By Rod Oram
All of a sudden about 18 months ago New Zealand caught high-tech fever. Forget the old economy, make way for the new has been the catchcry since.
A flurry of activity has seen tens of millions of dollars raised for venture capital investment, a dozen or so companies converting themselves to tech stocks and scores of deals done.
The need to re-make the economy is obvious. Low value commodity exports can't sustain New Zealand's standard of living. Handily, some of the foundations for high tech growth were already in place.
"We've found lots out there," says Jenny Morel, the Wellington investment banker who has pioneered the raising of venture capital in New Zealand.
In the past couple of years she has amassed a $27 million pool of money, flying in the face of conventional wisdom that New Zealanders were not interested in such relatively high risk/high reward investments.
Morel and Co has built up a database of some 1400 small high-technology companies and believes there are many more besides.
Beginning last year, Ms Morel and her colleagues began picking companies in which to invest. So far they have taken stakes in Tacit Group, a North Shore City designer of software for financial institutions, and TimeMaster Systems, a Christchurch developer of internet business services.
There's no shortage of good business ideas but there is a shortage of good management, says Ms Morel. The weakness is two-fold - in the startup companies themselves and in the lack of seasoned executives from lower tech, mainstream businesses to mentor them.
But if a good idea is combined with capital and management, growth can be fast. Tacit, for example, has grown its staff from 70 to 155 and opened an operation in Britain since Morel and Co invested in it last July.
A key factor behind the raft of small companies has been economic liberalisation, says John O'Hara, founder of the Voyager internet service provider and now chief executive of Wel Tech.
"The worst thing we ever did as a country was to bring in import licences in the 1950s. We created a generation of business people who believed you didn't have to compete."
Opening up the economy has turned that around but skills and experience are still in short supply.
"Hundreds of technology companies in New Zealand have great products."
But when it comes to finding ones to invest in, the pool "shrinks dramatically."
Now that the money is flowing at last, more attention is turning to improving people' s skills. A number of new education programmes are springing up to meet the demand.
Auckland's Unitech, for example, has set up the New Zealand Centre for Innovation and Entrepreneurship.
The centre hopes to begin offering in July a masters degree in innovation and entrepreneurship, the first in the country. It is also opening next month an incubator for four or five startup companies.
Declaration of interest: Rod Oram is a member of the Industry Advisory Board for the New Zealand Centre for Innovation and Entrepreneurship.
Growth pains limit march of technology
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