CANDA LOSING LUCRATIVE IMMIGRANT INVESTORS
February 9, 2015
The federal government has recently launched its new Immigrant Investor Venture Capital (IIVC) Pilot Program which aims to raise $120-million from 60 eligible ultra-high net worth investors. The funds are intended to be invested in Canada-based startups with high growth potential. Ironically, the new program unofficially confirms Canada’s definitive retreat from the global residence-through-investment industry, which it created in 1986 with the Quebec government.
Under the new program, approved applicants with a personal net worth of $10 million must invest at least $2 million into a government-approved VC fund for a minimum period of 15 years, with no guarantee for return of capital. Applicants must demonstrate their net worth threshold was obtained from lawful, for profit-making management, business or investment activities providing capital or equity gains. Inheritances or assets from principle residential real estate are excluded. Additional requirements include mandatory language testing and proof of completed Canadian post-secondary education of at least one year, or proof of a foreign educational equivalent. Education assessment can be exempted for applicants with a personal net worth of $50 million.
A maximum of 500 applications will be accepted during the 14-day solicitation period which ends in mid-February. The government then plans to invite up to 60 candidates to apply for Canadian permanent residence. Applicants will be charged a modest processing fee of $1,050. Selected applicants must also submit a comprehensive due diligence report prepared by a designated service provider to ensure the source of wealth is generated from lawful business or investment activities. The fund will be managed by BDC Capital, the investment arm of the Federal Business Development Bank of Canada and by government selected fund managers.
Despite this launch, the Harper government’s new program is a charade. It has a dubious history in the immigrant investor industry. In February 2014, after a two-year pause on new applications, it terminated the previous Immigrant Investor Program geared to entry-level millionaires, cancelling more than 15,000 unprocessed applications mostly from Chinese nationals. Many had been waiting up to six years to invest $800,000 per applicant. To meet new program requirements, the delays to complete mandatory language testing, education equivalence assessment as well as to secure the comprehensive financial documentation will take far longer than the short solicitation window.Back