Fertile soil for ideas to grow into profit

By CHRIS BARTON

Massey University's e-centre on the fringe of the Albany campus is truly the future of business - at least it will be for the next 12 to 36 months for 11 enterprises that have just taken up residence.

Besides having full occupancy before its official opening today, the most remarkable aspect of this $2.5 million high-tech incubator is that it is up and running without any Government help.

The purpose-built centre has sprung from a three-way partnership of Massey University, which provides the land and administration, North Shore City Council, which stumped up $500,000, and the Tindall Foundation, which put a $2 million loan on the table when the project was in danger of foundering.

It was Warehouse chief Stephen Tindall who, at a critical planning stage, cut to the chase. It went something like this: "So you're saying you can make this happen if you can get the money?" he asked the meeting.

"Yes," came the reply.

"Okay, how much do you want?"

The anecdote, which has probably become a little exaggerated in the telling, highlights a key difference between Government and private sector efforts to kickstart the knowledge economy.

The private sector knows how to move in internet time - very quickly and when the opportunity arrives.

In contrast, the Government moves on high-tech matters little faster than a sloth.

Although Industry New Zealand has been given money to promote incubator developments, the amount is grossly inadequate - $2 million in 1999-2000 and $2.25 million in 2000-2001 - and progress has been painfully slow.

Last year, $1.3 million of the money was diverted to a seminar and deal-making advice programme run by local councils' development agencies and venture capital promoter I Grow New Zealand - leaving $684,000 for incubators in the financial year ending on June 30.

But while the e-centre would have loved a $2 million Government grant to get off the ground, it's not looking back. One of its main advocates, Massey University director of research Dr Chris Kirk, welcomes belated Government recognition of the need for incubators.

The concept is not new. The United States, for example, has more than 800, and our private sector has spawned entrepreneur Dennis Chapman's education incubator in Christchurch, and a building in Wellington's Botanic Gardens that is home to 22 start-up firms.

A number of tertiary projects are under way. They include Unitec's Centre for Innovation and Entrepreneurship, which has two information technology businesses hatching, Victoria University's Innovation Greenhouse, AUT's Technology Park and the Canterbury Innovation Incubator - a partnership involving the Canterbury Development Corporation, Orion New Zealand, and three tertiary bodies.

Research, Science and Technology Minister Pete Hodgson said yesterday that he recognised the Government's incubator support scheme needed reinvigorating but was not sure if it needed more money.

He is meeting about 19 incubator organisations on Tuesday week to iron out problems.

The e-centre, like all incubators, aims to nurture new business - recognising that start-ups find it difficult to raise capital.

Other problems also arise. Small firms and innovators often overestimate value and underestimate risk, do not know how to present proposals, and are unwilling to share control or provide information on their ideas in return for capital.

"It's all about wealth creation," say Massey's Dr Kirk.

"We're a technology laboratory on the North Shore. Our aim is to nurture and grow new businesses and then they go out into the community."

Dr Kirk estimates that after 10 years, if the e-centre does its job and pushes "a couple of hundred" companies into the community, the effect will be "about $1.5 billion of additional revenue."

He bases this estimate on the idea of the start-ups graduating to the local environment - possibly in the shape of a technology park - and the flow-on for local jobs and services.

And he believes knowledge economy rhetoric can become reality if local government, business and universities work together.

E-centre manager Steve Corbett says businesses joining the centre must want to expand both here and overseas. He expects a bias towards technology-based businesses - even though the "e" stands for enterprise, excellence and entrepreneur, not electronic.

So what does an e-centre look like?

From the outside, the building is a nondescript two-storey box overlooking scrubby bush flanking the Oteha Stream.

Inside is 2000 sq m on two floors with glass-partitioned incubator units of various sizes arranged around a central stairwell and cafe.

But the utilitarian feel of the building is probably well suited to its purpose - to provide an environment for entrepreneurial creative talent to mix and "to grow and go."

As well as floor space - at market rentals - the centre provides its businesses with easy access to administration services, business advice and venture capital.

The nearby university provides a ready-made workforce.

The first tenants include Iosis, a group of Massey University graduates hoping to build their website development business.

They have honed ideas around directory databases and have found a niche in supplying services to local government.

So far, it is going well, and the company has generated about $50,000 in sales in the past two months.

"We could have gone and worked long hours, unloved, for good money for some computer company," says Iosis developer Heath Barclay.

"But we decided to go for broke and give our own ideas a go."

Another tenant, so new it still does not have a company name, is headed by Mark Watt.

Having secured private funding, and about to appoint former BellSouth head Keith Davis as its chief executive, the company plans to develop a universal TV set-top box - one that can receive multiple inputs from broadcasters and provide interactive and internet services.

Mr Watt is moving in because everything he needs to get growing is there.

"This is a superb concept. Everything is so easy - administration and services on tap and a great pool of newly educated talent to draw on."

Links


e-centre

Centre for Innovation & Entrepreneurship

Innovation greenhouse

Electronic Commerce

Invest New Zealand Incubator Initiatives

Industry New Zealand

Technology New Zealand