Business start-up support

Kiwi digital start-ups have never had it better.

The provision of new technology toolsets by big tech companies, coupled with more accessible venture capital funding in New Zealand, means it is now easier than ever before to fund a digital start-up.

Good times are happening for the Kiwi information technology industry, despite an ongoing international skills shortage.

New Zealand software development specialist Company-X has helped with business start-up support, alongside government agencies and big tech, since it was founded by software specialists David Hallett and Jeremy Hughes in December 2012.

Company-X appeared on the Deloitte Asia Pacific Technology Fast 500 for three consecutive years, consistently ranking as one of the fastest-growing technology companies in the region.

Hallett and Hughes recently invested into a $40 million fund established in 2020 by Hillfarrance Venture Capital founder and managing partner Rob Vickery to help encourage start-ups.

Vickery, who named his venture capital fund after his home village in Somerset, UK, immigrated to New Zealand in late 2020 after a decade in venture capital in Los Angeles, USA.

With the backing of Company-X, Vickery is seeking to make around 20 investments in predominantly digital start-ups.

“We’ve been working in the start-up space for decades,” Hallett said.

Both Hallett and Hughes ran their own software development companies before meeting through the Digital Industry Forum in 2009 and founding Company-X in 2012.

“The issue has always been capital constraint. Many of the people that we've dealt with have sold their houses.”

“When Company-X was offered the opportunity to support Hillfarrance Venture Capital fund for New Zealand entrepreneurs it was a no brainer,” Hughes said.

“Company-X has helped US-based Fortune 500 companies with innovation for nearly a decade, and this fund is an opportunity for us to help New Zealand entrepreneurs in the same way.

“By supporting Rob Vickery’s Hillfarrance fund we are promoting and encouraging entrepreneurs and the growth of the tech sector in the Waikato and New Zealand.

“There’s a whole toolset now that enables that,” Hughes added. “There’s a lower bar to entry and a higher chance of success.”

Building a minimum viable product (MVP) with just enough features to be usable by the client has become a popular and efficient way to validate an idea.

Company-X designed and built an MVP version of the Waikato Expressway Testing Application (WETA) for City Edge Alliance in under a week, before spending just under three months refining the end product.

“You can completely refactor what you started with,” Hughes said.

“You don’t have to do these big-think waterfall projects. You can start with something and if you do it right, that sets the basis going forward. That completely changed the game.”

Before the advent of cloud services, like Amazon Web Services, start-ups needed to buy a lot of hardware and the costs were huge.

“You had to go and buy or lease all this infrastructure so that you could put your app on it,” Hallett said.

“Now you spin up a virtual machine instance, or you build your application serverless . . . you don’t even need servers. You can build in a serverless environment which is elastic.”

The elasticity of a serverless environment makes projects scalable, with start-ups able to dynamically increase and decrease resources based on requirements.

The introduction of follow the sun servers, delivering minimal lag time, was also a game changer.

“With Amazon Web Services you just click a button and say where your application is housed to move around the globe, so that it’s close to where the users are awake,” Hughes enthused.

“Crazy stuff like that was not available 10 years ago.”

“Amazon is the thought leader in this space, and also the tech leader,” Hallett added. “To think they started building this to provide the infrastructure for their own online bookstore. They built this because they saw it as necessary for their own ecommerce solutions.”

“Those things have enabled a substantially different approach all the way up. Start-ups can begin without much venture capital because they don’t need big severs and data centres, or have the big costs that come with those things,” Hughes said.

The adoption of Apple, Google and Microsoft App Stores around the world, means software no longer needs to be shrink-wrapped and shipped to a reseller, as apps are easily delivered electronically to their markets.

“You used to need a huge marketing campaign, but now you can publish apps in the app store that aren’t advertised but are accessible to users. You can just tap a button on a website and the app is on your device,” Hallett said.

“These are technical things that are way below the radar of investment companies and founders, but they have profoundly changed the game,” Hughes said. “All of that reduces your investment, that increases the number of people that can play, a lot greater catchment of innovators to actually get as far as getting something out there, instead of getting stumped on how to pull that together.”

Better access to funding and new tools meant the creatives of the world could afford to explore their ideas earlier.

“University graduates can get together and just start building an idea and see if it’s going to work because they have got distribution channels and they have got scale from all of these services,” Hallett said.

“In the past you rarely saw graduates able to do this. It’s always they have had a job in Silicon Valley or somewhere else and they have made some money for the company and gone back and done it whereas now, actually, they can come straight out of college, give it a crack, and use the knowledge they’ve obtained in their doctorate.”

The domestic ICT skills shortage is amplified by big tech sucking up the talent.

“In the last 10 to 15 years the likes of Amazon and Google have become talent vacuums of really high-level New Zealand graduates,” Hughes said.

“The best ones disappear overseas,” Hallett agreed. “In the last year, with the COVID-19 pandemic, there’ve been a lot more graduates sticking around in New Zealand. We were augmenting the Company-X team with skilled migrants, whereas now we are hiring more local talent."