Canada comes in top 5 among G20 in Entrepreneurship Ranking

Lack of regulatory barriers, availability of venture capital funding and a culture that embraces entrepreneurship placed Canada in the top quartile in the EY G20 Entrepreneurship Barometer 2013 (U.S. Department of State)

A new report by Ernst & Young places Canada’s entrepreneurial ecosystem in the top five among the G20 countries.

The G20 Entrepreneurship Barometer 2013 ranks a country’s entrepreneurial environment according to its score in five sub-categories: access to funding, entrepreneurship culture, tax and regulation, education and training, and coordinated support between government, academic institutions and the private sector.

The formulation of the ratings relies on business environment indicators, like number of new businesses started per year, data collected in a survey of more than 1,500 entrepreneurs across the G20 countries, the insights gained in interviews with entrepreneurs, academics and experts, and a qualitative analysis of government initiatives to encourage and assist entrepreneurship.

Canada came fourth in the access to funding category, thanks largely to per capita venture capital funding that is second only to the U.S. It ranked third in entrepreneurship culture, behind the U.S. and South Korea, as interviewees had a generally positive opinion of the country’s attitude toward entrepreneurship and its acceptance of failure (more accepting than other countries).

In the tax and regulation category, which scores countries by the ease of complying with regulations when starting and running a business, and the number of special tax incentives for entrepreneurs, the country came second, after Saudi Arabia, for its simple business registration process, lack of labour laws allowing for a flexible labour market, and an abundance of tax subsidies for small and medium sized enterprises.

While the G20 Entrepreneurship Barometer is one of many possible ways of determining the quality of an entrepreneurial ecosystem, and has not been shown to predict for entrepreneurial success, Canada’s strong showing will at the very least help boost its image globally as a centre of innovation and a country that’s open for business.

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Diane Francis Says Canada Needs a Silicon Valley

Diane Francis says Canada needs to do more create its own version of Silicon Valley in order to obtain the economic benefits that tech entrepreneurs can provide

A recent article in the blog of Diane Francis, an editor-at-large for the National Post, argues that Canada needs to create its own version of the American Silicon Valley, and commends Citizenship and Immigration Canada (CIC) for taking a step in this direction with the creation of the Start-Up Visa.

Francis says that skilled entrepreneurs can provide the type of economic boost that a country cannot ignore:

Canada has been America’s farm team for centuries, providing brawn, brainpower and talent to feed its mighty industries. But the contest for talent has never been greater, notably for those technology entrepreneurs who are capable of invention, innovation and single-handedly replicating the GNP of small states.

She applauds Citizenship and Immigration Minister Jason Kenney’s May visit to the U.S. to recruit technology workers facing H-1B problems, and argues that the Canadian government needs to do more campaigns like this.

With the CEOs of American technology giants lobbying for greater government action to attract foreign tech talent to the U.S., Congress won’t stand still Francis says, and will try to match Canada’s Start-Up Visa program.

The federal government should be looking to add to its efforts now, to match the inevitable response by the U.S. government.

Not only should Canada be recruiting foreign tech workers living in the U.S., it should also be encouraging immigration by Americans themselves, who could find Canada’s tech clusters, a midst world class urban centres enticing, she argues.

Francis notes that the Government of Canada has a $500 million Venture Capital Action Plan in the works, which will subsidize Canadian venture capital firms that invest in Canadian start-ups.

Government subsidies like these, Francis says, are alone not enough to create a “technology venture capitalist marketplace” however, and the federal government should also be scaling up the Start-Up Visa program and increasing tax breaks for entrepreneurs.

A focus on economic impact of immigration

Francis’ call to action on attracting foreign entrepreneurs is one of several in a series by influential Canadian individuals and prominent Canadian institutions urging the country to make a more concerted effort to extract economic benefits from immigration.

Other than pushing for more entrepreneur friendly immigration programs, the other area of immigration policy that pundits have repeatedly pressed the country to give more attention to has been building on Canada’s strengths as a destination for international students and increasing the foreign student population.

This has included calls to make it easier for international students already in Canada to become permanent residents.

The provincial governments have also called on the federal government to increase the role of the provinces in selecting new Canadians. They say that the Provincial Nominee Programs (PNPs) allow them to select immigrants that meet their unique economic needs.

