Growing funding network gives support to tech start-ups
First published in the New Zealand Herald on Monday April 15, 2013
Angel investors provide both capital and capability to entrepreneurial initiatives.
How is the New Zealand Angel Association – and you personally – involved in the IT industry?
I’m an Angel investor as part of the AngelHQ club in Wellington, but we syndicate investment opportunities all over the country. The role of the Angel Association is to represent Angel investors across the innovation and entrepreneurial ecosystem and to encourage more Angels. Angels provide both capital and capability and with my background in ICT, I tend to gravitate towards ICT businesses or those that are heavily enabled by ICT.
What potential does New Zealand have to be an innovator in technology?
The potential is significant off the back of very capable and creative people. We are highly productive in early-stage endeavours as we are resourceful, work hard and costs are relatively low. We are also inclined to take on new technologies so we have a market that lends itself to validation, proof-of-concept and incubator-type initiatives.
How do New Zealand tech businesses make their ideas and products scalable?
The main challenge is scalability from a go-to-market perspective. This either requires significant investment in direct marketing and sales capability or alignment with channel partners, which will ideally have complementary technologies and where joining forces produces a strong collective value proposition.
Where are tech startups getting their funding from?
Funding comes from different sources depending on the maturity of the business. Early-stage funding comes from company founders and friends and family. We have a growing formal Angel network and new ventures also get great support from the Government through NZVIF, NZTE and MoBIE as well as regional incubators such as CreativeHQ and Icehouse.What other support do tech businesses need?I would like the Government to put more into developing the context and culture under which tech innovation, entrepreneurship and investment occur. This includes being clearer about where the nation should focus its limited resources; for instance, by building niche leadership as opposed to trying to build global businesses on a broad basis.
Do you encourage New Zealand tech businesses to try their hand in big international markets?
Certainly. Angel investment revolves around building a portfolio of which five out of 10 ventures will fail, four will survive and one will excel to deliver a return on all your investments. To generate a significant return, business will need to go global or target large markets like China and the US. Timing the run will depend on the nature of the business. If there is a genuine domestic market, this can deliver early-stage revenue and credibility, but on the other hand it can delay your entry and potential competitive advantage offshore.
It’s only by being in-market that the real learning happens and opportunities open up.