此為英文文檔nber -he Effect of Immigration Policy on Founding Location Choice - Evidence from Canada's Start-up Visa Program

NBERWORKINGPAPERSERIES

THEEFFECTOFIMMIGRATIONPOLICYONFOUNDINGLOCATIONCHOICE:EVIDENCEFROMCANADA'SSTART-UPVISAPROGRAM

Saerom(Ronnie)Lee

BrittaGlennon

WorkingPaper31634

/papers/w31634

NATIONALBUREAUOFECONOMICRESEARCH

1050MassachusettsAvenue

Cambridge,MA02138

August2023

WeacknowledgefundingfromAnalyticsatWharton.Wehavenootherdisclosurestomake.Allauthorscontributedequally.WethankExequiel(Zeke)HernandezandSabrinaHowellforprovidingvaluablecommentsontheearlierversionsofthismanuscript.WethankChristinaTongforexcellentresearchassistance.WealsoappreciatethehelpfulsuggestionsfromseminarparticipantsattheWhartonSchool,theUniversityofMinnesota,thePontificalCatholicUniversityofChile,theUniversidaddelosAndes,theMigrationandOrganizationsConference,andtheNationalBureauofEconomicResearchSummerInstitute.WealsoacknowledgegenerousfinancialsupportfromAnalyticsatWharton.Allerrorsinthispaperarethesoleresponsibilityoftheauthors.TheviewsexpressedhereinarethoseoftheauthorsanddonotnecessarilyreflecttheviewsoftheNationalBureauofEconomicResearch.

NBERworkingpapersarecirculatedfordiscussionandcommentpurposes.Theyhavenotbeenpeer-reviewedorbeensubjecttothereviewbytheNBERBoardofDirectorsthataccompaniesofficialNBERpublications.

?2023bySaerom(Ronnie)LeeandBrittaGlennon.Allrightsreserved.Shortsectionsoftext,nottoexceedtwoparagraphs,maybequotedwithoutexplicitpermissionprovidedthatfullcredit,including?notice,isgiventothesource.

TheEffectofImmigrationPolicyonFoundingLocationChoice:EvidencefromCanada's

Start-upVisaProgram

Saerom(Ronnie)LeeandBrittaGlennon

NBERWorkingPaperNo.31634

August2023

JELNo.F20,F22,J60,M13

ABSTRACT

Tospurentrepreneurshipandeconomicgrowth,anincreasingnumberofcountrieshaveintroducedimmigrationpoliciesthatprovidevisastoskilledentrepreneurs.Thispaperinvestigateswhetherthesepoliciesinfluencethefoundinglocationchoiceofimmigrantfounders,byleveragingtheintroductionofCanada'sStart-upVisaProgramin2013.WedemonstratethatthisimmigrationpolicyincreasedthelikelihoodthatU.S.-basedimmigrantshaveastart-upinCanadaby69%.OurresultsshowthatAsianimmigrants(whohaveahigherrepresentationinCanadathanintheU.S.)aredisproportionatelymorelikelytomigratetoCanadatostarttheirbusinesses,whereasHispanicimmigrants(whohaveasmallerrepresentationinCanadathanintheU.S.)arelessinclinedtodoso.Wealsofindthatthispropensityvarieswiththesizeofco-ethnicimmigrantcommunitiesintheoriginlocation.Overall,ourstudyunveilstheimportanceofimmigrationpoliciesindeterminingfoundinglocationchoiceandhasimportantimplicationsforcountriescompetingforglobaltalent.

Saerom(Ronnie)Lee

TheWhartonSchool

UniversityofPennsylvania

3620LocustWalk

Philadelphia,PA19104

saeroms@

BrittaGlennon

TheWhartonSchool

UniversityofPennsylvania

3620LocustWalk

Philadelphia,PA19104

andNBER

bglennon@

1

1Introduction

Oneoftheimportantinitialdecisionsthatanentrepreneurmustmakeiswheretofoundtheirstart-up.Inmakingthisdecision,whichcanhavesignificantimplicationsfortheirstart-up’ssurvivalandeventualperformance(

