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New immigration rules will stop overseas graduates starting the businesses we need

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Authour-Robert Phillips

A post-Brexit economy will be desperate for international students to launch startups, but visa changes could scupper plans

With Brexit and a global recession looming, the UK needs the talents of enterprising overseas students more than ever. But the outlook is gloomy: there’s been a sharp decline in entrepreneurship among immigrants since the EU referendum. While that’s perhaps unsurprising given the anti-immigration rhetoric that Brexit has spawned, it’s bad news for our economy. Recent data shows that immigrants are more likely to start a business than people born in the UK (13% compared to 8%), and while 14% of UK residents are foreign-born, 49% of fast growing businesses had at least one foreign-born founder.

Despite this, the government has recently changed the rules on which international students are able to stay in the UK after graduation to start a business. While there are some positives, there is a danger that many of the successful entrepreneurs who were endorsed under the previous scheme – such as photographer booking website Perfocal, glasses retailer Specscartand sports travel agency Homefans – would now be excluded.

The new startup visa scheme replaced the tier 1 graduate entrepreneur visa in April. It’s been a positive step in that it lifted many of the previous restrictions – early funding is no longer required, additional organisations which assess ideas such as accelerators and incubators can now endorse visas, the cap on the number of visas has been lifted, and non-graduates can also apply.

But while these changes widen the pool of potential entrepreneurs, there’s another more worrying move that limits it. The new criteria insist that applicants’ ideas must be “innovative, viable and scalable”. The government is most likely hoping for valuable high-growth, hi-tech businesses from the scheme. Yet many graduates who obtained the tier 1 visa used ideas from their background and culture rather than their university subject, to build businesses and apps in areas such as street food and language tuition.

This is perhaps not surprising, as starting a business straight after university in a foreign country is clearly a daunting prospect. But just because their ideas were low-innovation doesn’t mean they were without merit: they employed others, bought goods and services from their supply chain, paid tax and, most importantly, learned a lot from their experiences. After all, many entrepreneurs, including Richard Branson and Theo Paphitis, used their first business as a learning experience before setting up a high-growth business of the type the government craves.

The new criteria also disadvantage social enterprises since these tend to be locally based, making scalability more difficult. This is a particular problem as immigrants are key creators of social enterprises which are often targeted at groups of people of whom they have a direct knowledge.

Luckily, there is a solution. For a graduate to secure a startup visa, their business idea has to be endorsed either by a university or by an accelerator or incubator through a Dragon’s Den-style pitching competition. These organisations need to be brave, and to use their autonomy to put forward businesses which provide economic or social benefit to the UK, regardless of whether they are “scalable” and “innovative”.

The new startup visa gives a unique opportunity for the UK to gather a critical mass of intelligent and enthusiastic graduate entrepreneurs from around the world and shield the economy from potential Brexit damage. But this will only be realised if universities bend the rules as far as they will go.

  • Robert Phillips is a senior lecturer in entrepreneurship at the University of Manchester’s business school
  • Source-https://www.theguardian.com/education/2019/sep/04/new-immigration-rules-will-stop-overseas-graduates-starting-the-businesses-we-need

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