. Because of this, applicants’ business ideas and their business plans are going to be more important than ever in securing endorsement and a successful visa application.

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