DahlandSorenson

2012

,

Kulchina

2015

),founderstypicallyconsidervariouspotentiallocationsandawiderangeoffactorsacrossthoselocations.Theliteratureonstart-uplocationchoicehasmainlyexaminedthreetypesoffactors:afounder’spersonalpreferences(

DahlandSorenson

2009

,

Kulchina

2015

),thefounder’ssocialtiesandembeddednessinalocation(

DahlandSorenson

2012

,

MichelacciandSilva

2007

,

Sorenson

2018

,

Uzzi

1999

),andthelocation’seconomicfactors(e.g.,accesstospecializedinputs,humancapital,orcustomers;

BryanandGuzman

2021

,

ContiandGuzman

2023

,

Guzman

2019

,

Kolympirisetal.

2015

).

Inthispaper,weinvestigatetheroleofapreviouslyoverlookedfactorthatmayinfluencethefoundinglocationchoice:immigrationpolicy.Immigrationpolicyhasbeenshowntoaffectwheremultinationalfirmsgloballylocatetheirskilledworkers(

Glennon

2023

,

KangandEklund

2023

)andwheremultinationalfirmslocatetheirforeignaffiliates(

Glennon

2023

).However,lessisknownabouthowitmightinfluencethelocationchoiceofimmigrantfounders.Priorresearchhasdocumentedthat,innumerouscountries,immigrantsstartfirmsathigherratesthannatives(

FairlieandLofstrom

2015

,

KerrandKerr

2017

,

2020a

).Forexample,intheU.S.,immigrantsare80%morelikelytostartabusinessthanAmericans.Furthermore,thebusinessesthatimmigrantsestablisharenotlimitedtoaspecificcategory(e.g.,necessity-basedmom-and-popstores)butencompassfirmsofeverysizeinvariousindustries(

Azoulayetal.

2022

).Infact,arecentstudybytheNationalFoundationforAmericanPolicyfoundthat“immigrantshavestartedmorethanhalfofAmerica’sstartupcompaniesvaluedat$1billionormore”(

Anderson

2018

).Therefore,immigrantsconstituteasizeableandimportantsub-populationofentrepreneurs.Whilethesefactsabouttheentrepreneurialpropensityandactivitiesofimmigrantshavebeenwell-established,weknowlittleaboutwheretheseimmigrantschoosetofoundtheirbusinessesandwhetherthischoiceisaffectedbyimmigrationpolicy.

Toassesswhetherimmigrationpolicyaffectsthefoundinglocationchoicesofimmigrantwould-befounders,weexploittheintroductionofCanada’sStart-upVisaProgram,whichprovidespermanentresidencytoeligibleimmigrantfoundersandtheirfamilies.Wetakeadifferences-in-differences

2

approachinwhichwecomparethepropensityofimmigrantsandnativesintheU.S.tofoundacompanyinCanadabeforeandaftertheprogram’simplementation.WeexpectimmigrantslivingintheU.S.tobemoreresponsivetothispolicychangethanU.S.nativesfortwomainreasons.First,becauseimmigrantsarelesssociallyembeddedintheirhostcountrythannatives(

Aguilera

2005

,

AguileraandMassey

2003

,

Majerski

2018

),theymaybelessreluctanttoleavetheircurrentcommunities.Second,becauseimmigrantstypicallyencountermajorchallengesinobtainingaworkpermitforstartingacompanyintheU.S.(

Agarwaletal.

2021

,

Diethorn

2022

,

Gupta

2023

,

Kerr

andKerr

2020b

,

RoachandSkrentny

2019

),Canada’sStart-UpVisaProgramreducesasignificantbarriertoentrepreneurialentry.Withouttheprogram,theytypicallyfaceseveralyears(orevendecades)ofwaitingintheU.S.fortheirvisastotransitionintopermanentresidencybeforetheycanfoundacompanyintheU.S.,bywhichtimetheentrepreneurialopportunitymighthavedisappeared.OurfocusonthoselivingintheU.S.iscriticaltoourresearchquestion,whichexamineswhetherimmigrationpolicyaffectsthefoundinglocationdecision.Specifically,immigrantswholiveintheU.S.inthepre-policychangeperiodhaverevealedtheirpreferencefortheU.S.Therefore,byfocusingonU.S.-basedimmigrants,wecanobserveachangeinlocationchoicedirectlyattributabletothechangeinimmigrationpolicy:theintroductionoftheStart-UpVisaPolicy.

