Road to Silicon Valley turns rocky

Andy Lark, who runs the Trade and Industry operation in California, says there are many other routes to the US apart from Anza

The Government has pulled support for an Australasian initiative designed to smooth the way for tech companies trying to break into Silicon Valley.

New Zealand Trade and Enterprise is no longer sponsoring the San Francisco-based Anza Technology Network, which regularly holds investment and networking events in Silicon Valley and has 5000 executives in its network.

Founded in 2001 with backers including Intel Capital, Macquarie Bank and Investment New Zealand, Anza has helped New Zealand companies such as Ask Agent, make contacts in the United States IT industry.

But New Zealand Trade and Enterprise's support of the initiative has waned as it puts more emphasis on its Silicon Valley beachhead programme, formed in 2003, which helps New Zealand companies establish themselves in the US.

Anza chief executive Viki Forrest said the withdrawal of NZTE threw into doubt New Zealand involvement in the scheme and the sole New Zealand board position held by Andrew Hamilton, who runs the Auckland-based Ice House technology incubator, was under review.

"As a non-profit organisation we need financial backers. We've a great link with Andy but there was never a quality engagement between Anza and the beachhead," said Forrest, who still encourages New Zealand companies to take part in Anza events.

Peter Bull, NZTE's Los Angeles regional director for the Americas, has already resigned from the Anza board.

New Zealand's financial backing for Anza has ended as the network starts expanding. Forrest said Anza had signed a three-year deal with the Victoria Government to run a scheme called Fast Track to the USA, which puts Victorian tech start-ups through a 15-month programme that prepares them for the US market.

"The Victoria Government has said commercialisation is important. We're not after companies in early research and development but those in early commercialisation," said Forrest.

NZTE had told her the Fast Track programme would conflict with the activities of the technology beachhead if applied to New Zealand companies.

Anza has partnered well-known technology investor Saeed Amini, who has set up a technology incubator in Sunnyvale, California.

Anza member companies will be able to join the incubator, which is situated in the former semiconductor plant of electronics maker Phillips.

"Saeed's extremely well connected and the incubator covers everything from one individual in a cubicle up to start-up size. The whole IT infrastructure is provided for them."

Hamilton said Anza had struggled to gain traction in New Zealand since its formation in 2001.

"The issue is that there is a lot on offer in New Zealand with a very small market, which means initiatives like Anza don't really get the cut-through and are probably not worth the investment for New Zealand Trade and Enterprise."

He saw Anza and the beachhead as complementary. The beachhead programme helped more established companies already operating to grow, but Anza was aimed at early-stage companies thinking about "international expansion and in particular [to Silicon] Valley".

But with limited funding and a range of initiatives to help Kiwi companies abroad, Anza was overlooked.

The chairman of the Silicon Valley beachhead, expatriate businessman Andy Lark, said: "If New Zealand pulls out of Anza it will be because the entrepreneurs didn't see value in it - not Trade and Enterprise."

There were many other routes to the US market for Kiwi companies, including the Kea expatriate network, New Zealand venture capitalists, technology events such as AlwaysOn and Red Herring and through NZTE itself.

"I don't think the Government can play a big role in building those ties directly. Remember that the culture and approach to business here is very different," Lark said.

The technology beachhead's focus had shifted from start-ups to include helping more established companies gain a foothold in the US market.

"If I look at the current portfolio of companies it is a blend of the likes of Sonar6, SurveyLab, Hyperfactory, Esphion, all early-stage, and more mature companies like Rakon and Tait, who are all challenged by the same market entry issues as the start-ups," said Lark. He believed the addition of Aftermail founder Rod Drury as a beachhead adviser in New Zealand was a "terrific move".

There was a lack of maturity in how New Zealand companies sought funding in the US market.

"This will require new approaches to increase the number of companies getting access to offshore capital.

"These companies need one thing more important than capital - they need smart money that comes with brains and connections.

"Without that they would have been better off securing the money onshore at a cheaper rate."

Hamilton said a support network for tech companies arriving in the US was crucial to their success.

"From what I can see we have too many companies heading off to the markets without a clear plan and the resources to be able to do it seriously and hang in for the long run."

He saw the beachheads as a useful "end to end" route to take technology companies to foreign markets but they needed to go to "another level", building up advisory boards and working more closely with the companies to help them tackle their chosen markets.

Forrest said she was looking for a potential replacement sponsor for Anza in New Zealand.

But Hamilton thinks it is unlikely that a new local sponsor will put up its hand to fill the funding gap left with Trade and Enterprise's withdrawal.

"I don't think so, to be honest. We will still be a part of the network and will try to support it," he said.

"As a country we need to focus on a few things and do them really well with a small number of companies.

"The true battle is how we get these companies to listen to the sage advice that is available to help these companies take on the world."