Immigrants Are More Likely To Become Entrepreneurs, Here Is Why

Immigrants Are More Likely To Become Entrepreneurs, Here Is Why …
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Canada immigration news: A researcher says immigrants are more likely to become entrepreneurs than the average person because those who leave their countries to start a new life elsewhere are more willing to take risks. 

“Voluntary international migrants have a more entrepreneurial personality as a result of self-selection,” writes Peter Vandor, a senior researcher and lecturer at the Vienna University of Economics and Business.

In a paper published in the Journal of World Business, Vandor shows that the remarkably tendency of international immigrants to found companies – often at a much greater rate so than the native-born residents of those countries – comes down to their willingness to assume reasonable risks. 

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And Vandor says that personality trait is one of the drivers for them to decide to immigrate in the first place. Immigrants, he argues, are more likely to be risk-takers.

Many people have over the years proposed other possible explanations for the high level of entrepreneurship among immigrants. 

Social Networks, Discrimination Thought To Fuel Immigrant Entrepreneurship

“Prominent among the early answers provided by the literature was the argument that disadvantages in the labor market and discrimination push migrants to become entrepreneurs,” wrote Vandor in his paper, Are Voluntary International Migrants Self-Selected For Entrepreneurship? An Analysis Of Entrepreneurial Personality Traits.

Under that theory, immigrants were thought to set up businesses to create their own jobs because society made it harder for them to enter the labour market.

Another popular theory was that immigrants are somehow able to more easily capitalize on their social networks when they move to another country. This explanation postulated that immigrants’ social networks provided them with ready access to financial capital, knowledge and human resources, all of which are vital for a new business.

But Vandor thinks there’s something much simpler at play: people with entrepreneurial personalities are just also more likely to immigrate.

“Individuals with certain personality traits are more likely to migrate, and that these personality traits also make them more likely to start a business as migrants,” he writes. 

“This means that the frequently observed relationship between voluntary international migration and entrepreneurship is partially explained … by personality traits that are more pronounced among voluntary migrants due to self-selection.”

Study Focused On 1,385 Students

After testing that idea with a sample of 1,385 students, Vandor published his paper earlier this year and showered there is a link between voluntary immigration and the willingness to take risks, an important aspect of the entrepreneurial personality.

“Results showed a clear link between (voluntary international migration) and entrepreneurship as measured by behavioural intentions, preparatory activities, and long-term actions,” he wrote. 

Immigrant entrepreneurs hoping to gain their permanent residency in Canada can do so through the Start-Up Visa program. Under it, immigrants can get Canadian permanent residence if they qualify as immigrant entrepreneurs.

Three types of private-sector investors are considered: angel investors, venture capital funds, and business incubators.

  • A designated venture capital fund must confirm that it is investing at least $200,000 into the qualifying business. Candidates can also qualify with two or more commitments from designated venture capital funds totalling $200,000.
  • A designated angel investor group must invest at least $75,000 into the qualifying business. Candidates can also qualify with two or more investments from angel investor groups totalling $75,000.
  • A designated business incubator must accept the applicant into its business incubator program. It is up to the immigrant investor to develop a viable business plan that will meet the due diligence requirements of these government-approved designated entities. 

Business Consultants Help Immigrant Entrepreneurs Be Successful

That investing and the development of the business is usually done with the help of business consultants in Canada’s start-up ecosystem with oversight from experienced corporate business immigration lawyers who can ensure a start-up’s business concept meets all industry-required terms and conditions.

Candidates applying under the Start-Up Visa program can initially come to Canada on a work permit supported by their designated Canadian investor before their application for permanent residence is finalized.

The basic government-imposed candidate eligibility requirements for the Start-Up Visa program are:

  • a qualifying business;
  • a commitment certificate and letter of support from a designated entity;
  • sufficient unencumbered, available and transferable settlement funds to meet settlement funding, and;
  • proficiency in English or French at the minimum Canadian Language Benchmark level 5.  However, it frequently occurs that higher levels of English are needed to meet due diligence requirements imposed by designated entities.

Unlike almost every other federal and provincial-level entrepreneur program which requires a minimum of one or two years of previous experience either owning a business or in top-level management, the Start-Up Visa program does not require previous management experience.

The support of a government-designated entity is enough. That support can be either financial or in the form of accepting the candidate into a business incubator program.

Start-Up Visa a Fast Route To Work Permit, Permanent Residence

Immigrants who avail themselves of the Start-Up Visa program consistently report that it is quick, both for the initial work permit and permit residence application.

With a viable start-up business project, an immigrant entrepreneur can expect it to take about four to six months to secure a commitment certificate or letter of support from a designated entity. Once that letter of support is received, the application for permanent residence can be submitted.

It will then take approximately 18-months to finalize the application through to the issuance of a permanent residence visa.  For the candidate to qualify for permanent residence:

  • The intended business must be incorporated and carrying on business in Canada;
  • The candidate must own at least 10 per cent of the voting rights in the corporation, and;
  • No other person can hold 50 per cent or more of the voting rights in the corporation.

As many as five candidates can have their permanent residence application supported by the same business investment.  But that can come with a risk. Certain candidates may be designated as essential to the business. If any of the essential candidates withdraw their applications or are refused, all other candidates under the same business investment will see their applications terminated.

Surveys suggest Start-Up Visa candidates usually go on to succeed in Canada, in terms of growing their business, attracting further investment, networking or selling their business for a profit.

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