Next,weexaminewhetherthepropensitytostartacompanyinCanadavariesbythesizeoftheco-ethnicimmigrantcommunitiesinthelocationsinwhichtheseimmigrantslivedpriortothepolicychange.Asnotedearlier,immigrantsaretypicallylessembeddedthannativesinthecommunitiesoftheirhostcountry(

Aguilera

2005

,

AguileraandMassey

2003

,

Majerski

2018

),whichcanprovideadisadvantagetotheirstart-upssincethesecommunitiescanprovidebothopportunityidentificationandaccesstoinformation,resources,andbusinessnetworks(

DahlandSorenson

2012

,

Sorenson

2018

,

Uzzi

1999

).However,largeco-ethnicimmigrantcommunitiescanincreaseembeddednessinthehostcountryandmitigatesomeofthefrictionsthatimmigrantentrepreneursface(

Hernandez

andKulchina

2020

,

KemenyandCooke

2017

,

KerrandMandorff

2023

,

Marinoni

2023

).Hence,largercommunitiesofsimilarimmigrantsmayserveasacounteractingforcetothepullofamorerelaxedimmigrationpolicyforimmigrants.

UsingauniquedatasetfromRevelioLabsof1.2millionU.S.-basedindividualswhofoundedacompanyeitherintheU.S.orCanadabetween2006and2021,weshowthatCanada’sStart-UpVisaProgramincreasedthelikelihoodthatU.S.-basedimmigrantsstartabusinessinCanadaby69%.

3

Ourstudyalsofindsthat,comparedtoimmigrantsofotherethnicgroups,Asianimmigrantsweremoreresponsivetothispolicychange.Furthermore,ourresultssuggestthisresponsivenessvariesbythepresenceofAsianimmigrantsintheirpriorlocation.Thatis,thelargertheAsianimmigrantenclavesintheoriginlocation,thelesslikelythatU.S.-basedAsianimmigrantsinthislocationmovetoCanadatostartabusiness.Takentogether,thesefindingsnotonlyimplythatimmigrationpolicyhasasignificantimpactonthefoundinglocationdecisions,butalsoreinforcetheideathatthisdecisionentailsacomplexweightingofmultiplelocationfactors—mostnotably,socialtiesandembeddedness.Putdifferently,whenchoosingtheirfoundinglocation,immigrantwould-befoundersseemtoweighthepresenceofco-ethnicimmigrantcommunitiesagainstimmigrationpolicy.

Ourstudymakescontributionstovariousstreamsofliterature.First,ourworkcomplementsextantresearchonstart-uplocationchoice,whichhasassessedhowthesechoicesareinfluencedbythefounders’personalpreferences(

DahlandSorenson

2009

,

Kulchina

2015

),theirsocialtiesandembeddedness(

DahlandSorenson

2012

,

MichelacciandSilva

2007

,

Sorenson

2018

,

Uzzi

1999

),orthelocation’seconomicfactors(

BryanandGuzman

2021

,

ContiandGuzman

2023

,

Guzman

2019

,

Kolympirisetal.

2015

),byaddingimmigrationpolicytothesetofrelevantfactors.Inaddition,ourresultsalsoshedlightonthefoundingdecisionacrossborders.Priorworkhaslargelyfocusedattentionwithinnationalborders,oronmovementacrossbordersafterastart-uphasbeenfounded(

ContiandGuzman

2023

,

Shietal.

2022

).

Second,bysheddinglightonwhereimmigrantschoosetofoundtheirbusinesses,itcontributestotheliteratureonimmigrantentrepreneurship,whichhas,thusfar,documentedimportantstylizedfactsonhowimmigrantsandnativesvaryintheirpropensitytostartabusiness,whatenablesorhinderstheseimmigrants’entrepreneurialentry,andwhattypeofbusinessestheyestablish(

Agarwal

etal.

2021

,

Azoulayetal.

2022

,

KerrandKerr

2020a

).

