Migrant entrepreneurs aren’t staying in NZ – the new investor visa won’t replace them

New Zealand's attempts to attract entrepreneurs have encountered significant challenges. In August last year, the government closed the Entrepreneur Work Visa and introduced a new Business Investor Visa, designed for individuals willing to invest in and operate established New Zealand businesses. The previous scheme had low application numbers, high decline rates, and did not generate substantial economic impacts.

Under the new visa, migrants must invest at least NZ$1 million, with a faster pathway to residence for those investing NZ$2 million. However, the shift in emphasis raises a critical question: was the issue with the applicants New Zealand attracted, or with what transpired after their arrival?

In interviews with 22 high-skilled immigrant entrepreneurs, researchers found that many felt they could access better business support and opportunities elsewhere. Despite arriving with substantial business experience, international networks, and ambitious growth plans, these entrepreneurs often struggled to build legitimacy and secure funding, customers, and partnerships within New Zealand's entrepreneurial ecosystem.

This led some to seek support from their international networks, accelerating their business growth outside the country.

One entrepreneur expressed frustration with New Zealand's conservative innovation culture, saying, "We lose that innovation to overseas very quickly." He noted that if he were in Australia, he could expand his business at a much larger scale due to the superior support ecosystem there. Another expressed disappointment with the lack of support from New Zealand businesses, contemplating pulling out of the country. These entrepreneurs' businesses became less dependent on New Zealand, making their eventual departure easier.

While the Business Investor Visa may assist established firms by providing capital, experienced management, and international connections, entrepreneurs and investors serve different roles. Entrepreneurs create new businesses, products, technologies, and markets. For New Zealand, which struggles with weak productivity, stronger innovation, investment, and technology adoption are crucial to improve economic performance.

Immigrant entrepreneurs contribute not only capital but also knowledge, experience, and international networks. In fact, across 25 OECD countries, migrant entrepreneurship has contributed nearly four million jobs between 2011 and 2021, with immigrants disproportionately contributing to innovation given their higher likelihood of being entrepreneurs.

While a stronger focus on investors may address New Zealand's need for capital, it does not replace the contributions entrepreneurs make through new firms and innovation. The government acknowledges this distinction, with plans to introduce a separate pathway for startup entrepreneurs with scalable and innovative business ideas.

However, simply designing new visas alone is insufficient. New Zealand must also provide stronger support to help immigrant entrepreneurs build local networks, access investors and customers, and develop successful businesses that remain in the country.