0710 GMT October 17, 2021
Recent data showed that immigrants are more likely to start a business than people born in the UK (13 percent compared to 8 percent), and while 14 percent of UK residents are foreign-born, 49 percent of fast growing businesses had at least one foreign-born founder, theguardian.com reported.
Despite this, the government has recently changed the rules on which international students are able to stay in the UK after graduation to start a business. While there are some positives, there is a danger that many of the successful entrepreneurs who were endorsed under the previous scheme — such as photographer booking website Perfocal, glasses retailer Specscart and sports travel agency Homefans — would now be excluded.
The new startup visa scheme replaced the tier one graduate entrepreneur visa in April. It’s been a positive step in that it lifted many of the previous restrictions — early funding is no longer required, additional organizations which assess ideas such as accelerators and incubators can now endorse visas, the cap on the number of visas has been lifted, and non-graduates can also apply.
But while these changes widen the pool of potential entrepreneurs, there’s another more worrying move that limits it. The new criteria insist that applicants’ ideas must be ‘innovative, viable and scalable’. The government is most likely hoping for valuable high-growth, hi-tech businesses from the scheme. Yet many graduates who obtained the tier one visa used ideas from their background and culture rather than their university subject, to build businesses and apps in areas such as street food and language tuition.
This is perhaps not surprising, as starting a business straight after university in a foreign country is clearly a daunting prospect. But just because their ideas were low-innovation doesn’t mean they were without merit: they employed others, bought goods and services from their supply chain, paid tax and, most importantly, learned a lot from their experiences. After all, many entrepreneurs, including Richard Branson and Theo Paphitis, used their first business as a learning experience before setting up a high-growth business of the type the government craves.
The new criteria also disadvantage social enterprises since these tend to be locally based, making scalability more difficult. This is a particular problem as immigrants are key creators of social enterprises which are often targeted at groups of people of whom they have a direct knowledge.
Luckily, there is a solution. For a graduate to secure a startup visa, their business idea has to be endorsed either by a university or by an accelerator or incubator through a Dragon’s Den-style pitching competition. These organizations need to be brave, and to use their autonomy to put forward businesses which provide economic or social benefit to the UK, regardless of whether they are ‘scalable’ and ‘innovative’.
The new startup visa gives a unique opportunity for the UK to gather a critical mass of intelligent and enthusiastic graduate entrepreneurs from around the world and shield the economy from potential Brexit damage. But this will only be realized if universities bend the rules as far as they will go.