Third,extendingpriorworkonethnicimmigrantenclaves,whichhasshownthatimmigrantstendtoprefertolocatenearsuchenclavesandthattheseco-ethnicimmigrantcommunitieshelpimprovetheirentrepreneurialsuccess(

Bartel

1989

,

Baueretal.

2005

,

Cadenaetal.

2017

,

Eckstein

andPeri

2018

,

Edinetal.

2003

,

Marinoni

2023

,

WilsonandPortes

1980

),ourresultssuggestthatthesizeofco-ethnicimmigrantenclavesinboththeoriginandhostlocationsmaymoderatetheeffectofimmigrationpolicyonfoundinglocationchoices.

Fourth,bysheddinglightonhowamoreopenimmigrationregimecanlowerbarriersto

4

entrepreneurialentryforimmigrantfounders,ourpaperaddstopriorstudiesontheimportanceofinstitutionalenvironmentsforspurringentrepreneurship.Thesestudieshaveshownthatvariousinstitutionsandregulations(e.g.,non-competes,taxes,bankruptcyprotection)haveimportantconsequencesonthebarrierstoentrepreneurialentry(

Djankovetal.

2002

,

Eesley

2016

,

Klapperetal.

2016

,

Leeetal.

2011

,

McAfeeetal.

2004

,

SamilaandSorenson

2011

).Similarly,bydemonstratingthatamoreopenimmigrationregimeresultsinlowerbarrierstoentryforfoundersandstart-ups,weaddimmigrationpolicytothesetofdriversofentrepreneurialentrythroughitsabilitytochangebarrierstoentry.

Finally,thispaperoffersimportantpolicyimplicationsforcompetingforglobaltalent.Whilemorethan20countries(e.g.,Australia,Canada,Chile,Ireland,Korea)haveintroducedimmigrationpoliciesspecificallytargetingimmigrantwould-befounders,most(includingtheU.S.)havebeenhesitanttodoso.Ourfindingsimplythatthesepoliciescanbeaneffectivetoolforattractingtalentedimmigrantentrepreneursfromothercountries.

2Literaturereview

2.1Foundinglocationchoice

Thepriorliteraturehaslongbeeninterestedinunderstandinghowentrepreneurschoosewheretolocatetheirstart-ups.Asanempiricalregularity,thisliteraturehasestablishedthatentrepreneurshaveastronghomebiasandgeographicinertia.Thatis,entrepreneurstypicallyprefertolocatetheirstart-upswheretheycurrentlyliveandwork(

Figueiredoetal.

2002

,

Larssonetal.

2017

,

MichelacciandSilva

2007

).Inadditiontothedesiretobeclosetofriendsandfamily(

Dahland

Sorenson

2009

),stayingclosetohomecanallowfounderstoleveragetheircurrentknowledgeofthelocalcommunityortheirexistingsocialrelationshipswithinthiscommunity.Suchlocalknowledgeandsocialtiescanhelpentrepreneursrecruitemployees,raisecapitalinvestments,securesuppliers,andsucceedintheirnewventures(

DahlandSorenson

2012

,

Sorenson

2018

,

Uzzi

1999

).

Ifentrepreneursdomovebeyondtheircurrentlocations,extantresearchsuggeststhattheytendtostrategicallyselectastart-uplocationwithsignificanteconomicbenefits.Forinstance,foundersoftenlocatetheirstart-upsinentrepreneurialecosystemswheretheycanhavedirectaccesstoahigh-skilledlaborpool(

DiamondandSimon

1990

,

Romer

1987

)orventurecapitalists

5

(

Bernsteinetal.

2016

,

Chenetal.

2010

,

Kolympirisetal.

2015

,

StuartandSorenson

2003b

).Thisliteraturealsosuggeststhatentrepreneursvalueproximitytoindustryclusters(

Guzman

2019

,

Krugman

1991

,

Saxenian

1996

),wheretheycangainknowledgespilloversandpoachemployeesfromtheircompetitors(

DavisandDingel

2019

,

Songetal.

