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Road to Silicon Valley turns rocky

I’m quoted throughout this piece on the decision by New Zealand Trade and Enterprise not to back ANZA here in the Valley… It’s a conference for emerging technology companies from downunder. I really like ANZA – and would have supported it by participating on panels if I had time.

When Peter Griffin of the NZ Herald asked me for my thoughts, here is what I told him. I’d say the road to Silicon Valley is as rocky as you choose to make it and that ANZA should continue to be a success and avenue for NZ companies:

I can’t speak for NZTE. What I would say is that any NZ company can still get involved with ANZA so the avenue is open. And ultimately they (the companies) have to determine the success of the program via their participation – not the sponsors. So, if NZ pulls out of ANZA it will be because the Entrepreneurs didn’t see value in it – not NZTE.

How many NZ companies are signed-up to go? Not sure on that.

I definitely know ANZA is not the only organization setting out to link NZ & Australian start-ups with investors and partners in the US. Let me address that on several levels:

  1. The US beachhead program is targeted at companies of all levels – not just established. For the past few years we focused the program heavily on the early stage start-ups and now NZTE is balancing the program out with more mature tech companies – that is the right thing to do. 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). Disclosure – I helped found the beachhead program and chair the technology beachhead in the US market.
  2. One of the primary activities we engage in is linking start-ups and Entrepreneurs to partners and VCs. Case in point – next week I have two companies – both very early stage, here in the Valley for no less than 10 meetings that we have arranged.
  3. There are many other avenues a NZ start-up has to the US market from networking organizations like KEA through VCs in NZ, consultants and NZTE itself. They could also choose to attend any number of US events such as AlwaysOn and RedHerring (like Eurekster has done). I think that NZTE would be supportive of this should they approach them.
  4. I do believe that NZTE is doing the right thing in focusing its efforts. They/NZ have scarce resources so concentrating on things like the Beachhead program and delivering results through that is critical.

Should NZ companies attend ANZA? I think ANZA is a very useful educational forum and venue for sharing experiences and networking within the start-up community. I am not sure what metrics they have for securing funding etc for participating companies so can’t really speak to their value on that front? I’d suggest that NZ companies looking to achieve this check-in with other NZ companies that attended in past years as to its effectiveness for them. The companies I have spoken to about ANZA have seen value in the panels and speakers – and the post event networking.

Remembering that these companies are competing for money with US companies – I’d recommend that they invest in events like AlwaysOn, RedHerring and Demo.

Also interested in your views on the overall appetite in Silicon Valley for incubating and investing in companies from this part of the world. Are you seeing enough innovative NZ start-ups coming through to attract attention over there? Is the Government doing enough to encourage the development of strong ties between New Zealand and Silicon Valley companies?

I’m very active in both markets (VC and NZTE USAB in NZ) + CEO/CMO of start-ups in the Valley (working with many of the top VCs here)… So, I think there is always an appetite for great ventures, ideas and talent irrespective of where they have come. In fact, I think the flattening of the planet and willingness to engage in ventures in China and India will only benefit NZ over the long run.

I’m seeing more and more tech companies looking at the full range of funding options – from AIM, to the Valley and US-based angels. At the end of the day 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.  What NZTE can do is serve a group of ventures – not all of them.

What the Government can do via things like the Beachhead program is make terrific connections and light-up networks for the Entrepreneur to take advantage of. They can also marshal expertise and smarts onshore and bring them to bear on early-stage enterprises – strengthening them before they do head offshore. An example of this is the recent addition of Rod Drury to the NZ Beachhead onshore – a terrific move. I also think some of the new brand work around “New Thinking” is great and will help us define an investor-friendly brand for NZ that leverages recent success in the entertainment sector. This is a good example of how the Government can provide great air cover.

I do think there is a lack of knowledge and maturity in how NZ companies seeking funding approach funding in the US market. And, that this will require new approaches to increase the number of companies getting access to offshore capital. For instance – tighter mentoring and discipline through the investment process. It is something I am going to track over the coming year. It might also require a more commercial approach than we have now.

At the end of the day though these companies need one thing more important than capital – they need smart money. Money that comes with brains and connections. Without that they would have been better off securing the money onshore at a cheaper rate.

If you are interested, ANZA takes place in the Valley over the next week.

To all of this I would add that Governments can only bear the burden of growing companies for so long. NZTE have taken a good swing at it. How about some of the Enterprises in NZ step-up – especially those who directly benefit from global commerce – airlines, telcos, software platform and tools vendors…

2 Responses

  1. By Steve on October 24th, 2006 at 9:08 pm

    Andy, I’ve sent you an email. On our way!

  2. By Paul Spence on October 29th, 2006 at 7:46 am

    Andy, I agree that ANZA is a great event for companies that are ready. But I’m not surprised NZTE opted out.

    About a year ago I invited ANZATech to engage with NZ firms through ION. I was told that “New Zealand was bit overloaded with networks.” Since then I’ve only ever seen them promoting Aussie firms.

    Well, here in Wellington we’ve managed to boost some mighty fine companies of late, partly as a result of the social capital we’ve been quietly building. And I strongly believe there will be more successes as we leverage a second wave of ventures based on the “smart money” that you and Rod talk about.

    Networks are a good thing. Even better still, are the change agents who bridge the networks and bring together clever people, smart ideas and capital.

    http://www.ion.net.nz

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