Canada’s Start-up Visa Program

To attract foreign entrepreneurs to work in Canada, Canada has implemented the Start-up Visa Program. The program gives qualified business owners and their families an expedited track to permanent residency if they can meet the requirements.

To be eligible for the Start-up Visa Program, you must (1) have a qualified business, (2) obtain a letter of support from a designated organization, (3) meet the language requirements, and (4) have enough money to settle in Canada. 

1.         To have a qualified business, you must show that you own more than ten percent of the voting rights attached to all company shares. Additionally, applicants and the supporting designated organization must jointly own at least fifty percent of the voting rights shares. Upon receiving permanent residency, you must incorporate your business in Canada, an essential part of your business must take place in Canada, and you must provide active management of your business from within Canada.

2.         Applicants must also obtain a letter of financial support from a designated organization. These can be venture capital funds, angel investor groups, and business incubators that are pre-approved by the Canadian Government. You can find a list of these organizations here (https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/start-visa/designated-organizations.html). The letter of support: 

  1. describes the business structure; 
  2. identifies the applicant and their role in the business;
  3. describes the nature of the business;
  4. confirms the applicant has control over the company’s intellectual property;
  5. specifies the amount of the investment; and 
  6. that the organization performed a due diligent assessment of the applicant.

Lastly, the designated organization will send a commitment certificate directly to Citizenship and Immmigration Canada (CIC) that outlines its financial support. The CIC will use both the letter of support and the commitment certificate to assess your application.

3.         To be eligible to apply, you must also take a language test from an approved agency. To be considered for the program, you be able to show minimum proficiency in speaking, reading, writing, and listening in either English, French, or both languages. Upon receiving a score above Canadian Language Benchmark 5, an applicant should submit the results along with their application.

4.         Finally, applicants will not receive financial support from the Canadian Government, so they must provide proof of sufficient funds. You must show that you have enough money to support yourself as well as any dependents you plan on bringing to Canada with you. There are minimum requirements but the Canadian Government recommends that any applicant brings as much money as possible with them. 

If an applicant meets the eligibility requirements and submits and pays for a successful application, the process should take approximately twelve to sixteen months to complete. However, interested applicants can also apply for a temporary work permit while their start-up visa application is pending so they can start building their business in Canada. There are more specific requirements for such a work permit, but an applicant must have already received a letter of support from a designated organization. Finally, temporary work permits can typically be complete in a few weeks but times can vary depending on the country and other circumstances (Covid-19). 

If you can meet the criteria, the Start-up Visa Program can be an excellent opportunity to move your business into Canada while concurrently obtaining permanent residency.

Video Game Studio Intellectual Property Strategy

Recently we’ve seen an uptick in interest among video game studios looking to protect their intellectual property, with a focus on protecting characters and game/studio names.

Here is a list of priorities that should be considered when determining or developing a video game studio’s intellectual property strategy (in common order of priority).

1. Trademark protection for the game name and/or logo

With a successful game comes the risk that a competitor may produce a similar game and brand it with similar game title and/or logo.  Obtaining trademark protection of a game title and/or logo ensures your right to stop competitors from using the goodwill and reputation associated with your game title and/or logo.

2. Copyright protection for game characters

Obtaining copyright registrations is best suited for protecting the main character or characters of a game and can be used to stop unauthorized or unlicensed use of the character(s) on things such as t-shirts, plush animals, bobble head toys, clothing, hats, cups and mugs, etc.

3. Trademark protection for a studio name and/or logo

Finally, the studio should protect the goodwill and reputation associated with a studio name and/or logo through trademark registrations.

While a studio may not have financial resources to pursue all of the above at the start of development, it’s critical for the studio to at least develop an intellectual property portfolio strategy and plan to execute over time as resources permit.

Intellectual Property Rights for Video Game Studios

For our video game clients, protecting intellectual property is an important part of their business.   Intellectual property protection for a video game commonly comes in the form of trademark and copyright but may also involve patents and trade secrets

Trademarks can protect the titles and logos associated with a game.  Without a registered trademark, another studio could register a trademark that is confusingly similar to your existing game, thereby creating confusion, negatively impacting your ability to enforce trademark rights and potentially the complete loss of all trademark rights.

Copyright can protect game code, artwork, music and characters.  A copyright registration could be obtained on a particular character used in a game to prevent third parties from creating and selling plush toys based on the character.  

Patents can protect new and innovative hardware, systems, technical solutions, innovative game play or design elements and technical innovations such as networking or database design.  

Trade secrets can protect customer mailing lists, pricing information, publisher contracts, developer contracts, in-house development tools, and terms and conditions of any agreement the studio enters into.  Note that the enforcement of a trade secrets requires that a confidentiality agreement be put in place.

The following chart provides a helpful overview of intellectual property protection options:

Copyright  ProtectsTrademark ProtectsPatent ProtectsTrade Secret Protects
MusicStudio nameHardware systemsCustomer mailing lists
CodeStudio logoInventive game playPricing information
StoryGame titleTechnical innovations such as new software, networking or database designsPublishing contacts
Characters  Middleware contacts
Art  Developer contacts
Box design  In-house development tools
Website design  Deal terms

We recommend that studios become familiar with the range of intellectual property protections available and to prepare an intellectual property strategy for both the studio and its games.  

SAFEs and the BC EBC Tax Credit

SAFEs (Simple Agreement for Future Equity) are used by early stage companies to raise investment without requiring the parties to determine the company’s value.  Instead, future events determine the company’s value and prompt conversion of the SAFE into equity.  As of March 2, 2019, SAFEs are now eligible for the British Columbia Eligible Business Corporation (EBC) tax credit, subject to certain requirements being met.

The EBC tax credit, in simple terms, is a 30% BC government tax credit received by investors for investments made in small businesses operating in qualifying industries in BC.  In order for an investor to receive the tax credit: the company must be operating in a qualifying industry; registered for the EBC credit; the investment structure must qualify; and funds must be allotted and available to the company for issuance of the credit.  Industries qualifying for the credit are quite broad and include: manufacturing; research and development of new technologies; destination tourism; digital media products; clean tech and advanced commercialization.  BC also offers a similar tax credit for Venture Capital Corporations, which operates under the same overall program.

SAFEs typically contain clauses rendering them ineligible for the EBC tax credit and the BC government did not originally allow SAFEs to be used in tandem with the EBC tax credit.  This posed a significant problem for small business that raised money with SAFEs.

While SAFEs are now eligible for the EBC tax credit, they need to be altered to remove clauses that make them ineligible.  While the alterations required depend largely where the SAFE documents originate, be it from Y Combinator or a SAFE drafted by a Canadian law firm, clauses that need to be removed include:

  • fixed term lengths of less than 5 years (admitted, more of a Convertible Note clause);
  • repayment prior to 5 years from the date of investment;
  • interest features (eligible SAFEs cannot operate as loans, again, more of a Convertible Note clause);
  • assignment clauses (except in very limited circumstances); and
  • liquidity and dissolution clauses that either allow for certain priority or preference over shareholders.

There are two ways to fix these issues:

  • redraft the SAFE to make it compliant; or
  • have each SAFE investor waive in perpetuity all rights that would make the SAFE ineligible.  

The first approach is preferable as a wavier may cause unforeseen problems if the SAFE is not drafted with a wavier in mind and may inadvertently cause an investor to forgo important negotiated terms. 

Nearly all of the SAFEs we review are ineligible for the EBC tax credit so investors should be wary if a company claims that their SAFE is EBC eligible.  Furthermore, as EBC program funds can run out every year, we recommend planning ahead and making sure that all your documents are in order so the tax credit is not missed out on.