2003

).Inadditiontotheseeconomicconsiderations,foundersalsochoosefoundinglocationsbasedontheirpersonalpreferencesfor,e.g.,abettereducationorhealthcaresystem,lowercrimerates,orabetterclimate(

DahlandSorenson

2009

,

Kulchina

2015

).

Theenvironmentalconditionsthatentrepreneurstypicallypreferdonotemergeinavacuum,butaregeneratedbyinstitutions(

Djankovetal.

2002

,

Eesley

2016

,

Klapperetal.

2016

,

Leeetal.

2011

,

McAfeeetal.

2004

,

SamilaandSorenson

2011

).Forexample,priorstudieshaveshownthatweaknon-competeenforceability(

SamilaandSorenson

2011

,

Starretal.

2018

),entrepreneur-friendlybankruptcylaws(

Leeetal.

2011

),bankingderegulation(

KerrandNanda

2009

),andlessbureaucracy(

Djankovetal.

2002

,

Klapperetal.

2006

)canencourageentrepreneurialactivitiesandfostertheformationofentrepreneurialecosystems.

Similarly,immigrationpolicyhasbeenshowntoaffecttherateofentrepreneurship.Inparticular,

Agarwaletal.

(

2021

)findthatimmigration-relatedworkconstraintsintheU.S.suppressimmigrantentrepreneurship.Whatislesswellunderstoodiswhetherimmigrationpolicymightchangeafounder’slocationdecision.Inwhatfollows,weelaborateonwhyimmigrationpolicymighthaveasignificantimpactonafounder’slocationdecision.Wewillalsoexaminehowthefactorsaffectingfoundinglocationchoice(includingimmigrationpolicy)mightdifferforimmigrantsandnatives.

2.2Immigrationpolicyandimmigrantwould-beentrepreneurs

Immigrantsaredisproportionatelymorelikelythannativestofoundacompany(

Azoulayetal.

2022

,

KerrandKerr

2020a

).Likenatives,theseforeign-bornentrepreneursmustchoosethelocationinwhichtofoundtheirstart-up.Intheprevioussection,wedescribedthefactorsthatbroadlyaffectthisfoundinglocationchoice,withoutdifferentiatingbetweenimmigrantandnativefounders.Manyofthesefactorsarelikelytobeequallyattractivetoimmigrantandnativefounders.Forinstance,regardlessoftheirnationality,foundersarelikelytobedrawntolocationswithstrongentrepreneurialecosystems.Inthissection,wediscussthelocationchoiceofimmigrantentrepreneurs,andwhytheimportancetheyplaceondifferentlocationcharacteristicsmightvary.

6

However,immigrantandnativefoundersarelikelytodifferentlyvaluesomeofthesefactors—mostnotably,immigrationpolicy.Whileimmigrationpolicyaffectsthebarrierstoentryforallfoundersconsideringenteringanewcountry,thiseffectislikelytovarydependingontheimmigrationstatusofthefoundersintheircurrentcountry.Forexample,immigrantsintheU.S.aremuchmorelikelythannativesintheU.S.torespondtochangesinCanadianimmigrationpolicybecauseoftheinherentfrictionsinvolvedincross-bordermovementsandthedifferencesbetweenthetwotypesoffounders.

Migratingacrossborderstostartabusinessintroducesanimportantsetofchallenges.Tobeginwith,theactofcrossingbordersitselfresultsinlargefinancialandadministrativerelocationcosts(

Angelucci

2015

,

Carringtonetal.

1996

).Onceindividualshavemigratedandestablishedafirm,theyencounternotonlythe“l(fā)iabilityofnewness”(

Stinchcombe

1965

)butalsothe“l(fā)iabilityofforeignness”(

Zaheer

1995

),whichstemsfromalackofknowledgeaboutthegeographic,cultural,institutional,andeconomicdifferencesofthenewhostcountryandwhichcanthusincreasethelikelihoodofstart-upfailure.Lastly,asimmigrants,theseprospectiveentrepreneursneedtocarefullycontendwiththehostcountry’simmigrationpolicy,whichisnottypicallydesignedwithentrepreneursinmind.

