External funding can be a useful factor to determine a founder’s suitability under the UK Innovator Founder Visa. Many start-up visa schemes around the world, such as Canada, implement funding as a defining factor for applicants. 

In this article, I will look into the values that such as an approach may offer as well as some of the drawbacks. 

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The “Innovation” requirements & its flaws

The current Innovator Founder Visa is primarily based on applicants having concepts and/or businesses that are:

• Innovative
• Viable 
• Scalable 

On the surface, these factors are logical. However, in practice, the innovation requirement presents certain challenges. 

The UK Government’s guidance for Endorsing Bodies interprets innovation on the following basis:

• Unique selling point (USP): product and/or service differentiation
• Replicability: how easily the concept can be copied?
• Core offer: the innovation element should be the at the core of the company’s offering

Below is the precise wording of the guidance for Endorsing Bodies by the UK Government.

However, the issue that arises out of this interpretation primarily relates to “replicability”.

Unless a concept is protected by intellectual property (IP) measures such as patents, most, if not all, ideas can be copied. 

Therefore, there are two ways forward to determine innovation and the viability of a founder and their concept, and these are:

• Expanding the definition of innovation
• Adding funding as a benchmark for defining innovation

Expanding the definition of “innovation”

I have recently created a video on how the Netherlands has a more suitable interpretation of innovation compared to the UK. 

The Dutch Government defines innovation per below:

There are several aspects which make the Netherlands’ definition of innovation valuable, and some of them are:

-Taking social enterprise into account
-Consideration of organizational and process approach

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Funding as a suitability factor?

Incorporating external funding as a measure of startup viability in startup visa programs makes sense because it signals the following key indicators of a startup’s potential and legitimacy.

Proof of Market Validation

• Raising external funding, especially from investors, demonstrates that others (angels, VCs, or institutions) believe the business has a viable market, a strong business model, and the potential for growth.
• Investors conduct due diligence, serving as an independent validation of the startup’s viability.

Ability to Attract Resources

• Funding enables startups to secure talent, develop products, market services, and sustain operations, all of which are crucial for growth.
• Entrepreneurs who can raise funds show resourcefulness and their ability to “sell” the vision of their business to others.

Job Creation Potential

• Startups that raise funding are more likely to scale and create jobs, contributing to the local economy.
• Startup visa programs often aim to attract entrepreneurs who will have a significant economic impact, including hiring locally.

Commitment and Long-Term Planning

• Raising funding reflects a founder’s commitment to their startup and their capacity to plan for long-term sustainability, a critical factor in the success of any business.
• It shows that the entrepreneur is serious about staying and scaling their business in the host country.

Attraction of Strategic Partnerships

• Startups that secure funding typically become more attractive to strategic partners, enhancing their chances of growth and success.
• These partnerships further contribute to the economic ecosystem of the host country.

Risk Mitigation for the Host Country

• By requiring evidence of raised funds or the ability to raise funds, governments mitigate the risk of endorsing startups that lack sufficient financial backing to survive the competitive business environment.
• It ensures that only startups with credible financial strategies and realistic prospects are supported.

Global Competitiveness

• Countries with startup visa programs aim to attract high-potential entrepreneurs. Funding milestones act as a benchmark, helping these programs remain competitive in attracting top global talent.
• Entrepreneurs who can secure investment are more likely to bring innovative solutions, further boosting the country’s innovation index.

Support for Economic Development Goals

• Startups that attract funding are more likely to scale, innovate, and contribute to the broader economic goals of the country.
• They’re also more likely to bring in additional capital, expertise, and networks, enriching the local startup ecosystem.

Nevertheless, implementing funding as a requirement, rather than a complimentary factor has its own drawbacks. 

This is primarily due to the fact that it is often difficult for founders to raise funding at the idea stage. Moreover, many concepts require the founder and operations to be based in the UK, in order to gain the minimal viability to qualify for funding from an investment perspective. 

Way forward

With the current Innovator Founder Visa being launched less than two years ago, time is a key factor to evaluate its efficacy. 

Nevertheless, the current visa regime has flaws, particularly in relation to interpreting innovation. 

Ideally, a points-based system, where funding is an optional factor to score additional points would prove to be a more sustainable model. 

Entrepreneurship and start-ups are defined by the core factor of “unpredictability”, and therefore flexibility is essential. 

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About | My name is Sohrab Vazir. I’m a UK-based entrepreneur and business consultant. At the age of 22, and while I was an international student (graduate), I started my own Property Technology (PropTech) business under the endorsement of Newcastle University. I grew my business to over 30 UK cities, and a team of four, and also obtained my Indefinite Leave to Remain (Settlement) in the UK. I now help other migrant entrepreneurs, such as myself, with their businesses.