Canada woos entrepreneurs with visa program; should U.S. follow?

Apr 13, 2013

Canada is aiming to woo bright young entrepreneurs with a startup visa program. The plan offers immediate permanent residence to foreign nationals who are able to secure business funding from Canadian investors. But, there are mixed feelings in the U.S. about the benefits of following suit.

Introduced on April 1, the pilot program will have an initial annual allotment of almost 3,000 visas for entrepreneurs who secure at least $200,000 from Canadian venture capital funds or $75,000 from a private investor.

Canada’s Venture Capital and Private Equity Association (CVCA) is entering into a partnership with the Canadian government to get the program rolling.

In a statement CVCA officials say:

“Entrepreneurs create great companies and venture capital funds are in the business of providing the necessary rocket fuel for those entrepreneurs and companies. Those companies, in turn, provide strong returns to their investors and the countries in which they are located via superior job creation, exports and R & D.”

Should the US follow suit?

Jacob Kirkegaard from the Peterson Institute for International Economics says a similar program in the U.S. would provide the nation with a cheap way to improve the economy and create jobs.

“This is something that U.S. policy makers should think very hard about because I think this would undoubtedly benefit the U.S. economy, but equally important, I think it would be in many ways tailor-made to many of the existing strengths that we have here in the United States.”

Kirkegaard says the U.S. has an extensive venture capital industry and attracts many foreign students who could potentially take advantage of this type of visa.

“[This program would give them] an even greater incentive and opportunity to stay in the United States, found a business, and create jobs and economic growth. So I think all around this is a very good idea and it’s one that I think would work very well in the United States.”

But not everyone agrees.

James Spencer, director of the Emerging Ventures Ecosystem program in Albany, says developing more infrastructure for startups, trumps the need for a U.S. startup visa program.

“My thought was that, for us, because we have such a well-defined innovation culture of entrepreneurship here, I don’t know if it would bring as much advantage to the United States as it would for a more emerging entrepreneurship culture in Canada or another country,” says Spencer.

“I don’t think we have any shortage of entrepreneurs, I think our challenge is creating better ecosystems for entrepreneurs and finding better ways to connect them with local resources.”

Seed funding not enough

Andrew Rudnick, president and CEO of Buffalo Niagara Partnership, agrees that startups need more than just seed funding to succeed.

“I think it’s a mistake to think that the only thing startups need is money. They need management expertise, they need low cost operating environment, they need a culture of entrepreneurship and startups," he said.

Still, Rudnick says the startup community in the U.S. would embrace a program like Canada’s.

“You couldn’t come up with a reason why it wouldn’t be beneficial, not only in the amount of economic activity that hopefully would be generated, but it also creates a vitality, a community vitality that I think is important.”

The H-1B debate

The Canadian program was launched on the same day that the United States Citizen and Immigration Services released 85,000 H-1B visa slots available for businesses to fill vacancies in the IT and STEM (Science, Technology, Engineering, and Mathematics) industries.

This year saw a spike in the number and rate of applications seen for H-1B visas, and many are in favor of increasing the amount of these guest-worker visas.

James Spencer says an increase in H-1B visas would be more helpful for the U.S. economy and job market than a program like Canada’s.

“I think that’s going to help in the long term to fertilize the ecosystem with more good ideas, more good technology type companies,” Spencer says.

Jacob Kirkegaard agrees that the startup visa program could not replace H-1Bs in the U.S., but says that the two systems working together could be beneficial.

You’re creating new business, you’re creating new jobs so it’s kind of a win, win for everyone involved,” 

Even the H-1B visa system also has its critics.

Ron Hira, a professor of public policy at the Rochester Institute of Technology says guest workers can be paid poorly and end up effectively indentured, leading to abuses of the visa system.

He says the H-1B system needs tighter regulations, not more slots being made available.

Speaking about the March for Innovation, a group campaigning for the addition of more visas in the H-1B category and other immigration reforms, Hira says…

“I think they’re offering kind of a false choice, in the sense that they’re saying that the only way we can keep the best and brightest from around the world here is by also increasing the number of guest workers, temporary work visas, which actually place the foreign workers in a bad position.

“I think we’re really a nation of immigrants, not a nation of guest workers.”