CEO at Launch.vc
America is one of the most sought-after destinations for tech companies. Despite that reputation, international entrepreneurs are now finding it harder to enter the U.S. market. As a tech entrepreneur, I believe that technology should know no borders. As entrepreneurs, we build products and services that can help a global audience and hope to watch the companies we create make a positive impact on the lives of our customers around the world. But as Covid-19 continues to affect governments and citizens, international trade is becoming more difficult.
Through my position at Launch, I’ve worked with hundreds of international entrepreneurs. As part of a trade mission in November 2019, I visited 16 different cities in Asia and learned firsthand how things are progressing in the technology industry across the continent. I saw the ambitions of those entrepreneurs to take their companies global. I also saw how their efforts are being held back by tightening borders.
On July 1, 2020 the new United States–Mexico–Canada Agreement (USMCA) — formerly NAFTA — came into effect. With promises of new tariffs and noncompliance, USMCA is already off to a rocky start. Given the economic conditions we are all faced with today and into the foreseeable future, cross-border trade is likely to be a hot topic not only between the U.S., Canada and Mexico, but in every country around the world.
Policies like USMCA and others from the current administration are popular with U.S. citizens for a reason. Even prior to Covid-19, many Americans faced job uncertainty or layoffs. As one of the locations hit hardest by the virus, the U.S. economy continues to suffer, and will likely take longer to recover than other countries (paywall). As long as Americans continue to feel the squeeze, the world can likely expect more U.S. incentives to stay local, and an increase in restrictions on companies doing business from outside of its borders, regardless of who wins the election in November.
Across the world, shortages caused by Covid-19 have helped emphasize how dependent domestic markets are on international goods, products and services. Governments are beginning to support the idea that near-shoring manufacturing and other operational activities is in the best interest of their citizens.
But where does this leave entrepreneurs trying to build international businesses?
Alternative Ways To Do Business In America
Many Canadian businesses tell me that it isn’t any more difficult to sell into the U.S. than it is in Canada. As a result, Mexican companies have started to leverage Canada’s favorable immigration pathways, such as the Startup Visa Program, in order to set up their operations in Canada — a choice that allows them to do business in the U.S. as a Canadian company, all above board.
Companies established outside of North America have also leveraged the same strategy. Even though the relationship between Canada and the U.S. can be rocky at times under the current U.S. administration, both countries are very likely to continue to support each other through the economic recovery after Covid-19 and continue to be strong allies. Because direct access to the U.S. market is poised to become increasingly difficult, Canada’s business immigration programs continue to be an option for all international companies to reach the U.S.
Based on my experience, I would recommend any international entrepreneur challenged with entering the U.S. market look north to Canada. I have seen firsthand how the Canadian Startup Visa Program positively impacts not only an entrepreneur’s business, but their families and the careers of their spouses as well. The Canadian Startup Visa works by providing work permits for up to five founders of a company, along with work permits and student visas for the spouses and children of the founders. All applicants under the Startup Visa Program are fast-tracked to permanent residency in Canada, typically in under 12 months. Here are a few tips to help you determine if the Canadian Startup Visa Program is a good fit for you and your company:
• Keep in mind that the Startup Visa Program is a business immigration program and requires the support of a designated organization for your entry into the program. These organizations are either angel investors, VCs or business incubators/accelerators.
• Do your research to make sure your business is a fit for the designated organization you choose and that the organization is also the right fit for your business.
• Make sure your business is ready for the expansion into North America by assessing your company’s standing and goals.
Typically, the companies best prepared for this type of expansion have goals that put them into one or more of these three categories:
1. The business already has clients or partners in North America and is expanding or relocating to Canada in order to service them more efficiently from this new location.
2. The business is successful at home, growing and ready to tap into a new customer base. A North American presence would be beneficial for user adoption and business development.
3. The business is interested in a North American presence in order to be closer to strategic partners that can help build a stronger business or expand the user base in their home markets. Strategic partners can include investors, channel distribution partners, business development partners, R&D partners and universities. The business is also interested in access to hiring talent and industry experts.
Expanding or moving your business and family to a new country is a big step. Make sure everyone is qualified to meet the immigration requirements, but also make sure you, your co-founders and your family members are prepared both financially and mentally for a new life in North America.
While barriers exist, there is still a demand to do business in America. As long as that demand continues, there will be pathways to cross those barriers that are tried and tested by entrepreneurs.
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