Personal Immigration

Crowd-funding and Tier 1 (Entrepreneur) Applications

The UK government has been doing all it can to encourage London to become a centre for innovation and entrepreneurship and a hub for technology experts. Significant resources have been allocated to developing Tech City (Silicon Roundabout) and there are a range of tax incentives for those in the technology sector.

Immigration, too, plays an important part in the government's plans. They are keen to develop not just a hub of technological expertise, but also attract foreign investment into the UK. One way this is achieved is through the Tier 1 (Entrepreneur) Migrant visa.

For entrepreneur applicants there are two key aspects of the application; the Immigration Rules require that an applicant must genuinely intend and be able to invest in a new or established UK registered business. This involves both a cash investment, and an active role in the running of a UK business.

For those interested in the technology industry, it is the first requirement of the cash investment that can sometimes be the one that presents the most difficulty.

The level of investment needed for most applicants will be £200,000. This is undoubtedly a lot of money, especially when you consider that the average age of Entrepreneurs in the UK is decreasing rapidly. Tech City specifically targets 18-25 year olds with courses to assist young people in starting their own business. For someone in this age bracket, then, £200,000 can be an insurmountable hurdle to their application to come to the UK.

But with the changing dynamics of business, particularly in the technology sector, individuals are seeking new and innovative ways to fund their business projects.

Crowd-funding has been made popular through Kickstarter and other similar platforms which allow those with a business idea to seek funding from individuals, who think their business idea is worthwhile, rather than going through banks or venture capitalists. It has been used to fund computer games, films and technology. While a bank or venture capitalist might offer a large sum of money, for example £200,000 for a share in equity in the business, a crowd-funded project may receive 200 pledges of just £1,000 to reach the same level of investment, and this investment may be made in exchange for other benefits, rather than equity in the company.

While this, in theory, could be an option for a budding entrepreneur, the difficultly with applying to come to the UK as an Entrepreneur on this basis, would be how such an application would be viewed by the Home Office.

The Home Office must be satisfied that the money is genuinely available to the Applicant. The funds must be either already invested in the UK business with accounts showing a cash investment in the name of the applicant, or they can be held in the applicant's own bank account (in the UK or abroad) or in the accounts of third parties (in the UK or abroad).

This allows an applicant some degree of flexibility over their funding at the time of application. However, if the funds have not been invested in the UK business in the applicant's name or have not been held in the applicant's own account for a substantial amount of time at the date of application, it will be necessary to provide a large amount of documentary evidence to show that the funds are genuinely available to the applicant.

This presents a number of difficulties. On a practical level, it may be challenging to find an approach that will simultaneously satisfy the Home Office and funders. Also, if an applicant did have, as an example, third party support from 200 individuals, the amount of evidence required to demonstrate this would make the application process so laborious, that when considered in the context of the fast-paced world of technology start-ups, it would mean that the original business idea may cease to be viable before the application could even be made.
This is an extreme example though, and in the right circumstances, it is at least in theory possible to have a crowd-funded entrepreneur application. This is on the proviso that the applicant meets all the other requirements of the Immigration Rules, and in particular that they can demonstrate that they have genuine and realistic plans for a viable business and the necessary skills and experience to take an active role in running that UK business.

For advice or assistance with preparing an application to enter, or remain in, the UK as a Tier 1 Entrepreneur, contact our immigration barristers in Covent Garden London on 0203 617 9173 or by email to info@richmondchambers.com.

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