New Zealand’s handling of the COVID-19 pandemic created massive interest in Kiwi thought leadership and brought many Kiwis home.

New Zealand led the world in the fight against COVID-19 with a hard and fast lockdown that, for the most part, kept the virus out of the community.

“It caused massive renewed interest in New Zealand,” said Hillfarrance Venture Capital founder and managing partner Rob Vickery.

“The brain gain we've experienced of entrepreneurs coming back are building new businesses and pitching them for money from people like me. That's exactly what we need, otherwise, they would be doing that in San Francisco, London or Sydney.”

“This market is on fire,” Vickery said. “I have never seen so many entrepreneurs in one spot.”

The Waikato, where Vickery has established himself and his fund, is the locus of creativity.

“I have seen founders coming to me with much bolder ideas, more risk-taking. It's cool, and I feel like the Number eight wire mentality is metamorphosing within this new group of returning Kiwis.

“The Number eight wire is going to just change into something which is more about being frugal with what you've got but being more audacious and more creative with the solutions you create.”

The tech sector is the third-largest export for New Zealand. It drives eight per cent New Zealand's Gross Domestic Product (GDP), a major contributor to this economy and to this country.

“It’s down to the growth of companies like Company-X, and also the formation of more start-ups. It's interesting how important New Zealand has become to the tech sector, but also how important technology has become to New Zealand,” Vickery continued.

“I was chatting with Microsoft about their driver for opening three data centres in New Zealand. It's down to the fact that there’s something interesting going on in the market here. It’s an untapped treasure box. It’s largely undiscovered. Even though it’s still important to our economy, it’s still unknown.”

Waikato technical capability helps business start-up support

Vickery said he appreciated the technical capability held by the University of Waikato’s Computer Science Department and the skills it is passing on to students.

“The University of Waikato produces graduates who are pursuing ideas in the worlds of artificial intelligence and machine learning and this is a major focus of our fund,” Vickery said.

“They are going to come up with some really cool ideas.”

The University of Waikato is renowned for producing world-leading technologists, including Google Maps creator Dr Craig Nevill-Manning and co-founder of Google DeepMind Dr Shane Legg.

“New Zealand needs to think about how we cultivate more technical talent within our universities that aren't corralled into building a start-up within a university, but instead get those skills and offer them to employers. The only reason why Los Angeles grew so fast as a tech community is because we had the University of California, Los Angeles (UCLA), the University of Southern California (USC), and California State University, Northridge.”

Vickery said it is better to have tried and failed than not tried at all and Kiwis returning home after a decade or more bring that psychology with them.

“I'm using a pretty rough and ready start-up product to run our internship program,” Vickery said.

“I'm using it because the founder just returned after six years in Canada, and he was courageous enough to put a product out into the wild to ascertain how potential users might interact with it. Within his first trial his initial users broke the product. What some might think is not a good thing, I actually think is awesome. I said to him, ‘Don't be pissed off by that. Celebrate the fact that you had the courage to get something out there that didn't really work, and you still had people, willing to use it because they believed in your mission.’ That’s investible kind of stuff.”

Vickery said it was vital founders were freed from the shackles of excessive governance and given unbridled permission to pursue bold, moonshot ideas that succeed, fail, or fail fast in a capital-efficient way.

Figures supplied to Vickery by Waikato law firm Tompkins Wake showed onshore domestic investment into Kiwi start-ups had flatlined to around $80,000 over the last 14 years, while offshore investment was about $4.3 million.

“We've got to make that void and fill it more with domestic money,” Vickery said.

Vickery said he believed a slow-moving, gradually funded, start-up economy was destined to fail.

“There sadly might be a Permian level extinction event in our start-up economy from the companies formed seven to five years ago. Angel investors have realized that they can't keep giving 50 grand a year to keep start-ups limping along. Sometimes founders and their ideas need to fail fast and to get back up even quicker and learn from the mistake. In fact, this cycle might need to repeat itself a few times before the founders find the holy grail otherwise called ‘product market fit’.”

“We’ll emerge stronger from it.

“There's a rising audacity within founders who are willing to take some risks and maybe raise more money and be more visionary in their approach,” Vickey said.

“That rising tide is just raising all of us, and that's super exciting for everybody. Ultimately it increases the output that we need from our universities, for data scientists and engineers, backend engineers and front engineers, and CEOs, and chief marketing officers, all those types of people.

“The New Zealand tech economy needs to move into version 2.0,” Vickery said. “Version 2.0 is a market where the fundraising process is done within weeks, as opposed to six months, and it’s a process where the founders retain more ownership of their company than they did before.”

Hillfarrance Venture Capital founder and managing partner Rob Vickery.
BUSINESS START-UP SUPPORT GURU: Hillfarrance Venture Capital founder and managing partner Rob Vickery.

Business start-up support the Kiwi way

A new breed of New Zealand start-up has been born, and Vickery wants to help it grow entrenched with Kiwi culture.

“We're going to develop an entirely new form of start-up, built using the Treaty of Waitangi and some of the key aspects of that, is he tangata, he tangata, he tangata, the people, the people, the people.

“We're going to have start-ups formed by Maori founders, or maybe pakeha, and we're going to build start-ups that may challenge the very bones of venture capital.

“It is what drew me here. We don't need to be a back office for Silicon Valley or a clone of Israel. We can be our own, and that's what I want to work out.”

Vickery used his own Te Reo to English translation of the Treaty of Waitangi as a basis for developing criteria for founders of start-ups he wants to invest in.

“We need start-ups who create shared experiences and a sense of belonging for their team,” Vickery said.

“That's all about company culture, inspiring talent to come and work for you, retaining talent. How you create that shared experience as a start-up is a cool and unique challenge.”

The next big challenge, Vickery said, was self-determination.

“How do they enhance leadership and participation in their community? How do you create more leaders? How do you inspire leaders of the future?

“Then we've got guardianship. Will they ensure a sustainable future and intergenerational reciprocity? Do they improve the quality of life and satisfaction with our environment? Are our start-ups building businesses that are environmentally friendly and sustainable? Are they raising the community around them? For example, do they go and teach at schools? If they're doing code, why not go for free for the afternoon to the local primary school, teach the kids how to write a line of Python?”

A sense of identity in start-ups is also important to Vickery.

“Do they create a distinctive sense of identity? Uniqueness and belonging? That goes again to culture, to brand, and to the start-up and what it stands for. That kind of uniqueness, is a pretty investible kind of thing. So basically, I apply all these filters before I make any investments.”

Vickery said one in 150 start-ups meet his investment criteria. But for those who do the Hillfarrance support network is there. In general, Vickery said, support for the start-up sector needed to get bigger and deeper and quicker.

“We've got to get quicker at getting shit done. We've got to make it quicker and easier for start-ups to grow and to fail.

“The real estate challenge here for start-ups is very real. Most of the founders I know can't afford to buy their own home, and that's rough. They're starting to feel left out and unsatisfied, and their partners are unsatisfied.”