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Canada Top Country for Immigrant Businesses – Financial Post

Canada tops the list of countries to start a business according to a new article in the Financial Post (Martin Cajzer)

An article featured in last Friday’s Financial Post makes the case for Canada being one of the best countries in the world for immigrants to start a business.

Among the factors that make Canada such a welcoming place for immigrant entrepreneurs are its business friendly environment and immigration program, says author Chris Riddell:

The World Bank labelled Canada the best place in the G-7 to start a business, and thanks to an open immigration policy, a comparatively easy one to enter. Add a strong banking system, growing job market, and high standard of living, and it’s no wonder it tops immigrant entrepreneurs’ list.

For many, the government’s Start-Up Visa launched in April is making Canada an even more appealing place.

For business people considering Canada as a destination for immigration, there are three points to consider:

  • The per capita income of new immigrants is well below the Canadian average, with the gap growing since the early 1970s despite the average level of education of recent immigrants increasing in the intervening time. The longer an immigrant is in Canada, the closer their income tends to be to the Canadian average.

  • Immigrants and first-generation Canadians make up a sizeable percentage of Canada’s millionaires, at 48 percent.

  • The average income of immigrants who are admitted into Canada through the business class immigration programs is slightly below that of immigrants admitted through the Federal Skilled Worker Program (FSWP), despite the former group having had to meet stringent capital and business experience requirements.

Taken together, it suggests that:

1) immigrants who arrive through economic class non-business immigration programs, like the FSWP, are likely not at a significant disadvantage compared to their business class counterparts in their chance of creating a successful business, that

2) immigrants are likely more entrepreneurial than the general population, and that

3) many immigrant business people fail for the few that succeed.

Matt Man, a successful immigrant businessman profiled for Riddell’s article, advises immigrants who are starting their business to try to get as much face-time as possible to improve their chance of success:

“Face to face can always make up for some of what I lost due to my accent or the way I’m communicating.”

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48% of Canadian Millionaires From Immigrant Families

A new survey on Canadian millionaires finds that 48 percent are new Canadians and 68 percent are self-made (Government of Canada)

A new survey by BMO Harris Private Banking finds that nearly half of Canadian millionaires are either immigrants or have at least one parents born outside of the country.

The findings suggest a high degree of entrepreneurialism among the Canadian immigrant population, and contrasts with the theme of a recent special contribution to the Vancouver Sun that argues immigrants cost the Canadian $20 billion annually.

The survey further found that 68 percent of immigrant and first-generation millionaires report being self-made – about equal to the 67 percent rate among all Canadian millionaires surveyed.

The province of British Columbia has the highest proportion of millionaires belonging to immigrant families, at 68 percent, while the rate in every other province is below 50 percent.

The BMO Harris Private Banking survey was conducted online by Pollara between March 28th and April 11th, 2013, using a sample of 305 Canadian adults with a net worth of over 1 million dollars.

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Immigration Minister to Visit Silicon Valley to Promote ‘Start Up Visa’

Waterloo, Ontario, sometimes called Silicon North, is one of Canada’s major tech centres. Citizenship and Immigration Canada hopes the new Start Up Visa encourages foreign technology entrepreneurs to start companies in the country

Canadian Citizenship and Immigration Minister Jason Kenney will be visiting California’s Silicon Valley on Friday for a four day trip intended to promote Canada as a place to live for the region’s entrepreneurs.

According to an article in San Jose’s Mercury News, a billboard is currently appearing near Silicon Valley advertising Canada to foreign tech workers struggling with H-1B visa restrictions:

On Tuesday, just days before Kenney was set to tour San Francisco and the South Bay to promote his new visa for startup entrepreneurs, a giant red maple leaf emerged on a billboard off Highway 101 on the route from San Francisco to the heart of Silicon Valley, part of a Canadian advertisement encouraging tech workers here temporarily to migrate north permanently.

Modeled on an idea first introduced but never passed in the U.S. Congress, Canada’s new “startup visa” grants permanent residency to entrepreneurs who can raise enough venture capital and start a Canadian business.

“H-1B problems?” asks the South San Francisco billboard, referencing America’s temporary visa for skilled foreign workers. “Pivot to Canada.”

Citizenship and Immigration Canada (CIC) hopes to capitalize on the frustration tech companies in the U.S. are feeling over immigration restrictions on foreign technology workers and encourage them to relocate to and invest in Canada.

