NZ start-ups strong in foreign markets, survey shows

New Zealand start-ups have the highest percentage of overseas customers when measured against their counterparts from 50 other "ecosystems". Photo / 123RF

New Zealand start-ups have the highest percentage of overseas customers when measured against their counterparts from 50 other "ecosystems" including New York, Moscow, Beijing and London, according to the Compass Start-up Genome's Ecosystem Ranking Survey.

The Compass Start-up Genome project team is based in San Francisco and benchmarks so-called start-up ecosystems from around the world. More than 100 Kiwi start-ups took part in the 2016 survey, according to the Angel Association of NZ. In New Zealand, the survey was led by the Angel Association with support from NZX, NZ Trade and Enterprise, the NZ Venture Investment Fund, Ministry of Business, Innovation and Employment and Callaghan Innovation.

In the recently released overall index for 2016, New Zealand start-ups report a high 'Percentage of Foreign Customers' outside their continent at 32 per cent, confirming the fairly small domestic market and, more importantly, the ability to 'Go Global', the survey report said.

"What we are seeing with many of these ecosystems is a function of the small size of their national economies or their geographic locations. Start-ups in New Zealand have a few options beyond Australia, so most of them must go global quickly," it said.

New Zealand also ranks fifth when it comes to positive corporate interest and involvement with them, at 65 per cent. The global average is 51 per cent.

It also noted that New Zealand start-ups are ranked fifth to last in terms of the start-up experience of their growth teams, with only 48 per cent previously having at least two years of start-up experience.

Marcel van den Assum, Angel Association chair, underscored "the challenge for New Zealand is to apply higher levels of capability, capital and connections to those businesses that have real potential to scale and deliver a return on investment to all ecosystem participants."

According to the survey, New Zealand's local start-up ecosystem is estimated to be home to 400 to 600 tech start-ups and "New Zealand's angel-backed start-ups have proven their ability to scale globally by raising more than $500 million in growth funds."

The Ecosystem Ranking Survey supports research published earlier this month aimed at giving entrepreneurs a better understanding of how to present a start-up that's attractive to investors in New Zealand.

Massey University Master of Management student Hattaf Ansari worked with the university's start-up incubator - the ecentre - to investigate the criteria of investors in early stage ventures in New Zealand and compared that with similar US data. He found most New Zealand investors look for ventures that have international reach and are easy to scale.

BusinessDesk receives assistance from Callaghan Innovation to cover the commercialisation of innovation.