Incubation period

In the heart of Parnell's Textile Centre, an open-plan office covering half a floor buzzes and hums with over 15 innovative start-up companies and an ever-expanding raft of mentors, advisors and the occasional angel.

It's the site of The ICEHOUSE, styling itself as a business accelerator, and an adjunct of the University of Auckland's business school, dedicated to making innovation work.

As one of the oldest incubators in what, by any measurement, is still a fledgling industry, the ICEHOUSE is heading into its fourth year with some statistics stacking up its goal of helping companies, from start-up through to established SMEs, looking to ramp up their exports.

By international benchmarks, New Zealand's incubator industry is barely out of start-up mode itself compared to 10-plus years in US and Europe. However, figures suggest that New Zealand companies are quicker to see the value of innovation with 40 per cent of the knowledge-based start-up companies in New Zealand based in incubators, compared with around 5 per cent elsewhere in the world.

What that means, according to ICEHOUSE incubator director Dave Wrathall, is that incubators are getting the mix right in providing the big three support mechanisms that fledgling technology companies crave: mentoring, capital and infrastructure support.

The incubation process works. To date, the ICEHOUSE has exited six high growth companies (a high growth company scores three out of four goals, doubling employment numbers, turning over $0.5m and raising VC of $0.5 during incubation, with potential to turn over $5m within three years of exit).

One of these high growth success stories took out the top innovation award at the ICEHOUSE inaugural awards late last year: Climate's innovative powder coating process winning both best Start Up and Greatest Innovation. Dave Wrathall explains: ``Climate was a clear winner because it demonstrated true innovation that is believed to be a world first in its field.''

Climate is a New Zealand technology-based company that is on the verge of changing the face of the furniture-joinery industry and potentially the wider building industry, both locally and internationally. The team has developed a powder coating process concentrating on quality and consistency in coating engineered wood substrates such as MDF and plywood.

ICEHOUSE CEO Andy Hamilton believes that fully supporting innovative companies doesn't just stop at the door.

``We must be more strategic in how we see the New Zealand innovation system. We need to understand what it is, what the segments are i.e. ideas/start-ups/emerging exporters/established exporters, and how we are going to support each of the segments and how many companies are at each phase.''

He says encouraging innovation comes from within. In the case of the ICEHOUSE, that means from the raft of support mechanisms available to businesses. For instance, we can tap into expat brains through KEA, which encourages New Zealanders and others offshore to remain connected with New Zealand and provide growing New Zealand companies and individuals with a simple way to establish professional contacts in global markets.

It also acts as a conduit for New Zealanders and others offshore to put their skills and expertise to use when in New Zealand, as mentors, advisors or consultants to educate fledgling businesses.

``Or'', he says, ``when the idea needs more than just a helping hand, then it might be time to call on the angels.

``The ICE Angels are part of a growing network of private investors who are putting their money collaboratively into young enterprises to help turn the innovative ideas into commercial reality.''

The idea is simplicity itself, but according to the two companies funded so far by the ICE Angels, the value is enormous. The ICE Angels connect high-potential start-up ventures, with willing investors to facilitate the funding and success of emerging companies. The angel investor network is a collective of private investors who have banded together to increase their `deal flow'.

Typically, angels are experienced entrepreneurs and business people who take an active interest in the management of their investee companies. ICE Angels is not a venture capital fund, though venture capitalists are affiliate members.

Andy Hamilton says innovation is the lifeblood of business. It is recognised that to compete and win internationally you will need to have differentiation and a sustainable competitive advantage

``Our knowledge-based businesses will not just come out of universities or CRIs as some people believe. They will come from where we already have distinctive and world-leading capability or where we develop such in the future,'' says Hamilton.