With a number of countries initiating their own investment for citizenship programs, it is evident that there is a huge demand for such schemes, indicative of the wide pool of wealthy investors all around the world looking for alternative residencies. This pool of rich citizens is something that entrepreneurs could easily tap into for funding but so far this does to seem to have been the case.
Most countries offering residency or citizenship in exchange for investment would have entrepreneurs looking for some financial backing. The only country that seems to have used this program for the benefit of these entrepreneurs so far has been the United States, which runs an EB5 program, marketed as the opportunity to gain access to the country by supporting various American businesses. International investors can get a conditional visa leading to residency in exchange for investments that create jobs in the US.
Immigration experts however feel that the EB5 program is not being used to its full potential to get investments. Under the program, a minimum investment of $500,000 is required to qualify for residency. The program grants 10,000 visas every year, but since these are also given to families of investors, the number of investments is much lower.
“The real premise of the program is creating investment opportunities and encouraging active development as well as job creation. According to projections, in 2013 the USA saw 50,000 jobs and economic development of over $1 billion from EB5. It’s popular in the USA – despite the detractors of immigration reform,” says Parisa Karaahmet, of international law firm Fragomen
The EB5 program offers a few alternatives to the investors – they can choose to either invest in a regional center or directly into a project. Direct investment in a project is the simpler option, wherein the investor can choose a project, make the minimum investment of $500,000, making sure the investment creates employment for at least 10 people in the US.
On the other hand, if the investor chooses to invest in a regional center, he/she has an option to make a joint investment with other investors (with each person making a minimum perquisite investment). This option has been more popular with investors as it allows them flexibility over the management of the project, since in a joint project each investor need not be actively involved. Moreover, the condition of job creation is also more easily met as indirect jobs are created in the process and they add up to the total. The jobs created do not need to be documented through payroll or other professional corporate data as just numbers from the regional center suffice.
In addition, investors also gain further advantages if they choose their projects in a targeted employment region, i.e. any area where unemployment is 150% above the national average. The minimum investment required for these regions is $500,000, as opposed to a minimum of $1 million in other more economically developed areas.
The EB5 program has been rapidly gaining popularity, especially among Chinese investors. According to the US State department, the program has already met its quota for this fiscal year, reaching the limit of 10,000 by July itself, with around 85% of the applications made by Chinese investors. And with a 300% increase in applications over the past five years, the surge in demand for investor visas is indicative of significant growth potential of such schemes globally as a source of investment, which is good news for entrepreneurs and start-ups looking for funding.
Source: www.forbes.com