Rocket Lab founder Peter Beck has built a company with a private equity valuation of more than $1.5b. Photo / Supplied
Rocket Lab founder Peter Beck has built a company with a private equity valuation of more than $1.5b. Photo / Supplied
EDITORIAL
Technology Investment Network director Greg Shanahan says it's time for the technology sector to get the respect it deserves. He's right.
There are lots of tech companies in hiring mode. Rocket Lab - which already employs 500, most of them in Auckland - is in the process of recruitinganother 100 NZ staff. Another local hero, point-of-sale software company Vend, wants to add another 125 positions to its existing 300.
Those aren't cherry-picked examples. A survey by Shanahan's organisation last year found the technology sector employs 25,451, with salaries significantly higher than the national average. The likes of Fisher & Paykel Healthcare and Datacom (both of which have around $1 billion in annual revenue) have become some of our largest companies.
Some 25 tech companies generate annual revenue above $100 million.
Compiling the Herald's list of the 40 most powerful people in tech, the hardest part was who to leave out.
Shanahan's 2018 report, backed by NZ Trade and Enterprise, found tech companies operating in NZ had total revenue which increased 11 per cent to $11.1b, while revenue from tech exports jumped 12.4 per cent to $7.9b.
That makes technology one of our biggest earners, on a par with some of our primary industry mainstays.
New Zealand has no shortage of entrepreneurs with good ideas but our venture capital scene is immature, our R&D spending low next to other OECD countries and incentives for startups are Spartan.
For context, Statistics NZ figures show the dairy industry generated export receipts of $15.1b per cent in the year to May, sheep and beef $7.7b, forestry $5.5b, fruit $3.4b and wine $1.8b (international tourism sits outside Stats NZ's commodity survey but brought in $16.2b last year, making it our top foreign exchange earner). All grew at a decent clip, but none as fast as the tech sector.
And while many of our traditional exports are low-margin commodities, a number of our high-tech companies have created high-margin global niches where they are the leading player or sometimes the only player - think Rocket Lab with small-satellite launches, PushPay with its virtual tithes or Vista Group with digitalised cinema management and marketing systems.
It was downright unfashionable to make a profit during the dotcom-boom but today's techs are in the black. Shanahan's survey of the top 200 tech firms by revenue found an average 38 per cent increase in operating profit. "Tech companies are not only growing but growing profitably and there are no signs of any slowdown," he said.
Rocket Lab successfully launches seventh Electron mission, deploys seven satellites to orbit. Photo / Supplied
"If you read a lot of the blogs and media, there's a perception that some kind of technology is some sort of joy ride that will never make any money, that it's some sort of bubble-like phenomenon rather than mainstream business," Shanahan said.
Rocket Lab founder Peter Beck has built a company with a private equity valuation of more than $1.5b, while pointing out New Zealand should have far more "unicorns" (or companies that have reached a $1b valuation pre-IPO).
New Zealand has no shortage of entrepreneurs with good ideas, he says, but our venture capital scene is immature, our R&D spending low next to other OECD countries and incentives for startups are Spartan.
For the likes of Beck and Shanahan, moving to a higher-wage, more productive economy means embracing the technology sector. The recent 15 per cent tax break for R&D is a good first step, but modest against similar move across the Tasman. The same goes for the Super Fund being nudged to support a new $300m fund aimed at startups that will help to plug the VC gap.
Those are baby steps. We need to take bigger strides to support the tech sector, and part of that is shifting our mindset to accept it's no longer the domain of geeks but a mainstream part of our export-led economy.
