ICT and the USA are proving a winning formula for many Kiwi tech companies. Photo / 123RF
ICT and the USA are proving a winning formula for many Kiwi tech companies. Photo / 123RF
New Zealand's information and communications companies are driving the country's surging technology economy as it cuts swathes through the lucrative US market.
According to the latest Technology Investment Network (TIN) report - out this week - the ICT sector accounted for the largest share of revenue growth among the country's top 200 tech companies, which cracked the $10 billion mark in combined revenue for the first time in the 2017 financial year.
The year also saw ICT company Datacom Group take the number one ranking in the TIN report, a position long held by high-tech manufacturing stalwart Fisher & Paykel Appliances.
The report's "rising stars" category is also dominated by ICT companies, which accounted for 13 of the 22 in the mix. Accounting software firm Xero and tourism photography business Magic Memories took the number one and two spots, respectively, in that category.
Auckland-based mobile app developer Pushpay, which processes donations made by US churchgoers, took the year's "TIN Rocket Award" as it recorded growth of 227.5 per cent.
"Companies operating in ICT can often scale globally at a pace which is unattainable for the TIN200's traditionally dominant high-tech manufacturing companies," the report says.
"ICT firms frequently employ high-recurring revenue models based on cloud services, resulting in a higher tolerance to currency pressures and the ability to bypass export costs."
High-tech manufacturing and biotech companies are also increasingly integrating ICT solutions and big data into their business models.
In the case of case of logistics and transport fleet management company Eroad, its focus has shifted so much that it was re-categorised from high-tech manufacturing to the ICT sector in this year's report.
With its large, wealthy population, the natural market for such tech companies is the United States.
The report says about 90 per cent of this year's high-growth tech companies have strategies in the US, which lead author Deanne Bloom believes could soon overtake Australia as our number one market for tech exports.
"If the growth trend continues then yes, in a few years we could well see that," she told the Herald.
The report found that the 200 companies now contribute the equivalent of 10 per cent of all New Zealand exports and it attributed two-thirds of offshore revenue growth to the 18.8 per cent growth tech firms achieved in the North American market.
"The thirst for US growth is not limited to the TIN200's leaders. Early stage companies are increasingly seeking a US presence in order to reap the benefits of high volume revenue growth and scalability offered by the market's 320 million consumers," the report says.
The company leaders spoken to by the Herald all had ambitions to get a slice of the opportunities afforded by the US technology market.
"Starting a company is easy", says Kiwi tech wizz
Wellingtonian Ezel Kokcu is primed to launch her third tech company at the age of just 24. Photo / supplied
At just 24 years old, Ezel Kokcu has already founded two highly-successful ICT companies, with a third set to launch next month.
The ambitious Turkish-born Wellingtonian is an example of the opportunities at hand in the booming sector.
Kokcu's first start-up, STQRY (pronounced story), was founded during her first semester of a computer science degree when she was 19.
She and her team answered a call from New Zealand's national museum, Te Papa, which was seeking to enhance the visitor experience. They developed a mobile app that allows users to search for nearby arts and cultural attractions, and act as a guide once they arrive.
Within its first month, STQRY picked up five new customers, including Wellington Zoo and the New Zealand Portrait Gallery. Within a year, its customer base had exploded to 200 and, says the TIN Report, STQRY is now the world's number one tech provider for museums.
Kokcu's second company, Non-Stop Tix, was founded after she saw a gap to be filled in the ticketing field. She and her team developed a platform that could be used by venues and promoters organising smaller-scale music gigs. It was bought up by a promoter within a few weeks of going live.
She has now developed another ticketing platform for conferences and expos, called Passphere, which incorporates data analytics and marketing technologies.
It is due to launch next month and Kokcu hopes to go global in next year.
Speaking from Oklahoma, where she spends about nine months a year, Kokcu says her companies have all been created to address needs in a market and, contrary to popular belief, "it's quite easy to start a company".
"The things is, even before you start the company, bring in customers," she says.
"With STQRY, Non-Stop Tix and Passphere, we heard a lot of different things from potential customers and said, 'Hey look, if we bring you this product, would you be willing to come on board'? And a lot of the time the answer was yes."
In the ICT sector, innovators are able to provide simple solutions to problems that are traditionally dealt with by huge, complex systems and prove extremely frustrating for customers.
"I think as New Zealanders _ we have a great, great benefit in that we have a lot of kids that are really excited to get into tech; not only to work with established teams but also to start their own companies," she says.
New Zealand is a great testing ground for tech startups, she says, and even some international companies are using it to test their product or services.
"[New Zealanders] take their technology seriously and use it to its full capacity ... so we're just really lucky that New Zealanders are that responsive to new tech."
