LS Legal News Bulletin
Endorsing Bodies - The Facts
Thursday 15th August 2019
Introduced earlier this year, Innovator visa and Start-Up visa require applicants to get an endorsement from one of the Endorsing Bodies listed in the Home Office Guidance. The Endorsing Bodies, currently 29 on the list, have been delegated wider discretion when it comes to assessment of the applicants.
The new category has existed for over 3 months, and there is still not a lot of information about the endorsement process. It is possible that the Endorsing Bodies are still adjusting to accommodate this new responsibility. However, the uncertainty around the requirements and timelines raises many questions from prospective applicants.
Here is what we know about the endorsement so far:
1) The majority of the Endorsing Bodies are very industry-specific. The dominating themes are, unsurprisingly, various kinds of tech - FinTech, EdTech, SciTech etc., as well as Robotics, Cyber Security, Health and Logistics. A very limited number of Endorsing Bodies, such as NatWest (Accelerator programme), claim to be open to any viable business idea. The applicants are advised to carry out thorough research of each Endorsing Body before making an application.
NOTE: Prospective applicants, especially those whose ideas have not developed into a business yet, do not have a wide range of choice when it comes to industry or market. The government made it clear that it would not provide such a degree of freedom to overseas business persons by abolishing the Tier 1 (Entrepreneur) route. Instead, the applications will be assessed based on the needs and current trends of the UK economy, providing more scrutiny than ever before.
2) Up to 25 endorsements are available from each Endorsing Body. Although this figure may seem significant, the reality (so far) is that not many Endorsing Bodies are eager to request the maximum number of endorsements. For instance, Scottish Edge only requested 4 allocations, showing some doubt about its future involvement in the Endorsing scheme. What this may mean to the prospective applicants is that they can expect a very competitive process for the limited opportunities to get an endorsement.
NOTE: The process 'becomes' even more competitive when the applicants are reminded that the struggle for endorsement will be joined by participating UK and EEA applicants. The hope is that the government will expand its list of Endorsing Bodies in the near future to increase the number of allocations.
3) Some Endorsing Bodies require participation in their own internal programme first before considering endorsement. The programmes generally divide into Incubator, Pre-Accelerator or Accelerator programmes, and the deadlines are different with each Endorsing Body. It is worth noting that most programmes are aimed at already existing businesses, as opposed to yet-to-develop business ideas. Prospective applicants interested in digital financial services can check Barclays Accelerator programme run by Techsters in London, where applications for 2019-2020 will close on 13 October 2019.
NOTE: The first step to apply for Accelerator programme will be to submit an online application. The common questions include describing your company and its objectives, listing your competitors, providing details of your company's staff and any revenue generated in the last year. Over the next few weeks, more requests for information and interview invitations will follow. From the moment the application is submitted, it will take around 4-8 weeks to be notified of whether it has been approved. The prospective non-EEA applicants must be mindful of their timeframes. With most Accelerator programmes taking up to 6 months to complete, it is advised to start preparing for your Startup or Innovator visa application at least one year beforehand.
4) Costs of funding. Although not completely transparent at the moment, some Endorsing Bodies require a certain percentage of equity in your business, should you be approved for funding.
NOTE: Quoting the statement from TechStars' FAQ: "like you, we're entrepreneurs". The equity stakes vary from 5% to 15% and depends on the amount of investment the Endorsing Body provides. Not a very big problem for an aspiring start-up business, the higher equity may pose a problem for those applicants with an innovative idea. A careful approach needs to be taken when choosing the most suitable Endorsing Body to one's business needs.
Conclusion: Start-up and Innovator visa routes offer big opportunities for those candidates who are passion-driven and have something to "bring to the table". Although at present moment the endorsement process remains uncertain, it is likely to resolve within the coming months.
