Govt urged to back innovative start-ups

New Zealand's entrepreneurial community is asking the Government to back innovative start-up businesses through allocating some funds from intellectual property fees and from the New Zealand Superannuation Fund.

Their "white paper" has been written in the last few months incorporating ideas from the Entrepreneurial Summit in Auckland last May and has been received by Research, Science and Technology Minister Wayne Mapp.

"We don't back ourselves," says spokeswoman Dorenda Britten for the Entrepreneurial Summit and Development Working Group.

Their key recommendation is that the Intellectual Property Office (Iponz) increase its fees with the additional revenue used to finance an "Early Stage Innovation Fund" for young companies. The report says that is fiscally neutral as the additional revenue was not available now and its use would not affect other budgetary requirements.

The proposed new fund would access intellectual property (IP) from New Zealand universities and crown research institutes (CRI) on a "first right of review" basis which would mean the fund would get the first look at all IP originating from those institutions.

The benefits included speeding up the rate at which universities and CRIs commercialised intellectual property and would lead to the establishment of more businesses and drive more contract research back to universities.

Members of the group included Maurice Boland, the former general manager of 3M in New Zealand, Franceska Banga from the New Zealand Venture Investment Fund, Will Charles from Uniservices at Auckland University, Mark Stuart from Waikatolink, a local incubator, Peter Bradley from Qatalyst in the biosector, Dorenda Britten from the design sector and Chris Locke from Enterprise Northshore, an economic development agency, and Claire McGowan from the biosector.

It recommends the NZ Super Fund invest a small proportion of funds as venture capital in innovative businesses but acknowledges this required Government direction. In Australia 5 per cent of superannuation funds can be invested in venture capital but in New Zealand super funds struggled to invest venture capital because actuaries advising the funds considered there was not enough of this type of investment in New Zealand to form an asset class, the report says

"However, we believe that the Super Fund's Guardians are not currently of a mind to allocate capital to this asset class so its involvement would probably need some form of Government direction or underwrite of the downside risk associated with such a capital allocation."

Another recommendation is that some of FRST (Foundation for Research, Science and Technology) grants be instead placed in a fund that could invest and be repaid by the new companies at certain milestones.

The report said the recommendations were practical and could be implemented in the short term. The group believed New Zealand could do better with what it had.

The only South Island member of the group, Dorenda Britten, said some of the group's recommendations were quite confronting in their simplicity.

There was not enough questioning and "prodding" in New Zealand to keep testing to see whether the innovative idea could be successfully commercialised.

The group believed there needed to be more rigour around the assessment of intellectual property accelerating the assessment process, and not pursuing something that did not measure up.

Britten said the group was asking for only a small portion of New Zealand Super Funds to be invested as venture capital in new innovative companies.

The taskforce examining crown research institutes said it was important for them to define their area of expertise and evaluate every year rather than each of them competing for the same pot of money.

The group also advocated standard contract terms between research providers such as universities and CRIs and businesses using those services.

Small companies found the research systems daunting while larger companies might view the relationship as risky and were concerned they might not be able to control the rights to any intellectual property that was created.

Minister Wayne Mapp said he had met with the group several times in the past few months.

The group and others had identified that New Zealand was innovative but had problems with turning the intellectual property into marketable goods and services.

He would be meeting with the key authors Maurice Boland, Claire McGowan and Tenby Powell to discuss the issues more fully.

Mr Mapp said the recommendation to raise Iponz fees was "challenging" and the Government would want to discuss that more fully.

Asked about the New Zealand Super Fund investing venture capital in innovative businesses he said the Government had planned the Super Fund would invest 40 per cent of its fund in New Zealand and the fund would have to make "sensible judgments" about how it did that.

The Prime Minister had said the Government had made research, science and technology a high priority in the up-coming Budget and a key way of doing that was through FRST and more about that would be revealed in the Budget.

- © Fairfax NZ News