BC PNP potential as a funding channel for a startup

There are a number of uniquely BC channels available to a startup in British Columbia, particularly in the technology space; venues such as BCIC New Ventures BC, a competition with cash prizes of up to $300,000. (Thanks Aaron Cruikshank at the Crux Group for headsup here).

 

I always had the BC Provincial Nominee Program (or rather it’s Entrepreneur Immigrant subcategory) in the back of my mind as a potential funding channel for the right-size venture, but I wasn’t too sure if it was welcome or even doable. My first attempt at getting some answers wasn’t successful, the BC PNP office basically referred me to their website and the program manuals. The second time around, I managed to get an answer:

Startup ventures are an eligible business type. Many of our Entrepreneur Immigration applicants are proposing to start-up a new business. The percentage of applicants who meet their Performance Agreement terms and conditions (which includes operating a going-concern business) within two years of arriving to British Columbia on a BC PNP-supported work permit and are nominated for Permanent Residency by the BC PNP is approximately 80 – 90%. We do not monitor long-term success of the business, however, anecdotally, it is believed that Entrepreneur Immigration applicants have similar success rates of start-ups undertaken by local entrepreneurs.

The Entrepreneur Immigration applicants must maintain a minimum ownership stake of 33 and 1/3% and the business must be operational during the BC PNP Performance Agreement period (18-24 months) and then the Immigration, Refugees and Citizenship Canada Permanent Residency application processing period (depends on country of origin, typically between 9-18 months). [Yuri: Now here’s the important bit!] If the ownership falls below this percentage or the business ceases to be a going-concern during the Performance Agreement period, the applicant may not be approved for Permanent Residency nomination by the BC PNP. If this occurs during the Permanent Residency processing period, the BC PNP may withdraw their nomination and/or Immigration, Refugees and Citizenship Canada may not approve their Permanent Residency application. If the applicant is approved for Permanent Residency, no further monitoring is undertaken of their business.

On Page 48 of the Program Guide though, it states: “If your ownership is less than 33 1/3 per cent, you must invest a minimum of $1 million in order to not be disqualified.” and I am wondering if, for instance, I brought in a PNP investor, and he’she invested over $1m that should automatically preclude them from being disqualified even if their share dropped below the required 33.33% (technically, since they are investing over 1m, that 33.33% requirement doesn’t even apply to them? – I will update this when/if I get some clarification from the PNP office).

Update. The PNP office responded: “Dear Yuri, Thank you for your email. As you note on page 48 of the Guide , if your ownership is less than 33 1/3 per cent, you must invest a minimum of $1 million in order to not be disqualified within the registration process. And yes, this investment must be an equity purchase.” which seems to confirm that.

So, while this does leave some questions about the chances for the PR application approval for the immigrant investor, it does seem quite doable. The partners in the venture, however, must plan their funding rounds carefully, so that the future dilution doesn’t derail the investor’s chances for the PR, especially if the investment is less than $1m.

 

 

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