Alex
By: Yasmin Jalali
3 in the morning. I called my boyfriend, woke him up, and shouted: “We got in!”
After our first rejection, we thought this acceptance email was the biggest milestone to achieve, and from then on, everything would be an easy ride.
But we were young and naive. Getting accepted into Manitoba Technology Accelerator (MTA) was only one of the many challenges ahead of us.
Since that night, around one year ago, many things have changed. I have become stronger, more experienced, more confident, and more persistent. After all, I am now the co-founder of a Canadian start-up with big dreams of success: I am creating indiroot, the first C2C marketplace dedicated to authentic indigenous products accompanied by Augmented Reality (AR) technology for promoting and presenting the indigenous heritage.
One in four indigenous people in Canada lives in poverty. Nelson Mandela has once said that “while poverty persists, there is no true freedom”. Indiroot’s goal is to help the indigenous communities first and make money second. That is why our business model is designed in such a way that we do not make money until indigenous sellers do. Considering the fact that the indigenous culture is a world heritage and needs preserving, we also want to help in its promotion and presentation with AR technology.
But I am not going to talk about my start-up more than this today. I would like to tell you how I am establishing such a start-up in Canada while I am still in Iran. Well, you may have heard of Canada Start-Up Visa (SUV), a rather recent immigration program to help innovative entrepreneurs immigrate to Canada by starting a business there and creating jobs. Now, I would like to tell you how we applied for SUV, and how we are managing to keep our start-up alive in the COVID-19 era.
According to the website of Immigration, Refugees and Citizenship Canada (IRCC), Canada’s Start-up Visa Program targets immigrant entrepreneurs with the skills and potential to build businesses in Canada that are innovative, can create jobs for Canadians, and can compete on a global scale so that they can immigrate to Canada permanently. Applicants can also apply for a work permit while waiting for the issuance of their permanent residency.
The first step for entrepreneurs with an innovative business idea is to get a Letter of Support (LOS) for their idea from one of the Designated Organizations mentioned on the website of IRCC. Designated organizations are business groups that are approved to invest in or support potential start-ups through the Start-up Visa Program. They choose which business proposals to review, and each of them has its own intake process for proposals and assessment criteria. There are three types of designated organizations participating in the SUV program: Venture Capital Funds that should agree to invest a minimum of $200,000 in your start-up, Angel Investor Groups that should agree to invest a minimum of $75,000 in your start-up, and Business Incubators that should accept your venture into their program. You can find the list of designated organizations on the website of IRCC.[1]
Further, the applicants should be able to demonstrate their ability to communicate in English or French at a CLB 5 level as well as to show that they have enough money to support themselves and their families financially when in Canada. In addition, at the time of receiving the LOS, each applicant needs to hold 10% or more of the voting rights of the start-up, and the applicants and the designated organization must jointly hold more than 50% of the total voting rights. The other requirements are that at the time of receiving the permanent residency, each applicant should provide active and ongoing management of the business from within Canada, an essential part of the operations of the business happens there, and the business is incorporated provincially or federally. Up to five entrepreneurs can apply in a team under SUV.[2] Needless to say, the core activities of the start-up, from management to the technical side, should be done by the team members themselves, and only the side operations may be outsourced. This will not only strengthen your PR application, but also gives you more control over the business.
I have applied with two of my friends for the SUV, and now we are waiting for our visas to get issued so that we can move our start-up to Canada. The process of receiving a LOS from MTA took around 6 months for us since we got rejected the first time. The problem with our idea was that we didn’t validate the product-market fit. In fact, after we consulted with the MTA SUV program manager, we found out that, although the idea seemed unique and attractive, there was a chance that nobody would pay for it! This was the first lesson that we learned: Before moving forward with your start-up, talk with your potential customers. Ask about what they need and what they desire. Find out how much they are willing to pay to solve the problem you have identified. Before that, determine if that is a real problem worth solving for customers! I think anybody in the start-up community has heard how heavily Steve Blank emphasizes listening to customers. He says that “the art of entrepreneurship and the science of Customer Development is not just getting out of the building and listening to prospective customers. It’s understanding who to listen to and why.”[3] We didn’t do so, but you should do your research about your customers and interview them when developing your idea.
The second time, we changed our strategy entirely. We edited our business plan and changed our target market. This time, we decided to develop the same idea as the first time but targeted indigenous communities, starting from Canada. We started contacting indigenous artists, business owners, and communities to validate if indiroot would be something that they would be interested in using to sell their products while promoting their culture, history, and art with the novel technology of Augmented Reality. At the same time, we talked with Canadian organizations and associations that aim to empower the indigenous population economically or are interested in preserving their heritage, stories, and endangered languages. Finally, we put a survey up and asked people in North America and Europe to see if they would be interested in buying from indiroot, at what price, and with what purpose. The result? Amazing! We received so much positive feedback about indiroot. In addition, we were informed of several cultural and technical challenges that we hadn’t thought about before.
