Canada Start-up Visa misused as PR route, not job creation: What happened?

Ottawa says an internal review found the Start-up Visa was increasingly being used to secure permanent residence rather than to build businesses

Canada on December 19 announced it would pause its Start-up Visa programme, saying it would stop accepting new applications from December 31.

 

Immigration, Refugees and Citizenship Canada (IRCC) said the decision followed an internal review of how the programme was functioning and whether it was attracting the kind of entrepreneurs it was originally meant to bring to Canada.

 

“We are reviewing the programmes and exploring options for ensuring that this program selects the best entrepreneurs to drive innovation, competitiveness and job-creation in Canada,” IRCC told Business Standard in November, weeks before the pause was formally announced.

 

Recent reporting suggests that concern had been building for some time inside the immigration department.

 

Why Canada paused the start-up visa programme

 

Launched in 2013, the Start-up Visa programme was created to encourage founders of innovative, high-growth companies to build their businesses in Canada rather than in Silicon Valley.

 

Applicants were required to secure backing from a designated Canadian venture capital firm, angel investor or start-up incubator. Successful candidates could obtain a work permit to begin operating their business while progressing towards permanent residence.

 

Over time, immigration officials concluded that the programme was increasingly being used as a route to permanent residence rather than as a vehicle for building businesses.

 

“The Start-up Visa Program stopped working as intended,” Isabelle Dubois, a spokesperson for Canada’s immigration department, told Bloomberg.

 

She said some designated investors and incubators had ended up “stretching the program’s goals and rules by supporting lower-quality or even non-genuine startup proposals”.

 

How the programme was misused

 

Bloomberg News reported several cases that immigration officials reviewed before the programme was scrapped.

 

In one case, a woman from Vietnam applied for a start-up visa, saying she planned to develop wearable sensors for weightlifters in Canada. An immigration officer later found that the technology was already being developed by a professor at a Canadian university with help from a local incubator. The officer could not determine what role the applicant had played in getting the company started.

 

In another application, a founder said she intended to launch a robo-adviser for Canadian financial products aimed at Chinese investors. An internal review found that most of the work was being carried out by an employee of the same incubator supporting her application, while the supposed founder received what officials described as “cursory” updates.

 

A third applicant proposed an Uber-style app for daycare providers in Southeast Asia. An immigration officer questioned why the founder needed to move to Canada to build the company at all and concluded that her real motivation was citizenship. The officer also raised concerns over a C$300,000 ($217,000) fee paid to the incubator backing the application.

 

Officials raise concerns over middlemen

 

Court filings, government reports and internal documents reviewed by Bloomberg show that immigration officials became increasingly worried about a surge of questionable applications, often linked to intermediaries offering visa support for a fee.

 

“You tell them you want to immigrate to Canada, pay them and they come up with a business idea,” one immigration official wrote to a colleague in a 2020 email obtained through an access to information request by Vancouver-based immigration lawyer Richard Kurland.

 

“The whole process starts with people just wanting to get their families to Canada, rather than people wanting to actually start a business,” another official wrote in an email shared with Kurland.

 

Kurland said many applications were driven by the promise of permanent residence rather than entrepreneurship.

 

“The goal is permanent residence, the goal is not to set up a business,” he said. “They want permanent residence — that’s what the payment is for.”

 

Rising applications and growing backlogs

 

Applications to the Start-up Visa programme surged after 2020, as the Covid-19 pandemic coincided with a broader rise in immigration to Canada.

 

Key pressure points included:

 

• Applications to the programme more than tripled in 2020 compared with the previous year

• By the time the programme closed to new applicants, the backlog had crossed 44,000 people

• Processing times stretched to more than 10 years in some cases

 

A 2023 government review flagged instances of potential abuse, including sponsors charging applicants for unauthorised services, submitting fraudulent applications, and lawyers or consultants selling ready-made business plans.

 

What comes next

 

The pause forms part of a wider reset of Canada’s economic immigration policy under Prime Minister Mark Carney, who took office after a post-pandemic surge in immigration strained housing, public services and political support for newcomer programmes.

 

The government has said a new immigrant entrepreneur initiative will replace the Start-up Visa programme. Dubois said that while venture capital firms and incubators could still play a role, there would be fewer of them and they would operate “under clear rules governing how the program can be utilized”.

 

Alongside this, the Carney government plans a separate initiative to attract employees from major US tech firms, as it seeks to draw talent amid tighter US immigration rules, including a $100,000 fee imposed by the Trump administration on the H-1B work visa.