Innovator Founder visa opens new improved immigration route to start up a business in the UK
13 April 2023
The UK Government and relevant endorsing bodies have now published details of the new Innovator Founder visa which replaced the Start-up and Innovator routes this week.
Here is a summary of the eligibility requirements and benefits of this new route for innovators seeking to set up innovative ventures in the UK.
For more advice on how to apply for this useful new immigration route and its suitability for your needs, feel free to contact us on +44(0)207 0339527 or email@example.com.
Why has the Innovator Founder route replaced other Start-up and Innovator visas?
Immigration Minister Robert Jenrick announced this overhaul of immigration routes for entrepreneurs setting up businesses in the UK last month with the latest changes to the UK Immigration Rules.
The new Innovator Founder visa replaces Start-up and Innovator routes which in turn replaced the Tier 1 (Entrepreneur) visa in 2019, when private endorsing bodies took over the Home Office’s responsibility to decide whether proposed business start-ups were viable. However, the Government-approved endorsing bodies often insisted start-ups they were endorsing join their accelerator programmes which could cost up to £30,000 or an equity stake in the firm.
The Innovator route had similar requirements to the Start-up visa but also required applicants to have at least £50,000 to invest in their business. Innovators were not allowed to work for any business except their own as they scaled it up to profitability, though unlike the Start-up visa, time spent in the UK as an Innovator counted towards qualifying for indefinite leave to remain after three years.
The new Innovator Founder route improves on the best aspects of the previous two categories. While business plans still need to be endorsed by an appropriate endorsing body, there is no requirement to invest £50,000 in the business and you can undertake additional skilled work for other employers. It does not entail major fees to join programmes or a slice of the enterprise going to an endorsing body. The new endorsing bodies will charge £1,000 (plus vat) for the endorsement application. If successfully endorsed, this route then involves just two endorsing body check-ins on the business over the three-year visa (£500 each), plus another £1,000 payment to assess whether the business has done well enough after three years to be a route to settlement for founders, or whether you can apply for another three years and go through the process again.
What does the new Innovator Founder visa allow?
Successful Innovators will be granted leave to stay and work on their venture, as well as doing other work for three years at a time and can bring dependent family members to the UK. Innovator Founders can take up secondary employment provided that the employed role is at least RQF Level 3 (equivalent to A-levels).
After three years, Innovators can apply to extend their stay for a further three years or to settle permanently in the UK, which will require paying for a further endorsement.
What are the Innovator Founder eligibility requirements?
To apply for an Innovator Founder visa, you will be at least 18-years-old and have a business or business idea that has been first endorsed by one of the approved bodies (see below) as being innovative, viable and scalable. You will need to prove to the endorsing body that you have enough funding and where it’s from.
As well as the initial letter of endorsement, you should be able to show you can support yourself with evidence of at least £1,270 in your bank account for 28 consecutive days (plus additional funds if you are accompanied by family members).
There is an English language requirement to level B2 that you can show by: being a citizen of a majority English speaking country; passing a Secure English Language Test (SELT) from an approved provider; having a GCSE, A level, Scottish National Qualification level 4 or 5, Scottish Higher or Advanced Higher in English gained through study at a UK school you started under the age of 18; a degree-level academic qualification that was taught in English (if abroad, you’ll need confirmation from Ecctis.)
What does Innovator Founder endorsement involve?
The initial application, extension and settlement all require endorsement from one of the four new endorsing bodies listed below, unless you are applying to switch from the Start-up or Tier 1 (Graduate Entrepreneur) categories (in which case your previous endorsing body may be able to do this too if they are a “legacy endorsing body”).
