A Government agency is defending its decision to award a $5.9 million research and development grant to NextWindow, a Canadian-owned company that has its headquarters in New Zealand but manufactures in Asia.

The digital touch screen maker employs about 60 R&D staff at its Auckland head office.

NextWindow's funding is the largest slice of a new $50 million allocation of Technology Development Grants announced last week.

Other companies with foreign owners to receive grants include Auckland's Atlantis Healthcare, which is half-owned by a British private equity firm, and telecommunications company Open Cloud, whose shareholders include Nokia Siemens Networks. NZX-listed software developer Xero will receive $4 million, despite trumpeting at its annual meeting in July that it had a "strong cash position", with $16 million on hand.


The grants cover 20 per cent of a firm's R&D costs over three years, which suggests NextWindow will spend about $30 million in the coming 36 months.

The Ponsonby-based company was wholly acquired by Canada's Smart Technologies last year for an undisclosed sum. Nasdaq-listed Smart, which makes interactive whiteboards, reported US$790 million ($960 million) revenue in the year to March.

Labour Party spokesman for science, research and technology David Shearer said the nearly $6 million awarded to NextWindow was "a bit rich" considering the number of firms that missed out on grants.

"It's a question of fairness," he said. "You've got a company like [Next Window] that's getting a grant when there's a whole lot of companies that are completely missing out ... [last year] about 60 per cent of those that applied didn't get funding."

The Ministry of Science and Innovation's Brett O'Riley said an independent advisory group had been satisfied that NextWindow met the criteria for its grant. The company paid tax on its profits, he said, and was developing the skills of its R&D workers, which helped to expand New Zealand's technical capability.

Despite its foreign ownership structure, its intellectual property remained in this country, O'Riley said.

NextWindow chief executive Al Monro said many local technology companies were foreign owned, especially through the investments of offshore venture capital firms.

"Even before we were acquired by Smart, we were 65 per cent owned by a Kuwaiti fund, because it's really hard to raise capital in New Zealand."


NextWindow employed science and engineering graduates straight out of this country's universities.

"What we're really trying to do is grow jobs, grow skills and grow experience so that we can spawn more companies [in New Zealand]."

Monro said it was important that the Government encouraged overseas corporations to locate their R&D teams in this country.