Is it time to let our companies fly? Report unveils NZ ‘unicorns’ create more than $34 billion in value
Last year Peter Beck addressed this topic when he declared: “Instead of lamenting the fact we lost another one we should be celebrating the fact it went global. We have to understand that you can reach a certain size in New Zealand then you have to become a global company.”
His words draw parallels to New Zealand tech sector’s biggest success stories, such as 90 Seconds, Vend and Xero, who have pulled in overseas VC firms to leverage the capital needed to scale up. Moreover, the report, Growing The Pie, estimates these NZ ‘unicorns’, which further features A2 Milk, Xero, LanzaTech and Rocket Lab among others, have between them created more than $34 billion in value. However, the net benefit of these companies to New Zealand is far greater than the economic value.
Crone says, when a founder exits the business they often use that capital created to feed new businesses, inspire new start-ups, or continue to help New Zealand businesses through philanthropic causes.
“Company exits are very controversial, we don’t necessarily like when our founders sell out overseas, but what we see here is it is a necessary part of building an ecosystem.
“The report clearly shows that cycle, or pattern, of what we see is the growth of that innovation system over the last decade and proves how we can clearly link company exits to that.”
Certainly, there is reason for people to be torn about foreign venture capitalists buying out local companies, but the reality is in New Zealand: there is no venture capital community. At least that’s what Beck had to say, aswell as, “You’ve got folks like Stephen Tindall trying to make a difference and doing a good job, but apart from that, the venture capital industry in New Zealand is shocking.”
So why is there still a stigma against companies being plucked by overseas investors? Perhaps it is rooted culturally, where as a country we feel an element of national pride when a business succeeds, therefore we are sad to see them go.
Crone states: “I think that we are the youngest country in the world, therefore our sophistication and understanding that this is often what successful businesses are about is the growth potential of the business, especially if it is a fantastic idea on global stage, it is hard to achieve that level of potential from New Zealand.
“Part of it is how we mature as a business sector and innovation sector to better understand that.”
Another cultural shift signified in the report is that today’s breed of entrepreneurs are hugely ambitious and socially conscientious, and that the old adage about our businesspeople wanting ‘a boat, a bach and a BMW’ no longer applies.
Asked what this means exactly, Crone says, “If you were to look ten to fifteen years ago, many business people aspired to create a successful business, and one that gave them a great lifestyle in New Zealand. This was typically referenced in the beach, the boat, and the bach. So, if you had a five to ten million dollar exit, then life was great for me.
“But, what we have seen with the likes of Stephen Tindall, Rod Drury, and Peter Beck is that we can solve the world’s problems from New Zealand. And that we can create businesses that can fundamentally change the world.”
Another value to companies achieving overseas success is that it lifts business confidence, and helps nourish new pioneers coming through.
“What I am seeing coming into the ecosystem is a lot more confidence, so that mindset is shifting from creating a personal lifestyle to solving the world’s issues,” Crone says.
“We are a huge fan of that at Callaghan Innovation, one thing we know is that we have fantastic ideas in New Zealand, where we struggle is to commercialise those ideas into globally scalable businesses.”