For the required letter of endorsement, Innovator Founder applications will be assessed for innovation, viability and scalability. According to the Home Office guidance for immigration staff:
- the applicant must have a genuine, original business plan that meets new or existing market needs and / or creates a competitive advantage
- the applicant’s business plan must be realistic and achievable based on the applicant’s available resources
- the applicant must have, or be actively developing, the necessary skills, knowledge, experience and market awareness to successfully run the business
- there must be evidence of structured planning and of potential for job creation and growth into national and international markets
- applicants must satisfy the endorser that the business plan is theirs, or one they contributed to significantly
- applicants should show that they are the sole founder or an instrumental member of the founding team
- applicants must have a day-to-day role in the business
The guidance specifies that “the endorsing body supporting the application must state in the endorsement letter that they are satisfied the requirements have been met and provide a short description of how the applicant has done so.”
Although there is no specific £50,000 capital investment requirement such as the previous Innovator visa had, endorsing bodies must still ensure that the source of funding is legitimate and not illicit, or unsatisfactorily explained, and that the applicant is fit and proper. Home Office guidance indicates there should be a very low risk-tolerance approach to this.
After the initial endorsement letter, there will be two further contact meetings with the endorsing body to check on progress over the three-year visa. Endorsing bodies must inform the Home Office if these checks are missed or they are not satisfied with the progress.
What makes a business ‘innovative’?
According to the Home Office guidance for endorsing bodies, they are expected to consider the following principles when assessing if an application meets the innovative requirement:
- “business propositions should be able to demonstrate a clear and compelling unique selling proposition (USP) i.e. what is it about the product or service that differentiates it from its competitors?
- The concept for innovation within the business should demonstrate a business proposition that is not easily replicable by others / can demonstrate reasonable barriers of market entry to otherwise replicating their proposed innovation
- The innovation element should be core to the success of the proposed business proposition and be primarily delivered within the business”
The Home Office guidance for endorsers gives examples of business plans that should not be considered as meeting the innovative standard, such as “where the innovation element and associated research, design or implementation is largely outsourced to a third-party provider.” Another example is a “generic businesses with an only incidental innovation proposition, for example a taxi or cleaning company ‘with an app’.”
You can find more examples and details of what endorsing bodies will be looking for in the guidance here.
Can a qualifying business have more than founder?
The Innovator Founder visa reflects the fact that businesses often have cofounders with more than one founding team members being able to apply for this visa for a single business plan if it qualifies for endorsement as innovative, viable and scaleable. Every applicant will have to demonstrate they meet the requirements outlined above, ie: that they are founding members of the business who have generated the ideas in the business plan (or significantly contributed to them) and will be involved in their day-to-day role fulfilling the business plan.
Applicants must give a clear explanation of how their particular skills and experience relate to their role specifically enabling the delivery of the innovation proposition within the business. Members of the founding team should not only show that they have the necessary skillset to be capable of successfully developing and delivering the product to market, the business plan’s financial projections should also show that it will support all the team members as part of the skilled job creation element of being viable and scaleable.
More details and examples can be found in the Government’s guidance to endorsing bodies here.
Who are the endorsing bodies for the Innovator Founder Scheme?
There are three private and one UK Government endorser for the Innovator Founder visa. (These will also be endorsing the new Scale-up visa Sponsor Licence for UK businesses that cannot show the three-year’s required growth financially or in employees but can demonstrate for an endorser the clear potential/ability to do this in the next four years.)
The four endorsing bodies are:
The Global Entrepreneurs Programme (GEP)
The GEP is run by the UK Government’s Department for Business and Trade. It has been set up to help internationally mobile tech entrepreneurs to scale innovative companies from a UK global HQ. The programme only provides visa endorsements for founders that have been invited to participate on their programme. (For eligibility details email: firstname.lastname@example.org)
How much will the Innovator Founder visa cost?
The Home Office application fee will be £1,036 for an applicant and the same for their partner or dependent children if applying from outside the UK. The fee is £1,292 each if applying to switch onto this route from within the UK.
Endorsement for this new route will be much less onerous than its predecessors, with none of the endorsing bodies requiring a cut of the business or tens of thousands of pounds. The total endorsement fee allowed by the Home Office is £2,000 spread out over the three years of the visa: an initial Innovator Founder assessment fee of £1000 for the letter of endorsement, then two further £500 fees for the two regular monitoring assessments by the endorsing body.
