Raising "serious" capital has long been an issue for NZ business but what examples would you provide of businesses who have been able to achieve a lot with comparatively limited capital injections?
There are many examples but one that springs to mind was a New Zealand online gaming (internet games) company that developed a game for a specific niche i.e. mature gamers who had young families and wanted to relive their youth.
By targeting a specific niche this company was able to launch its game over the internet directly into the US. It was free to use and so the US market took off. The programmers hired designers to make little artefacts that could be bought for cash. For example, you might pay US$100 ($145) to buy a sword for the soldier that you are taking into battle.
This was a bunch of programmers eating pizza that managed to bootstrap their way into a significant business and then large Asian players asked for rights to tailor the programme and language for their region. No angel investment required here. Just a clever business model and a bunch of clever mates.
In your experience of overseas businesses what are the most innovative approaches to future-proofing operations that you have witnessed?
The real challenge is to move into a brand position before your innovation is copied. This requires speed, capital and entrepreneurial talent. I'm not expecting to find a lot of patentable IP in Hawke's Bay (but it would be great if I am proven wrong) and therefore speed of execution and international partnerships will be critical to future-proofing.
Establishing a brand that is recognised globally is hard but NZ does have some great case studies - Zespri, Icebreaker, The All Blacks etc, and thousands of niche players that have built significant brand presence in their niche area - 42 below, Grinding Gear Games, Ecoya.
The most innovative approach I have seen is where the New Zealand company leverages our natural advantage of "growing great things". So, on the one hand they are a supplier but on the other hand they have entered into joint ventures around trade mark ownership and product development. This means that their offshore Joint Venture partners pay royalties back to NZ in addition to the supply sales.
What do you expect to be Hawke's Bay's future regards up and coming or new export goods/technology?
I expect that Hawke's Bay will embrace new technologies but historically we have developed technology on the land and it has been shared across our farming and growing communities without much thought about the value of the IP.
Of course, we don't want that sharing to stop, but I think we will increasingly see more IP savvy entrepreneurs who recognise the value in the technology itself, validate in the local market and then rapidly export into Australia and further afield.
Are you impressed with the amount of co-operation within Hawke's Bay's business community, following the formation of both HB Angels this week and the setting up of other businesses aimed at helping expand other individual businesses and how vital to success are this type of collaboration?
I don't really see Hawkes Bay as being different from anywhere else. If you provide a good service then people will hear about it and you will continue to grow.
The reason I think that a formal investment group works as opposed to lots of smaller individual groups is that you can establish good systems and processes and benchmark company valuations, governance standards, business opportunities etc. against a "best practice".
I can get on the phone and chat to other group managers and understand how deals are being done, what valuations are being achieved and perhaps there is a member of another club that can assist in due diligence. The volume of quality deals that we can access gives us a significant advantage over smaller groups of individuals.
I see a lot of local investors paying too much for deals because they are not quite sure how to value these young high growth businesses.
Inexperienced early stage company investors often think they can pick a winner. But time and time again they learn over time that you need a portfolio of at least 10 companies to cope with the high failure rate and the inability of picking winners.
This portfolio approach is something that a formal angel group can provide.
