Entrepreneur Work Visas

New Zealand is a nation full of people doing stuff, and usually the stuff they are doing is the source of their livelihoods. Small businesses are the lifeblood of our economy and they are the source of some pretty amazing innovations, particularly in the tech and engineering sectors. New Zealanders are well know for their DIY approach to things (we call it the number eight wire mentality - you can do anything with number 8 wire) and running your business has naturally become an extension of that. Although there is no official description of what a “small business” is, our statistics gurus, tend to use the measure of any business that has less than 20 staff.

As of late 2024, there were over 600,000 small businesses in existence in New Zealand, with 97% of them being classified as “small” by that definition. In fact the vast majority of businesses actually dont employ anyone and are essentially “one person bands” (not to discriminate on gender of course).

Theses businesses cover practically everything from real estate to rockets and while many start and stay small, some break through and become heavy hitters, often on the international stage. One such example is Rocket Lab, which start just under 20 years ago with one guy and the idea to build better rockets…now launching things in to space that keep our global communications ticking.

We are a nation of doers and arguably we need to be, given our small population base and geographic isolation from the rest of the world. Given the environment, you would think that our visa system would cater for this, with a strong and well thought out process for seasoned entrepreneurs to join the ranks here. Unfortunately that isn’t the case and what we do have is complex, overly restrictive, and assessed by people who have never actually run a business in the real world.

However that could all be about to change as the Government adds the Entrepreneur Work Visa (the current category) to its list of visas due for an overhaul. We were asked for our opinion on the visa and why it doesn’t work in a recent Radio New Zealand article (click here to read the article) and this post is an extension of that piece - taking a look at how the current visa operates, why it so complicated and what changes in this space might look like.

How It Works

The current Entrepreneur Work Visa (EWV) is essentially a three step process, with the aim being to secure residence based on establishing a successful business in New Zealand that is benefiting the country in one of various ways. The time it takes to get residence through this pathway varies, depending on the investment you are prepared to make as well as the benefit you hope to create. The EWV operates on a points based system, offering additional points for a unique business, or one that will be located out of Auckland, your investment level (minimum $100K but that can be waived in certain cases), points for producing export earnings, hiring additional staff or having more experience. There are a range of points available, the total for which needs to be 120 to pass.

Three Stage Process

The EWV is a three-stage process, where applicants have to prove how their business will benefit New Zealand.

Step 1 - The first stage of the process is to present your application, claim to points, evidence of how you meet those points, health and character and of course a solid business plan. Bearing in mind that this is not a business plan you would take to the bank, but one custom built for the visa process.

Within the business plan you have to demonstrate, among other things, how your proposed business will meet one of three criteria that form the objectives of the policy. You can either claim that your business will be innovative (meaning you will do more with less), high growth or has export potential. These might sound easy to prove, but the issue is that there is no real definition of what they actually mean. When INZ says “high growth” there is no readily available bench mark for how high the growth needs to be, or over what period - this is probably the key design fault of the policy.

Assuming however that you are able to package everything up nicely, and have all the evidence, and a plan that INZ likes (and what they do and don’t like is a mystery unto itself), then you will be granted a 12-month work visa to be self-employed in that business. This is essentially the second stage or the “start-up” phase.

Step 2 - With your 12-month work visa in hand, you need to head this way and transfer the investment funds that you nominated in the original application, using that money to seed your business. Bear in mind that you cannot claim working capital in that equation, you need to spend those investment funds on things directly related to establishing the business - stock, equipment, leases etc. Once you have done this and also set up the legal entity required to operate the business you can head back to INZ to claim the balance of your visas, or another two years, taking you to a total of three.

Now the hard work really starts and your goal, having established the business (or taken one over, if you are buying an existing one) is to operate that business in accordance with the plan, successfully for a period of two years. That will then, hopefully, get you to step three.

Step 3 - With the business now in full swing and two years of successful operation under your belt, step three consists of applying for residence, based on that two years of your business existing. However, and its a big “however” your business might have done really well, but if you haven’t achieved all of the objectives in your plan, relating to benefit, e.g., you hired two staff instead of the three you planned for, then your residence application is at risk. Even if your have doubled your forecasted revenue in that two years, your residence might not happen if you have deviated too far from the initial plan that got you through step one (more on this below).

There is also the option to “fast-track” your application for residence, by investing at least $500,000.00 in to your business and employing three full time staff, which allows you to apply for residence at the six months of operation point - however the residence you secure will have conditions attached requiring you to continue to operate the business for the full two years anyway - so there is little advantage to doing it this way - better to go with a lower investment, and just work through the two year process.

Sounds pretty straight forward right?

The Complications

One of the comments I offered in the media article, centred on how this policy offers applicants very little clarity or certainty over the process. Yes there is a points total to meet, and often applicants believe this is all they need to do, but the reality is, this application is a lot more Dragon’s Den than it is visa policy.

“There's a huge lack of certainty for applicants for putting money into this as to whether or not it will be successful. I think what Immigration has attempted to do in the past, and certainly with the policy as it stands now, is they're kind of trying to wrap that up as much as possible to minimise the risk for the applicant - which was good in some ways.”

To give this some context and perhaps explain why the current rules are so vague, we need to look at its predecessor or the Long Term Business Visa (LTBV). The LTBV system didn’t have a points total, or a minimum investment amount and it was essentially open to anyone with an idea, some loose change and the ability to run a business (and even a few who couldn’t). It was for all intent and purposes the opposite of what we have now.

Too Much Discretion

One of the main faults of the existing policy is the lack of clarity in terms of requirements and amount of discretion INZ has.