Will the Investor Founder visa always lead to settlement?
If applying for indefinite leave to remain towards the end of three successful years on this visa, a final endorsement fee of £1,000 and an application fee of £2,404 is payable. Please note that government fees can be uprated from time to time and to be endorsed for a settlement visa, the business and all applicants for settlement must meet certain criteria.
Settlement is not guaranteed. Like the immigration routes that preceded the Innovator Founder, there are significant achievements that must be shown.
You have to have held leave on this immigration route for three years, in which you have demonstrated a key role in the business which you are registered in Companies House, with yourself named. The business must demonstrate progress against your endorsed business plan and appear to be sustainable for another year at least.
Applications will have to be endorsed for at least two separate success criteria from the following:
- investing at least £50,000 in the business
- doubling the customer base over three years, with more customers than the mean for other comparable UK businesses
- significant research and development and applying for intellectual property protection in the UK
- minimum annual gross revenue for the business of £1 million in the last full year
- minimum annual gross revenue of £500,000 in the last full year, with at least £100,000 from exporting overseas
- creating the equivalent of at least 10 full-time jobs for settled staff for over a year or five full-time with a mean salary over £25,000
If other founding team members are applying for, or have been granted, this type of endorsement, you cannot share the same means of meeting these criteria. For example, if you are both relying on the requirement to have created 10 jobs, 20 jobs must have been created in total.
What happens if Innovator Founders don’t qualify for settlement?
If founders are unlikely to meet enough of the above success criteria towards the end of three years, you can always renew your Innovator Founder visa for another three years and keep renewing it until a point at which you may meet the requirements for settlement.
You can renew the Innovator Founder visa as many times as you want if you meet the less onerous criteria of continuing to work in a day to day capacity in your “active, trading and sustainable” business, meeting “significant achievements” against the business plan.
Another option is to switch your visa. So another route to settling in the UK is to apply for a sponsor licence for your business and to switch founders to sponsored skilled workers for the business. All the time on both visas will count towards the qualifying period towards settlement as a Skilled Worker so your clock is not reset when you switch. After five years in total on these routes in the UK, you can qualify to settle as a Skilled Worker if you are still required for the role and meet the other settlement requirements at the time.
Should people on a Start-up, Innovator or Tier 1 (Graduate Entrepreneur) visa switch to an Innovator Founder visa?
The majority of endorsing bodies that were approved by the Home Office to endorse and assess Start-up and Innovator visas will not be taking any further new applications but will continue the endorsement process for those on these routes, including endorsing extensions and settlement. These legacy endorsing bodies will also be able to endorse those already using them for switching to the new Innovator Founder route.
The four new endorsers of the new Innovator Founder visa will be able to endorse people switching onto this immigration route from other visas, providing they meet requirements.
Those on an Innovator, Start-up or the legacy Tier 1 (Graduate Entrepreneur) visa that preceded it, can use the same businesses they used for those visas to switch, if it qualifies for the Innovator Founder endorsement.
The old Innovator visa is a route to settlement, so there should be no need to switch if you meet the settlement requirements by the end of the three years. You will be able to be endorsed for settlement by your current endorsing body. If you don’t meet the settlement requirements but your business is active, trading and sustainable and you have made significant progress against your business plan, you may be able to switch to the Innovator Founder route.
People on a Start-up or Tier 1 (Graduate Entrepreneur) route would have generally switched to the Innovator route and its route to settlement up to now. So now switching to the Innovator Founder three-year route to settlement for you and your family, with the ability to work for other employers would likely be a sensible option.
We would advise people to look into the business requirements you need in place for switching well before your visa is due to expire. Feel free to call us for a consultation.
For more detailed immigration advice on these and other UK immigration developments, please contact us on +44(0)207 033 9527 or email@example.com.
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