8 in 10 Canada Startup Visa Approvals Come From One Designated Organisation Type

Slava Apel
Toronto

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After months of work on Freedom of Information requests for data from the government, we have finally obtained the first comprehensive batch of processing data for Canada’s Start-Up Visa (SUV) program. We now have a veritable treasure trove of Canada SUV data. So as not to overwhelm the readers by releasing all the data at once, I’ll be sharing and analyzing bit by bit here in IMI over the coming weeks and months.

In today’s article, we’ll look at the distribution of applications across the three types of designated business organisations: Angel Investment Networks, Business Incubators, and Venture Capital Funds.

Some background

The path to Permanent Residency (PR) through the launch of an innovative business in Canada first opened as a pilot project in 2013 with the aim of bringing top talent to Canada. The government left the work of identifying which applicants would be the most qualified potential business owners to industry experts (Designated Organisations) working in three ecosystems: Business incubators, angel investment groups, and venture capital funds.

These experts would deliver to the government’s immigration processing unit an attestation document of the due diligence conducted in the form of a “Letter of Commitment” and a similar document to the inbound individual in the form of a “Letter of Support.” With this Letter of Support, the individual (or a team consisting of up to five individuals), would thereby become eligible to apply for permanent residency in Canada.

While working with immigration firms worldwide, I have heard rumors based on anecdotal data as to which of the three channels offers the applicant the greatest chance of approval for the SUV path to PR in Canada. In Vietnam, we have heard that the Angel Investment stream had the highest approval rates, while, in China, the incubator route was said to be favored. In Dubai, meanwhile, we were told the Venture Capital path is the best.

With this article, we will share data to put the record straight once and for all.

While the minimum requirements are the same for all three paths – showing a basic level of English or French (CLB5), a clean medical and criminal history, and bringing to Canada an innovative startup where the landing founders have a controlling stake – there are major differences between the three designated organisations:

Notably, business incubators need not invest in the incoming businesses to issue a Letter of Support, while VCs and Angels do. This investment differentiation alone creates a divide as to which businesses can apply where, as an early-stage startup should not be qualifying for a minimal investment of $200,000 from a Venture Capitalist.

Based on the raw FOIA data from the government of Canada, we were able to parse the approval rates year by year. Let’s start by examining the percentage of processed applicants for each designated organsation type over the past decade:

The data illustrates that Business Incubators have consistently held the highest share among the three designations, peaking at 86% in 2021, dipping in 2022, and rebounding in 2023. Angel Investment Networks show a rising trend, averaging a 21% share, while Venture Capital Funds have seen a decline, averaging around 4%. This decline is primarily attributable to the higher vetting standards and requirements for Venture Capital Funds compared to Incubators and Angel group funding.

Next, let's take a more granular look and consider the approval rates for each Designated Organisation separately, starting with the Angel Investment Networks:

In 2020 and 2021, Angel Investment Networks boasted a 100% approval rate, which gradually decreased to 85% and 76% in 2022 and 2023, respectively. This decline correlates with an increase in both applications and approvals for Angel funds, indicating heightened scrutiny from the federal government and higher expectations for project quality, resulting in an overall average approval rate of approximately 79%. 

From the perspective of my involvement in the vetting of applicants for one of the nine designated Angel groups for admission and funding, only 1 in 300 applicants have gone through to the level of receiving the Letter of Support and funding – proving that only the best applicants get to the level of approval. So, the vetting happens twice: Once at a Designated Organisation level and once for the final approval by Immigration, Refugees, and Citizenship Canada (IRCC).

Now, let's explore the approval rates for Business Incubators:

Business Incubators, the predominant processor of Letters of Support, have consistently maintained a high average approval rate of 81% throughout the decade. Despite a slight decline in 2022, the average pass rate remains robust, reaffirming the federal government's confidence in early-stage ventures and highlighting the significance of Business Incubators in the SUV program.

Finally, let's analyze the approval rates for Venture Capital Funds:

The data reveal that SUV projects funded through VC investment have consistently exhibited lower approval rates and smaller applicant pools. This is attributable to the higher threshold requirements for VC funds, including rigorous due diligence, valuations, and profitability models, which are often unattainable for early-stage startups.

Having reviewed the SUV pass rate data over the past decade, I hope this information aids in making informed decisions for your own project. Keep in mind that just because one designated channel has better approval rates than another, that isn't the entire story. Rejections happen for many reasons (which I'll discuss in my next article), and not necessarily because of the candidate's chosen Designated Organisation.