The eventual goal is to help foster the development of a Canadian equivalent to Silicon Valley.

One challenge that CIC faces in this mission is the country’s top marginal income tax rate, which is significantly higher than that of the U.S. A Canadian entrepreneur can look forward to paying about 50 percent of their income to the government if they succeed in joining the top bracket of income earners.

Compensating for this disadvantage, the federal government is offering a perk that no other advanced economy offers foreign entrepreneurs: permanent residency status.

For foreign tech workers in the U.S. anxiously awaiting the six year limits on their H-1B visas, immigration to Canada offers a chance of stability that only permanent residency can provide.

Also working in Canada’s favor is the perception of being a safer country than the U.S., with significantly lower violent crime rates, particularly homicide rates. A better fiscal situation, with a much lower deficit to GDP ratio than the U.S., also gives foreign nationals more confidence in the country’s economic future.

Regardless of how successful CIC’s headhunting campaign in Silicon Valley ends up being, the federal government has a lot of ground to make up for, with total venture capital funding in all of Canada in 2012 coming to $1.5 billion -less than 15 percent of the $10.9 billion worth of deals that happened in Silicon Valley last year.

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Immigration Canada Announces April 1 Launch of Start-Up Visa Program

Foreign entrepreneurs who receive venture capital funding from a designated venture capital fund or angel investor group will qualify for the new Start-Up Visa Program (CICS News)

Citizenship and Immigration Canada (CIC) announced on Thursday that foreign entrepreneurs would be able to start applying for the newly created Start-Up Visa Program on April 1st of this year.

“Canada is open for business to the world’s start-up entrepreneurs,” said Citizenship and Immigration Minister Jason Kenney in announcing the launch date.

“Innovation and entrepreneurship are essential drivers of the Canadian economy. That is why we are actively recruiting foreign entrepreneurs – those who can build companies here in Canada that will create new jobs, spur economic growth and compete on a global scale – with our new start-up visa.”

To qualify for a Start-Up Visa, a potential immigrant must receive venture capital funding from a fund and angel investor group designated as a recognized venture capital investor by CIC, in partnership with Canada’s Venture Capital and Private Equity Association (CVCA) and the National Angel Capital Organization (NACO).

A full list of designated venture capital funds and angel investor groups can be seen on the CIC website.

International competition

The Canadian Start-Up Visa Program is the first permanent residency program of its kind in the world but will still have to contend with competition for global start-ups from other countries which offer temporary residency and other perks to attract foreign entrepreneurs.

Singapore for example offers the EntrePass (Entrepreneur Pass), which provides business visas to qualifying individuals seeking to start a business in the country, and a competitive business environment, with no capital gains tax, a low income tax, and no fiscal deficit.

While inviting foreign business people and entrepreneurs to Canada undoubtedly contributes to the Canadian economy, an analysis on the income trends of Canada’s economic class immigrants, conducted by CICS News in January, suggests that the full potential of the capital and talent invited to Canada might remain unrealized unless the country’s business environment becomes globally competitive in terms of expected after-tax returns on investment made in the country.

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Financial Post Profiles Canada’s Latin Immigrants

Canada’s Latin American immigrant entrepreneurs are dispelling stereotypes of Latin America’s revolutionary communist past

A story appearing in Monday’s Financial Post, one of Canada’s largest national business newspapers, examines the achievements of Canada’s Latin American immigrant entrepreneurs, which it calls Generation Ñ.

The article, by Eva Salinas, profiles Diego Casco, a native of Costa Rica, who now runs a branding agency in Toronto, Canada.

His experience is like that of many in Generation Ñ. After over a decade of building a modest-sized business, improving his English, and getting himself familiar with the Canadian business environment, he now wants to expand his company and become a major player in Canada’s business world.

Salinas notes that Generation Ñ is highly educated, with the Toronto Hispanic Chamber of Commerce (THCC) finding that 91% Toronto area Latin American professionals surveyed report having a Bachelor’s degree or higher:

“These people are educated, they come with a decent amount of money and they’re looking for not only a new life but to be recognized in terms of their quality of work and experience and education that they have,” says Jacob Moshinsky, THCC chairman and Mexican-born entrepreneur. He now runs Ñ Communications.

