New Zealand should focus on increasing the number of small, early-stage, high-growth companies fourfold by 2015 rather than aspiring to have five Fonterras in place by the same deadline.
“It (Metro Innovation Project) isolates early stage investing as critical to New Zealand’s goal of getting back into the top half of the OECD’s economic rankings. “Achieving this requires five companies of an equivalent size to Fonterra or 3000 ‘globally capable & competitive’ firms – four times the current number.
Five Fonterras is unlikely and unrealistic, therefore four times the number of ‘globally capable & competitive’ firms by 2015 needs to be the goal.”
That’s the thrust of the Metro Innovation Project chaired by Andy Hamilton.
The investment culture in NZ is different to overseas in that most early-stage companies attracted angel funding first, and then venture capital came later.
Hamilton: “The reality is that the venture capital model is much challenged internationally and in NZ it’s no different. They’re struggling to get the returns and the support from the institutional investors, whereas there’s a lot of angel money and people with angel money out there.”
“It’s easier to get angel money for start-ups: the problem though is that a lot of these angel companies will go on and need a lot of capital, which is where VC comes in and why that is actually very important.”