The LTBV was overly relaxed, far too simple and INZ approved almost anything that they were given to assess. The issue of course being that very few applicants transitioned from the work visa to residence and often they used the work visa as a back-door to other visa options.

So when the LTBV was overhauled, policy makers did what they do best and swung the pendulum in completely the opposite direction. The EWV was targeted at bring across very niche or unique businesses that would employ a load of people, ship our goods all around the world and fill up the tax pot as quickly as possible. The reality however is that the policy didn’t really meet the market. Large scale businesses, employing a lot of people or with significant capital investments are often set up here, but not by individual applicants, but instead by parent companies or a consortium of investors. What the EWV failed to recognise is that the main goal for these potential entrepreneurs was to live in NZ, not create the next Meta.

The policy also attempted to ring-fence applicants, but making them fulfil every part of their business proposal, and hanging them out to dry if they didn’t. Even if the business was wildly successful, but that success was achieved in a way that deviated from the plan, then residence was on the line. These issues coupled with a very vague and elusive set of criteria that even most immigration officers struggled to understand, meant that application numbers fell to single digits and approval rates plummeted.

Most advisers wont go near this category, because of its lack of clarity and certainty and it has created a reputation of being the last resort option for anyone considering a move here. We do tend to see it differently and we have assisted applicants through the process in recent years, but we are ruthless in terms of the business being proposed and making sure clients understand the challenges.

From my perspective and having been around for a while, the two issues INZ have with this policy is 1) the lack of clearly defined eligibility criteria and overly discretionary decision making process and 2) understanding that successful businesses don’t always go according to plan. Businesses grow, change and evolve and even though they might not tick all the boxes in the plan, they might end up being wildy successful - that is the measure of success the policy should be focussed on.

The Need For Change

The Government has identified the issues with this policy (and the fact that everyone is trying to sweep it under the rug) and I am hoping that any amendments they bring, will place more weight on backing the winners, rather than enforcing a plan. There has been some rumour and speculation floating around as to what those changes might be, but I would suspect that they are just that - rumours.

It does raise an interesting question however, in terms of what the policy could look like if it were given a bit of a tidy up. My thoughts would be to start with a few key points and work backwards from there.

Make it stand out

The EWV policy is long overdue for a change, as we are potentially missing out on some great skills and investment.

Recognising who this visa is aimed at would be a good start…and its not those who head up major multi-national businesses. It is generally those looking to relocate here, who have the skills to work for themselves, and are able to generate some benefit. That can be small scale, and still very valuable.

We need to move away from a completely risk-averse approach entrepreneurs eat, breath and sleep risk, so they will appreciate what is involved and what is at stake. In doing so, we would also be able to create something more flexible that acknowledges that benefit and success in this space doesn’t always follow a linear path. It would also take acount of the fact that a person might have a great plan, and all the resources, but local market conditions don’t play ball or at least not right away. The ability to move on to residence shouldn’t be measured against finite criteria, but more generally as to whether the person has taken the risks, made it work and created something successful at the other end.

We also need to recognise that it isn’t just the business that we are approving but also the person. More weight and emphasis could be placed on the level of skill that person brings. Currently we just look at whether you have been self-employed or in a management role, (its a pretty basic test) but why not look at what that person might have achieved. Perhaps they were involved in setting up multiple businesses, all at once or providing strategic advice to businesses that have gone on to be wildly successful. We need to pick winners who will bring those skills and multiply them here, rather than just focusing on the one plan they have to present at the start.

Lastly, and like almost all policies, the simpler it is, the better. We have seen how big of an impact simplicity can have with the recent changes to the Active Investor Visa stream. The previous policy was cluttered, nonsensical and confusing - even the Ministers responsible for releasing it at the time, had a hard time explaining how it actually worked. The new, simpler version of that some policy has generated more interest in the first few weeks than the previous one did in two and half years. Make it simple, clear and achievable and people will use it.

We have a real opportunity with this visa to capitalise on a very complex world, where people with skills and money are looking for exit strategies. If we get this right, we will bring not only significant investment in to the country but people who can create jobs and jobs create stability and growth. We don’t need people to be promising to get us all to the moon, we just need people prepared to take risks, invest in the country and create a viable opportunity.

The challenge for the Government with a policy like this, is realising that unlike a skilled migrant, where you can identify each aspect of their eligibility (qualification, job, age, experience etc.), when it comes to setting up a business, there are a lot of unknowns. We need to build that in, and instead of trying to create those bright-line tests that even immigration officers struggle to explain, back the winners to take those risks.

Need Some Help?

For anyone reading this you might be thinking why on earth would I consider this visa option, and you would be right, but that doesn’t mean it can’t work at all. My advice to all applicants considering the EWV pathway is to first establish whether any other visa might work more efficiently. We often find that potential entrepreneurs can qualify as skilled migrants and then once they have residence they can run any business they like, without it being the key to being able to stay here.

However if that isn’t an option or you do you have a really good business idea, then the EWV can work for you, you just have to do it right. This involves having an expert business plan writer (we know some), who can create a plan that INZ wants to see, not one you might try and sneak past your local bank manager. It also means calculating your risks, finding the most conservative (but still attractive to INZ) plan and not trying to do more than you can potentially achieve.

Finally, it also includes having a back-up plan, for example you might run the business, but your partner might secure a job offer that could act as a secondary pathway to residence. Ultimately it is about being as strategic in the application process as you would be in running your business.

If you are considering the EWV option, talk to us today. We will guide you through all the possible options, assess your plan and give you a realistic appraisal of your chances of success - and of course stay tuned for how this particular visa policy might shape up in the near future.

Until next week.