“There’s absolutely a misconception of what the Hispanic community is here,” he adds, listing Latino stereotypes such as all being refugees and living in low-income areas.

Unlike the previous generation of Latin American business owners, the new generation is looking to integrate into the wider Canadian economy and target beyond its own cultural group, says Salinas.

Salinas describes Cristian Contreras, who immigrated to Canada from Columbia, and graduated from the University of Toronto, as a Generation Ñer who fits this profile.

Since graduating, he has taught himself how to program, and created a political collaboration website called Next Parliament, which is intended to improve the way Canadians create, discuss and share political proposals.

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Vancouver, Canada to Host International TED Conference

The TED conference will be held in the Vancouver Convention centre’s West Building, which was opened in 2009

The annual TED (Technology, Entertainment and Design) conference, a gathering of some of the world’s brightest and most influential thinkers, will be moved to Vancouver in 2014 and 2015, it was announced on Monday.

It is believed that the move will provide a major boost to Vancouver’s reputation as a first class global city and have peripheral benefits in the way of attracting more businesses, innovators and international events to the city.

The annual TED conference started in 1990 and has emerged as one of the most highly regarded public forums for spreading ideas that benefit humanity. It often features renowned speakers, which have included Bill Clinton, Bill Gates, and Google founders Sergey Brin and Larry Page.

The topics covered in the talks can relate to any thing ranging from science, to contemporary politics, to economics, to culture, like the harm schools have on creativity and video showcases of creatures in the ocean.

Each ticket to the TED conference costs $7,500, meaning the event’s 1,400 attendees will be a collection of the comparatively very rich and influential, whose visit to Vancouver will doubtlessly raise awareness of the city among global decision makers.

Vancouver’s rising profile

Vancouver has qualities that make it particularly attractive to immigrants and international visitors to Canada, including access to the Pacific Ocean, a mild by-Canadian-standards climate, and the natural beauty of the Coast Mountains.

Its domestic and international popularity and above-Canadian-average population growth rate have persisted for decades, which suggests the trend will continue into the foreseeable future and the city will become increasingly important on the global stage.

TED’s move to Vancouver could be the iconic event that marks its transformation into a World City.

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Immigrant Income Levels Depend on Canadian Immigration Program

Data from the Statistics Canada report on the income of immigrants, released in December, shows large differences in the economic performance of immigrants depending on which immigration program they were admitted through (Moxy)

In the second part of our series on the recently released Statistics Canada report on the income of immigrants, we delve deeper into the data and look at how various economic class immigration programs compare for immigrants who arrived between 1986 and 2010. The first part can be found here.

Among the most important immigration-related issues for the federal government every year is picking the right mix of immigration programs to make up the annual quota that it sets aside for new permanent residents.

The major priorities that the federal government seeks to meet in selecting the allocation are:

  • meeting the humanitarian commitments it has set for itself to re-settle a certain portion of the world’s refugees
  • accommodating Canadians whose family members live abroad and who they would like to re-unite with through family class immigration sponsorship
  • admitting immigrants that will contribute to Canada’s economy and meet its investment and labour needs

To meet the last objective, the federal government currently allocates 60 percent of the permanent residence quota to economic class immigration programs, which consist of the Federal Skilled Worker Class (FSWC), the Canadian Experience Class (CEC), the business class programs, and the provincial nominee class programs.

Historically, the skilled worker program (FSWC) has contributed the largest portion of Canada’s economic class immigrants, but there have been calls to increase the proportion admitted through programs in the business and provincial nominee classes.

The provincial governments in particular have frequently called on the federal government to allow them to pick a greater share of Canada’s immigrants through their respective provincial nominee programs (PNPs), which has resulted in their quotas being increased from 2,500 in 1999, to over 30,000 in 2009.

Whether the FSWC should remain the mainstay of Canadian economic-class immigration or whether the PNPs, or perhaps business class programs, should continue to see their role expanded, is a question that the StatCan report can help answer.

The 30 year longitudinal study (we have only reproduced 24 years of it, as we assessed the data from 1980-1986 to be too limited to be useful) has a few surprising findings.

Income of immigrants by immigration program. Skilled worker class immigrants see the most wage growth over the 24 year period.

Early success for PNP immigrants, long-term success of the skilled worker class immigrants

Immigrants admitted through the FSWC earn significantly more than those admitted through the business classes, and after seven years in Canada, more than PNP class immigrants.