Althoughimmigrationpolicythatenablesimmigrantstostartacompanyinaforeigncountryremovesanimportantbarrier(i.e.,visastatus),itonlyaddressesthethirdchallenge.Therelocationcostsandtheliabilityofforeignnessremain.Thus,would-befoundersnotcurrentlyfacingvisachallenges(e.g.,Americanwould-befounderslivingintheU.S.)areunlikelytorespondtoanyimmigrationpolicychange.

However,immigrationpolicytargetingimmigrantwould-befounderscouldhaveadispropor-tionateimpactonwould-befounderswhoareoutsideoftheirhomecountry(e.g.,immigrantstotheU.S.interestedinpursuingentrepreneurship)ascomparedtonativeslivingintheirhomecountry(e.g.,AmericanslivingintheU.S.interestedinpursuingentrepreneurship).First,theyarepredisposedtowardmigratingasindividualswhohavepreviouslymigrated.Thatis,becausetheseimmigrants,bydefinition,havepreviouslymigratedtoaforeigncountrywheretheyarelesslikelytohavedeepknowledgeofandbesociallyembeddedinthelocalcommunity(

Aguilera

2005

,

Aguilera

andMassey

2003

,

Majerski

2018

),theyareunlikelytohavethesamegeographicinertiaastheirnativecounterpartsandalreadyencountertheliabilityofforeignnessintheircurrenthostcountry

7

(i.e.,theU.S.).Butmoreimportantly,ifthehostcountry(inourempiricalcontext,theU.S.)limitsimmigrantsfromlegallystartingtheirownbusinesses,thenthehostcountry’simmigrationpolicyactsasanimportantbarriertoentry(

Agarwaletal.

2021

,

Diethorn

2022

,

Gupta

2023

).Hence,ifadifferenthostcountry(e.g.,Canada)relaxestherestrictivenessofitsimmigrationpolicybyintroducingastart-upvisa,thepolicychangeremovesasignificantbarriertostart-upentryforimmigrantswillingtomove.Thus,foranimmigrantwould-befounderchoosingbetweentwolocations,itsignificantlyincreasestheappealofthisalternatehostcountry.

2.3Themoderatingroleofethnicenclaves

Intheprevioussection,weassumethatimmigrantsarepredisposedtowardmigratingduetotheirlackofsocialembeddednessandtheliabilityofforeignnessintheirhostcountry.Priorresearchhassuggestedthattheextenttowhichimmigrantslacksocialembeddednessandencountertheliabilityofforeignnesscanvarybythepresenceofco-ethnicimmigrantenclaves(

Bartel

1989

,

Baueretal.

2005

,

Cadenaetal.

2017

,

EcksteinandPeri

2018

,

Edinetal.

2003

,

Marinoni

2023

,

WilsonandPortes

1980

).Sharingacommonethnicbackground,assuch,canfostersocialsupportandtrust,facilitatecollaboration,andcultivatebusinessnetworksamongimmigrantsintheirhostcountry(

Kalninsand

Chung

2006

,

KemenyandCooke

2017

,

KerrandMandorff

2023

,

WilsonandPortes

1980

).Asthesesocialinteractionsincreaseknowledgeandinformationflow,co-ethnicimmigrantenclavescanhelpimmigrantsinmitigatingmanyfrictionsthattheyencounterinentrepreneurship(

Hernandezand

Kulchina

2020

,

KalninsandChung

2006

,

KerrandMandorff

2023

,

PortesandShafer

2007

)andinpursuingvariousentrepreneurialopportunities(

Borjas

1986

,

KerrandMandorff

2023

).Accordingly,asco-ethnicimmigrantenclavesofferimmigrantssuchbenefitsofsocialembeddedness,numerousstudieshavedocumentedthatimmigrantsthusprefertosettleinthegeographicalregionsinwhichtheirethnicgroupisspatiallyclusteredinthehostcountry(

Bartel

1989

,

Baueretal.

2005

,

Cadena

etal.

2017

,

EcksteinandPeri

2018

,

Edinetal.

2003

).

