Is UDI discouraging skilled immigrants from the startup space?
Immigrant entrepreneurship is a well-researched topic. The majority view is that immigrants are more likely to start a business than citizens of the host community, either because they see business opportunities in the new country (opportunity entrepreneurs) or because they could not get a regular job and are forced to start a business as a way to survive (necessity entrepreneurs). Statistics Norway (SSB) reports data which confirms that immigrants in Norway are indeed active as entrepreneurs. The Norwegian startup scene is currently bubbling with activities. This combined with flexible working hours makes startups a good ecosystem for professional and social integration for skilled immigrants.
However, the UDI’s self-sufficiency policy that requires permanent residence (PR) applicants to have earned a minimum of 246246nok in the 12 months prior to submitting their PR application, is a threat to immigrants’ participation in the startup space, either as (co)founders, employees, or interns. The spirit behind this UDI regulation is not the money itself but simply to ensure that immigrants are active citizens and are not unnecessarily dependent on the welfare purse. This is the reason why PR applicants who are students and have not received social welfare benefits are exempted from this minimum income requirement.
The spirit behind this UDI regulation is not the money itself
The pressure to meet UDI’s self-sufficiency requirement is a major reason why international professionals avoid taking the risk to join startups in Norway. Bootstrapping is a buzzword in the startup space because it often takes time between generating an innovative idea and generating sales or investment funding that is sufficient to pay decent salary to the team in an early-phase startup. Equity which is a common form of compensation in startups and could be worth much in the future, is usually worth little at the time of receiving it
Waiting to apply is not an option for many because of increasingly stringent immigration policies and because (permanent) residence permit is a form of security that creates a sense of belonging to a society. It was therefore not surprising that when Brexit was announced, Britons living in other EU countries rushed to get the local permit. The same applied to EU nationals in the UK.
Many successful entrepreneurs like Evan Spiegel of Snapchat and the Smith brothers of Qualtrics International Inc. have had to rely on their personal support systems in the early days of their journey so that they could focus on their ideas rather than worry about survival.
In these times of economic recovery, we need all innovative hands on board and I believe that by exempting immigrant entrepreneurs and employees in startups from this minimum income requirement – while retaining the social welfare clause, there will be an increase in the number of immigrants attracted to and contributing to the development of the Norwegian startup ecosystem. The question of course then becomes what should UDI accept as a proof of active involvement in a startup, but that is a topic for another day.