All you need to know about Tier 1 Visa

All you need to know about Tier 1 Visa Startups

Tier 1 Visa allows overseas investors interested in startups to move to the UK to live and work. What makes it different from other investments?

Tier 1 (Entrepreneur) Visa (T1V) is one of the ways in which overseas investors interested in startup businesses can move to the UK to live and work. The scheme allows them to either start a new business or invest in an existing UK-based company where they can play an active role.

What makes T1Visa investors attractive for businesses?

  • T1V investors can contribute to the expansion of the business in their home countries.
  • The investment size tends to be of at least £200K. T1V investors have to invest a minimum of £200K and, although they can split it between different companies, most decide to get involved with only one.
  • T1V investments can take the form of either equity investments or unsecured loans repaid after the 5th year – with valuations or interest rates to be agreed between the parties.

What differentiates T1Visa investments from the more common angel, fund, and VC investments?

  • T1V investors have to be appointed as (non-executive) directors at Companies House, which is a formal requirement from Home Office.
  • T1V investors can only be employed in the company they invest in. Employment is optional, but many investors are interested in becoming employees – salaries are agreed between the parties.
  • T1V investors have to be actively involved in the company they invest in, which can range from employment to advisory roles and/or participation in board meetings.
  • Companies are required to create two new full time jobs within 2 years from the beginning of the investment – additionally to the investors themselves if they choose to work in the business. These new positions have to last for at least 1 year. Companies have the option to create four part-time roles instead of two full-time ones.
  • T1V investors’ backgrounds, experience, and/or interests have to clearly prove that they are a right match with the company of their choice – it cannot be accidental.
  • T1V investors’ investment is checked after 3 years. They can receive permanent residency in the UK only after 5 years, which is the main timeframe of collaboration.

The process of T1V investments is different, longer, and more complex – what does it usually look like with Startup Funding Club?


Phase I: Preparation

The first phase should be the fastest one to go through and should take up to one week – as long as the startup has all the documents ready!

  • The company applies for T1Visa investment through the SFC website. By filling in the form, SFC will be able to create a tailor-made business profile for Tier 1 Visa investment purposes.
  • The startup will be asked to populate a Dropbox folder with basic Due Diligence documents.
  • The company is then presented to potential investors through SFC partners specialised in immigration.

Phase 2: Matching

Matching to the right investor might take some time and there are no rules to this. This can take from two weeks to twelve months – or even more!

The process can be long as it is not only about the attractiveness of the investment, but also about how investors’ interests, backgrounds, and experience fit the company profile. The more affinity, the more chances of getting the visa. Once an investor expresses interest on the business, the latter receives their CV and can then decide whether to go ahead or not.

Phase 3: Negotiation

Once the startup decides to proceed, the negotiation phase begins. This can take between two and twelve weeks.

  • A first meeting – or a Skype call – is arranged. This can be followed with more meetings, calls and/or email exchanges.
  • The company and investor negotiate the terms of investment – this includes the investor’s role, salary, equity or interest rates and terms of repayment, etc.
  • Once agreed, the company is asked to provide a set of documents – including loan or investment agreements – and a business plan.

Phase 4: Visa Application and Investment Finalisation

The final phase of the process consists on the Tier 1 Visa investor’s Visa application and the finalisation of the investment. This can take from four to twelve weeks.

  • The investor might start working with the company to familiarise themselves with the company’s ins and outs for a few days or weeks (work shadowing/internship) previous to closing the investment.
  • Investor and company have to finalise the business plan that will be submitted to the Home Office.
  • The investor applies for the Visa.
  • The investor is invited to an interview with Home Office. The company might be contacted by the Home Office as well.
  • The investor receives the result of his Visa application within approximately two weeks from the interview – if they are unsuccessful, they can re-apply.
  • If the Visa is granted, the investment is then finalised – documents are signed and the money transfer is made.

The whole process may take any time as little as three months and long as twelve months.


Final Notes:

  • Tier 1 Visa is a very attractive way of raising funds, but because of its complexity, it is advised to treat it as a separate round with it’s own terms.
  • The T1Visa investors SFC works with are mainly Chinese. They are usually either professionals who have made enough money and want to move to the UK with their families or post-graduates who studied in the UK and want to stay here.
  • The employment of  T1V investors is often a part of the deal and will influence the terms of investment.
  • The employment and the investment are linked, but should be considered as two different arrangements – described respectively in both the employment agreement and the investment/loan agreement.
  • T1V funding requires more work and more parties that help with the deal. Consequently, the cost of raising with this type of investment is higher than in case of other types of funding and equals to 9% + VAT of the raised funds.
Alex Batlle Bosch
Marketing Manager