Good news for start-up firms in Tauranga

Venture capital guru Oren Gershstein says New Zealand is the only country so far to begin implementing the Israeli model, which has been successful in using government-supported high-tech business incubators to develop global technology companies.

Mr Gershstein was in Tauranga this month to advise WNT Ventures, one of the three technology incubators backed by Callaghan Innovation, which will be able to access grants to help get new companies off the ground.

Formerly the chief executive of Israel's leading technology incubator Van Leer Ventures for nine years, Mr Gershstein has been Callaghan Innovation's chief adviser on setting up the programme.

He also sat on the panel which selected the three successful technology incubators. Incubators in Auckland and Wellington were also selected.

Advertisement

"You can be very encouraged about the success of WNTVentures, because the quality of the other incubators was very good," said Mr Gershstein.

Mr Gershstein, who spoke at Tauranga's Ignition workspace during his visit, said that Israel and New Zealand had a lot in common.

They both had small populations and were far from key markets in the US and Europe, but had excellent universities as a source of cutting-edge technology research.

Israel has become a magnet for venture capitalists and direct foreign investment. Observers of the economy note that it has certainly helped that Israel had access to significant US foreign aid and a stream of immigrants, many of whom were highly skilled.

But, said Mr Gershstein, in the 1980s Israel was largely an agricultural and textiles-based economy, with an inflation rate that sometimes hit 400 per cent.

The key element in transforming the economy was Israel's incubator programme, established in 1991.

Over the past 20 years the Government has invested about US$600 million into the programme, with the successful start-ups going on to secure US$3.6 billion in foreign investment over the same period. "The incubation industry changed the face of the country," said Mr Gershstein.

The problem for small companies in countries with tiny domestic markets such as New Zealand was the difficulty in scaling up, he said. With the incubator programme, the Government had stepped in to collaborate with the private sector, to take some of the inherent risk out of backing start-up technology companies.

Advertisement

Peter Wren-Hilton, chief executive of Wharf42, one of the three partners in WNT Ventures, said the Tauranga-based incubator would be aiming to invest in four start-ups a year over the next three years. "The model is based on trying to commercialise research on the complex intellectual property that is coming out of New Zealand," he said. "I'm really excited about the vision of what will happen here."

At a glance
• WNT Ventures is made up of Wharf 42, Newnham Park (Plus Group and Locus Research), and the Titanium Industry Development Association (TiDA).

• The incubator will access repayable grants of up to $450,000 to eligible companies, matched 1:3 with the incubator contributing up to $150,000.