Startup Visas - which country will win the innovation jackpot?

One of the most fascinating areas to watch in the global war on talent is around startups and entrepreneurs. These individuals and fledgling companies are the jewels that skilled migration programs are theoretically designed to attract. Superpowers such as the USA are fighting ferociously to remain leaders in innovation, with China in particular aggressively pushing filing of new patents. Beijing is finding that investment alone won't buy success. This post examines some emergent trends in policies for encouraging entrepreneurship and incubating startup ventures.

1. Birds of a feather flock together.

Silicon Valley is the epicenter of technology startups. Partly this is due to the American cultural lean towards entrepreneurship, but it is also a self fulfilling prophecy. Everyone from micropreneurs and hotshot developers through to famous venture capitalists benefit from hanging around with like minded people. If you are planning the next Facebook there is no better place to make it happen faster. Yet American policy is preventing foreign startups from joining the party.

Yet other locations are also carving out a niche within high tech such as Berlin with emerging music technology. London is trying to build on top of the so-called Silicon Roundabout at Old Street by creating the East London tech cluster.  The message for governments here is clear - leverage the success and reputation of your existing community. Guaranteed they are keen to help!

2. To attract bees, you need pollen.

Israel have been matching VC money (both foreign and homegrown) since 1993. Ireland copied this model in 2010 and launched Innovation Ireland with over $700 million up for grabs over the next 5 years... and startups all over the world started paying attention. It is a canny way for the Irish to expand on the "Silicon Isle" success they had attracting high tech companies with tax breaks and skilled workers.

There is an interesting parallel with software development where over the last 10 years many new software companies would choose opensource technology because they avoided license costs. in 2008 Microsoft launched Bizspark to combat this. This program gives new businesses the whole suite of developer and productivity tools for nothing and has attracted over 30 000 registrations in 2 years. 

If governments want to compete then you have to provide the resources (tax incentives, funding, low operating costs, skilled labour, access to markets) to help new businesses gain traction.

3. If you don't offer it, someone else will.

Countries like Australia have trumpeted their skilled migration policies - yet everyone has their own story of the cab driver who was a qualified doctor back home. The UK ironically is talking of an Entrepreneur Visa at the same time as they are scrapping the Tier 1 visa. The Highly Skilled Migrant Permit was hugely successful in Britain because it gave skilled workers the chance to enter and then choose how they contributed to the economy (whether by permanent work, contracting or starting their own business). As long as they met the earnings levels they could extend the visa.

One of the big drivers behind the startup visa campaign in the US is the understanding within the startup community that people will go home to Singapore or Bangalore to start their new venture. This was exacerbated by the financial crisis.

Barack Obama higlighted this in his 2011 State of the Union address: "Others come here from abroad to study in our colleges and universities.  But as soon as they obtain advanced degrees, we send them back home to compete against us.  It makes no sense."

He is giving voice to the longstanding agitation within the USA for a Startup Visa and also to introduce policies for US employers to hire foreign students on graduation. Indeed Australia built an $18 billion foreign student education sector largely on the promise that students can get a job after their degree and thus residency. It is a promise unfulfilled as a result of the shortsightedness of politicians.

A number of influential and highly successful American startup veterans have joined in support of the Startup Visa campaign to raise awareness and influence policy (of course they have a website!). This demonstrates an acute understanding - from the same people who have already succeeded on the journey - that attracting foreign entrepreneurs is of key strategic importance to the USA.

The economic spoils for the victor are quite simply massive... the chance to have home grown companies like Intel, Yahoo, Sun Microsystems or Google. The Wall Street Journal reported in 2010 that immigrants were twice as likely to start a new business. The NY times quoted Vivek Wadhwa's (Harvard, Duke)  research which showed 25% of American high tech startups from 1995 to 2005 were founded or co-founded by immigrants. These companies employed more than 450 000 workers!

4. A broad definition of success and skill.

One of the main issues with the popularity of skilled migration programs is they assume governments can somehow legislate for increases in innovation, talent and business generation. They are viewed by governments as economic levers.

"bring in more renewable energy engineers"

"bring in richer, better educated migrants"

"less asylum seekers"

"we won't bring in anyone who would need to learn our language"

Governments continue to assume there is a formula for success. Or that there is a broadly defined type of person who can match it. Neither Bill Gates, Richard Branson, Henry Ford, Walt Disney, Coco Chanel nor Frank Lloyd Wright received university degrees before making their fortunes. Indeed a large part of Americas success is the belief that anyone can rise to the top and the green card lottery is a wonderful example of this in action.

Countries that chop and change their policies with each election or economic fluctuation pay a higher price than they realise for this. Australia felt the flipside of this in 2010/2011 as international students grew tired of regular changes to visa policies. Similarly the UK made wholesale changes to the Tier 1 HSMP scheme in 2006 dashing the hopes of thousands of immigrants who had shaped their lives around getting permanent residency. These changes were ruled unlawful in a judicial review and had to be recast, but the message conveyed to skilled migrants around the world has persisted.

It is the consistent and transparent approach to attracting residents of countries like Canada that rightly earn their reputation as desirable locations to emigrate to (They even have a refugee from Google). Research In Motion, creators of the Blackberry, were founded by a Turkish immigrant to Canada who dropped out of university to start the company. The progressive attitude of Canada is encapsulated by the Canadian Immigration Minister, Jason Kennedy, who recognised “...skilled trades people who don’t have university degrees or who have very limited English or French language proficiency typically cannot make it through the points grid, but we have a huge and growing need for such...people”.

Countries which look at a broad picture of migration and move beyond the sole focus on economic status and educational attainment will reap greater rewards.

Globalisation in action

There is a not so hidden agenda behind this push, particularly within developed economies, into attracting new business creators. Developed countries have an urgent need to stay at the forefront in innovation, simply because they are losing the battle in traditional industries. It is not enough to expect metrics based migration to solve the problem. A comprehensive commitment to building a honeypot is required to attract these most valuable migrants.