In that light, Kokcu does not recommend new techies head straight to the alluring US market.
"In saying that, my first company actually did do that," she says. "But with the landscape now, I think it's really important to get some case studies in New Zealand before jumping over to any other territory. Even Australia's really, really difficult to get into."
Despite her young age, Kokcu is already helping to mentor new New Zealand tech companies, "so they don't have to make the mistakes I did when I was starting up".
"From a young age I learned to surround myself with people that are better than me in some way. I don't know everything - I don't claim to be a doctor when I'm not a doctor.
"And it's the same for business. I don't claim to know things that I don't have a clue about. If you have an ego about it, it will really hinder the growth of your company."
Maori aiming to be "in the sunrise" of new tech opportunities: John Tamihere
The Maori tech economy is on the rise, with five Maori companies appearing on this year's list of the country's top technology businesses.
The Waipareira Trust's John Tamihere sees this "sunrise industry" as having huge potential for Maori, both from a business and a community perspective.
According to the TIN Report, the five Maori-owned or Maori investment-backed companies contributed an estimated $93.9m of total revenue out of the 200 companies. There were also a breadth of Maori companies touted as future candidates for the TIN200 list.
Whanau Tahi, which is owned by the Waipareira Trust, was ranked the year's number one "hot emerging" company, with revenue growth of 176.7 per. It is the first time the company has appeared in the prestigious report.
The company provides community-based healthcare and other ICT services.
"With an expanded product offering and the intake of more talented staff following the acquisition, Whanau Tahi is well placed to continue growing and to gain a further foothold in overseas markets," the report says.
Waipareira Trust chief executive Tamihere says the company is delivering great benefits to the community while using what have proven to be successful business strategies.
"We've got an integrated service platform which is not only about health: it's about the education status of a family, the welfare status of a family, employment status and if there's any justice issues," he says.
"You then start to identify things that could create huge cost to a state by doing wrap-around services and then far more early intervention."
Waipareira Trust chief executive John Tamihere says tech is a "sunrise industry" that offers huge opportunities for Maori companies. Photo / supplied
The Waipareira Trust saw that the technology was easily transferable to overseas markets and it has successfully started selling into the US market, including Atlanta's largest African American service provider, Families First.
Whanau Tahi is also in the process of signing up three native American tribes.
It is the first time the Maori tech economy has been included in the TIN Report, with the authors pointing out the significant impact Maori companies are having in the industry.
Tamihere says the technologies developed by Whanau Tahi and other Maori tech companies are "very liberating" tools for Maori.
"The world we know is changing and the thing is we've got to be in the sunrise of that change rather than the sunset of it.
"In other industries you've got to have significant capital, you've got to have significant know-how, significant networking and a whole range of other things ... So it's an easier industry - contrary to popular belief - to access and to give it a go."
It is important to "bring the magic" to the community and demonstrate that it's not "locked up in an ivory tower downtown somewhere", Tamihere says.
"There's only one way that we're going to get out of the negative indicators that we're locked into at the moment and that is to use every new methodology possible to break out. The digital platform - the digital world - is a sunrise industry and we have to start to populate the front end of it."
It's not only ICT companies that are making big inroads into the US market.
With the launch last week of its first road-legal electric motorbikes, Kiwi high-tech manufacturing company Ubco could be at a major turning point on what has already been a highly successful journey.
The designer and manufacturer of electric drive motorbikes, which saw 196 per cent growth in 2017, has already has already sold out its new range of vehicles and has a glut of pre-orders.
Kiwi company Ubco has already sold out of its new range of road-worthy electric motorbikes. Photo / supplied
The company recently established a new branch in Oregon and received direct US investment, which chief executive Timothy Allan says makes it perfectly poised to grow.
"The thing with North America is it's a really developed market or markets - you're dealing with 50 markets really because each state is so different," he says.
"You can achieve scale there and the thing is, with very developed capital markets when you're talking about the technology sector it attracts people.
Until now, Ubco's electric bikes have only been allowed to drive off-road. Even then, they were extremely popular.
Its new motorbike, which is capable of travelling up to 130km on a lithium ion battery, can be legally driven on the roads in New Zealand Australia, the US and Europe.
"When we started ... we were focused on the off-road, unregistered market which meant we could stay out of all the compliance stuff, which is great because you can test the bike, see it working in hard-working terrain and learn a lot," Allan says.
"With the new product just about to go into the US, that's where the big uplift will probably come from because it opens up that whole market."
Asked what the end goal was for Ubco, Allan refers to a recent comment by Rocket Lab founder Peter Beck, that New Zealand needs more billion-dollar companies.