After you have validated your idea with potential customers, it is time to finalize your documents. Depending on the designated organization you apply to, you may be requested to provide several business and personal information and documents, including your business plan, financial projections, pitch deck, founders’ resume, founders’ language test results, founders’ financial statements, and many more. Some SUV teams (like us) decide to prepare all documents themselves as they have the skill and experience to do so among themselves. Some other teams may choose to outsource the preparation of some specialized documents, such as financial projections, to experts.
The process of applying for designated organizations is somewhat similar. For most of them, you should fill in the application form on their website. For a few others, you should contact them via email. After submitting the application form, you may be asked to present your business concept in an online meeting or submit a detailed business plan. After a few rounds of submitting additional documents and interviews, hopefully, one of the organizations chooses to support your business idea and to give you a Letter of Support.
Now, I would like to talk a bit about some of the most common concerns among SUV applicants:
- The required stage of start-up for receiving a LOS: Initially, the SUV program was designed to attract start-ups at an early stage. We are one of the few teams that were lucky to receive a LOS at the idea stage. However, designated organizations are most inclined to accepting start-ups at a more developed stage. This is why it is usually recommended for start-ups to have at least a working prototype or Minimum Viable Product (MVP) before applying. Reaching this stage before applying may take a bit longer, but it will considerably increase your chances of receiving a LOS.
- Incorporation from overseas: As a requirement of the SUV program, you are required to have incorporated your start-up in Canada when you receive your permanent residency. This may sound impossible from overseas, but actually, it is very easily done. There is only one condition that you should be aware of, and that is the 25% Canadian residency requirement for directors for incorporation in some jurisdictions. In simple words, if you do not have a Canadian permanent resident or a Canadian citizen among the directors, you cannot incorporate your start-up federally. The same regulation applies to incorporating the start-up in some provinces, such as Manitoba. The solution is to incorporate your company in a province that does not enforce such a regulation as British Columbia, Ontario, or Nova Scotia. Additionally, suppose you are not yet in Canada with your work permit, and hence, you do not have an address. In that case, you can use the address of the designated organization that has accepted your start-up with their consent or use the “virtual office” services of a co-working space in Canada. My final advice regarding incorporating your start-up is to consult with your mentor from the designated organization or a corporate lawyer beforehand to avoid making any mistakes.
- Protecting Intellectual Property (IP): Every co-founder with an innovative start-up is concerned about protecting their idea against getting copied or imitated by competitors or other businesses. The solution may be to protect the innovation through a patent or copyright. Of course, some IP protection methods (such as a utility patent) take a long time and even years. However, there are some temporary solutions; you can apply for a provisional US patent and receive a “patent-pending” status for now. Again, the safest way is to consult with a lawyer experienced in IP protection or a registered patent agent.
- Online Exposure: This has been my favourite part of owning and operating our start-up so far: Introducing indiroot to people! There are tons of demo days, pitch events, and networking meetings held each month across Canada. I suggest you pitch your start-up as early and as many as possible at these events. Be not afraid of disclosing your idea and coming across the competition; there is room in the market for everybody, and competition makes opportunities for creativity and therefore, growth. Besides, you can get to know investors and peers at these events and expand your network even before you are landed in Canada.
- Strengthening your Application for PR: As an immigration applicant who is putting my energy, time, and money into creating a business in a foreign country, I know, trust me, how stressful and uncertain this path is. Especially during the COVID-19, the operations of IRCC have been slowed, and right now, according to the website of IRCC, it takes 33 months for SUV applicants to receive a final decision on their permanent residency application. The only thing we can do during this time is to focus on developing our business in Canada as strongly as possible and on creating a network of potential customers, suppliers, partners, and investors for the time we land in Canada.
I can go on and on writing about the SUV program, running a business remotely, and staying sane managing all this. But I think it would be best for you to roll up your sleeves and find out about that yourself. Please note that I am not a registered immigration consultant, and this article was just a brief diary of my life during the past year. You can find me on LinkedIn by searching my name, and I can share my humble opinion and personal experience with you in more detail, but if you need expert advice, please seek the assistance of a registered immigration consultant or an immigration lawyer. I wish every one of you a joyful ride until you get that SUV PR badge!
https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/start-visa/designated-organizations.html ↑
- https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/start-visa.html ↑
- https://steveblank.com/2012/02/27/killing-your-startup-by-listening-to-customers/ ↑
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