Average income in 2010 for skilled worker class immigrants. The graph shows rapid income gains in the first few years following immigration, followed by more gradual income growth

PNP-class immigrants earn nearly double what other immigrants earn in the first year of their permanent residence. This is most likely due to the fact that a person needs to already be in Canada and working to qualify for most provincial nominee programs, whereas immigrants who become permanent residents through the FSWC or business class programs arrive in Canada for the first time on the day they receive their permanent residency.

The data shows that the PNPs’ lead in income quickly closes, as FSWC immigrants see rapid income gains in their first few years in Canada.

Average income in 2010 for provincial nominee (PNP) class immigrants. PNP-class immigrants start out with much higher incomes than other economic-class immigrants

It should be taken into account however that the data on PNP-class immigrants that arrived in the early 2000s is quite limited, given the provincial nominee programs admitted fewer than 10,000 immigrants for most of the first of half of the 2000s, so the long term income growth statistics for the PNP class could change over-time.

Poor performance of business class immigrants

The business class immigrants, despite having met demanding minimum net worth requirements to qualify for immigration to Canada, have lower income levels than skilled worker and provincial nominee class immigrants, especially in the first few years after they arrive.

Over the long run, their income gradually converges with the skilled worker class, but this takes nearly 24 years and it never meets the level of their skilled worker counterparts.

One partial exception to this is immigrants from the Africa and Middle East region. Business class immigrants in this group see their income surpass skilled worker class-immigrants from the same region after 24 years.

Average income in 2010 for business class immigrants. Business class immigrants from the Africa and Middle East region see significant income growth over a 24 year period

Cause of business class under-performance

Ideally, business class immigrants, with their substantial capital and business experience, would be the biggest contributors to the Canadian economy among the country’s immigrant population.

One possible explanation for their lower than expected incomes is that they keep their investments abroad.

Canada, which has relatively high average personal income tax rates, is out-matched in investment opportunities by many regions in the world, like the rapidly developing Asian country of South Korea, which has average personal income tax rates and government expenditure levels that are one third lower than Canada.

While business-class immigrants could choose to remain invested abroad, skilled worker class immigrants likely benefit from working in Canada, since it is a high-income country that provides better wages than the vast majority of the world, and in any case they have few options other than working and earning their salary in Canada, since labour is not mobile like capital.

If investment opportunities in Canada being comparatively poor is in fact the cause of lower than expected income performance of business class immigrants, this is not a problem that the federal government can fix by changing immigration selection rules.

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Canadian Government to Provide $400 Million to Bolster Domestic Venture Capital Industry

The headquarters of Shopify, one of Canada’s rising tech stars, in the ByWard Market district of Ottawa. The federal government hopes to see more high-growth technology companies like Shopify being started in Canada (GOOGLE MAPS)

The Harper government announced on Monday that it will inject $400 million in Canada’s venture capital industry as part of the Venture Capital Action Plan.

The goal of the plan is to encourage the creation of large venture capital funds that specialize in investing in early-stage, high-growth startup companies in Canada.

“Our Government understands that Canada’s long-term economic competitiveness in the emerging knowledge economy needs to be driven by globally competitive, high-growth businesses that innovate and create high-quality jobs,” said Prime Minister Stephen Harper in announcing the initiative.

$250 million of the $400 million of federal funding will be used to create a “fund of funds” for Canada’s venture capital industry, which will invest in Canada-focused venture capital funds.

$100 million will be invested into a private-sector counter-part to the government-run ‘fund of funds’, which will have a similar role as the government-administered fund, but with private and provincial co-funders.

The remaining $50 million will be invested into “three to five” existing high-performance Canadian venture capital funds.

The federal government has made several efforts over the past year to support Canada’s venture capital and startup industry, including providing publicity for the volunteer-led and funded Startup Canada project, and beginning consultations on creating a new ‘startup visa’ to provide a route for entrepreneurs with venture capital funding to immigrate to Canada.

With top marginal personal income tax rates that are among the highest in the world though, the government could face an uphill battle in fostering an entrepreneurial culture in Canada according to some analysts.

A study released by Canadian economist Ergete Ferede last year shows a negative correlation between the extent of redistribution and progressivity in the personal income tax and the rate of self-employment.

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