The following article appeared in the April edition of The Canadian Immigrant.
On Jan. 28, 2015, Citizenship and Immigration Canada (CIC) launched the replacement to the federal investor immigration program, called the immigrant investor venture capital pilot program. CIC was apparently so confident about demand for the new program that it announced that it would only accept applications to the new program for two weeks, or until a maximum of 500 applications were received, whichever came first. It soon became apparent that no one was applying to the new program, and on Feb. 13, CIC quietly announced that it was extending its two-week deadline until April 15.
The question thus has to be asked … has CIC created an immigrant investor program that no one is interested in?
Old immigrant investor program
Under the old federal investor immigration program, investor immigrants had to make a five-year $800,000 interest-free loan to the Government of Canada, have a net worth of CDN $1.6 million, and have two years of qualifying business experience. The program was first-come-first-served, and applicants were not required to possess any English or French language skills.
In 2014, the Government of Canada ended the investor immigration program and terminated all existing applications that were in processing. This resulted in roughly 65,000 individuals having their Canadian permanent residency applications cancelled.
Pilot program requirements
Under the new immigrant investor venture capital pilot program, immigrant investors will be required to make a $2-million investment for 15 years into what CIC is calling a “fund of funds” operated by the Business Development Bank of Canada. Applicants will have no say over how the “fund of funds” operates, and will have to be prepared for the possibility that they will lose the entirety of their investment.
The new program also requires that applicants have a net worth of $10 million derived from lawful, profit-making activities. Applicants will need to have their net worth verified by a designated due diligence service provider, typically a large accounting firm. Applicants will presumably be responsible for paying these firms to verify the legality of their net worth. Ineligible sources of funds include family inheritances and income derived from employment at state-owned enterprises.
The program also features education and language requirements. Prospective applicants must take an English or French language test from a designated testing agency, and achieve a language result similar to those in other economic immigration programs. As well, investors must have obtained a Canadian post-secondary educational credential or obtained a foreign-obtained credential that is equivalent to Canadian post-secondary education. Applicants who do not have a post-secondary credential must instead be able to demonstrate a $50 million net worth.
As noted above, CIC is waiting for 500 people to apply to the pilot program. However, it will not operate on a first-come first-serve basis. Instead, CIC will then randomly select 60 applicants through a lottery for processing. The remaining applicants will have their applications returned.
A tough thing to market
It is not surprising that so few people are applying to the immigrant investor venture capital pilot program.
The major disincentive in applying is that most individuals who meet the program’s language and educational requirements will qualify for other Canadian immigration programs that do not require parting with $2 million for 15 years, or, if the “fund of funds” loses money, forever.
Prospective applicants have also expressed skepticism at the notion that they would prepare and submit immigration applications, disclose sensitive financial information about themselves to a foreign government (and which may in the future share this information with other governments under information sharing agreements), when they cannot even be sure that CIC will process their application once submitted. Because CIC has announced that it will only process 60 out of 500 applicants, there is only a 12 per cent likelihood that the applicant’s time and effort will result in success.
Finally, an unfortunate legacy of the termination of the old investor program is that many prospective investors are simply wary of trusting the Canadian government. It is difficult to tell a person whose permanent residence application was terminated that they should now trust the Government of Canada with $2 million.
The new deadline to apply to the immigrant investor venture capital pilot program is April 15. I think that the odds that CIC will extend the application deadline again are higher than the odds that it will process any applicant’s application.
[UPDATE] Jan 2023]Memo to the Minister IIPR