Extendingthislineofreasoning,weexpectthatco-ethnicimmigrantenclavesinthecurrenthostlocation(i.e.,theU.S.)willreducethepropensityofimmigrantstorespondtoachangeinimmigrationpolicyinthefocalcountrybymovingandfoundingacompanythere(i.e.,Canada).Incontrast,ethnicenclavesinthefocalcountrymayincreasethelikelihoodthattheimmigrantsmigratefromtheirhostlocationtothefocalcountrytostartabusiness.

8

3Empiricalcontext

3.1Canada’sStart-upVisaProgram

Weassesswhetherentrepreneurship-focusedimmigrationpolicyinfluencesfoundinglocationchoicesbyleveragingtheintroductionofCanada’s

Start-upVisaProgram

.TheprogramwasannouncedandlaunchedinJanuaryandApril2013,respectively.Itranasapilotforthefirstfiveyears,duringwhichthenumberofapplicationswaslimited.Afterreceivingpositivereviews,theCanadiangovernmentgavethisprogramapermanentstatusin2018.

1

Thegoaloftheprogramisto“enableimmigrantentrepreneurstolaunchinnovativecompaniesthatwillcreatejobsinCanada,andeventually,competeglobally.”

2

TheprogramespeciallysoughttodrawpotentialimmigrantfoundersfromtheU.S.Todoso,Canada’sMinisterofCitizenship,Immigration,andMulticulturalismvisitedSiliconValleytopromotetheprogramjustafteritslaunch.Inaddition,theCanadiangovernmentpostedabillboardinSiliconValleythatfamouslyread“H-1Bproblems?PivottoCanada.NewStart-upVisa.LowTaxes”(seeFigure

1

;

Sengupta

2013

).Duetosuchpromotionactivities,thisprogrambecamewell-knownamongimmigrantstotheU.S.,particularlythoseinCalifornia.

3

[Figure1abouthere.]

Theprogramofferspermanentresidencestatustoforeign-bornentrepreneurs(andtheirfamilies)uponapprovaloftheStart-UpVisa.

4

Thevisaisapprovediftheseentrepreneurs(uptofiveperbusiness)satisfyallofthefollowingfiverequirements.First,theymustincorporate,activelymanage,andoperatetheessentialpartsoftheirbusinessesinCanada.Second,theymustownatleast10percentofthevotingshares,withnootherindividualsholdingamajoritystake.Third,theymustbeabletocommunicateandworkinEnglishand/orFrench.Fourth,theseentrepreneursmust

provethattheycansupportthemselvesandtheirdependentsfinancially(i.e.,foroneindividual,

1Forthereviewreport,seethelink:

https://www.canada.ca/en/immigration-refugees-citizenship/corporate/

reports-statistics/evaluations/start-visa-pilot.html

.

2Fordetails,seethelink:

https://www.canada.ca/en/immigration-refugees-citizenship/news/archives/

backgrounders-2013/new-start-visa-program-innovative-approach-economic-immigration.html

.

3ACanadiangovernmentofficialweinterviewedmentionedthatthesepromotionactivitieswerelaterreducedaftertheStart-upVisaProgramstartedtocreatebacklogsinCanada’simmigrationsystem.

4Duringthepilotyears,aStart-upVisaapplicationwastypicallyprocessedwithinfivemonths.IntheyearsaftertheCOVID-19pandemic,theprocessingtimehasincreasedand,in2023,reached35months,duetobacklogsintheimmigrationsystem.

9

therequiredfundsareCAD13,310;foreachadditionalfamilymember,thisamountincreasesbyCAD3,000).Lastly,toensurenewlyarrivedentrepreneurshavenotjustinvestmentfromalocalorganizationbutalsoamentorwhocanhelpthemnavigatetheCanadianbusinessenvironmentandtothusmitigatetheliabilityofforeignness,theseentrepreneursmustreceivealetterofsupportfromaCanadianventurecapital(VC)fund,angelinvestor,orbusinessincubatoronthegovernment-specifiedlistofdesignatedorganizations.

5

IfthislettercomesfromaVCfundoranangelinvestor,theyneedtosecureaminimuminvestmentofCAD200millionorCAD75million,respectively.Althoughreceivingaletterfromabusinessincubatordoesnothavesuchaminimuminvestmentrequirement,theincubatormustaccepttheforeign-bornentrepreneurintoi