Right Hemisphere steaming ahead

BY CLAIRE MCENTEE
Last updated 05:00 30/11/2009

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Auckland-born 3D software firm Right Hemisphere says business is steaming ahead after it secured an extension for repaying a controversial US$8 million (NZ$11.2m) interest-free government loan.

The previous government gave Right Hemisphere the three-year loan in 2006, against Treasury officials' advice, in a bid to keep the firm's research and development in New Zealand after it moved its head office and set up a parent company in the United States.

In return, Right Hemisphere was required to meet several commitments, including keeping two-thirds of its software development expenditure in New Zealand, aiding a three-year research programme with universities, and giving research and educational institutions a 97.5 per cent discount on its software.

Right Hemisphere extended the loan's due date earlier this year to September 2011, allowed under the agreement, so it would have more capital to fund growth in the next few years, says president and chief technology officer Mark Thomas.

The company, whose backers include US venture capital firms Sequoia Capital and Sutter Hill Ventures, does not disclose its financial results, but its revenue for the three months ending September was up 42 per cent on the same period last year. It is "cautiously optimistic" it will reach its sales targets for the year.

Business software giant SAP has integrated the firm's technology with its products, so that its customers can use 3D models inside its applications, and the company counts Boeing, Nasa and jet manufacturer Gulfstream among its customers, Mr Thomas says. "We are becoming a critical component in their manufacturing and documentation workflow. If what we do breaks, then they stop producing."

It is seeking resellers in Europe and has established an Auckland firm, Right Connect, to distribute its software to small to medium enterprises (SMEs) in Asia-Pacific.

Last month, the company won the Excellence in Enterprise Integration award from the US Association for Enterprise Information for its work integrating an aerospace manufacturer's 3D design data with its own software, so it could be easily visualised and collaborated on.

Right Hemisphere has 48 staff in Auckland, mainly in research and development, and another 50-odd employees in the US and Europe. Its New Zealand subsidiary posted a $3.78 million loss for the year ending March, on revenues of $5.35m. The previous year it lost $1.89m on a turnover of $4.18m.

Right Hemisphere set up Nextspace – a not-for-profit company – to help New Zealand firms and organisations develop applications based on its software and to ensure it upheld its part of the loan agreement.

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"They've done a terrific job of sending the technology out to a wide range of education and business organisations that are finding more ways to bring money into New Zealand," Mr Thomas says.

Economic Development Ministry deputy secretary Mark Steel says Nextspace has provided nine education and research institutions with more than $10 million worth of Right Hemisphere software for a cost of about $250,000.

Twelve companies have joined a "3D visualisation cluster" set up by Nextspace – another requirement of the loan – to encourage industry networking and collaboration.

While not every commitment has been met exactly as envisaged, the ministry is satisfied Right Hemisphere has honoured its side of the loan agreement, he says.

Nextspace chief executive Gavin Lennox says the company is helping Canterbury University's Hit Lab embed Right Hemisphere's 3D technology in a new X-ray scanning system.

New Zealand Steel is using Right Hemisphere's software to build 3D virtual models of its plant equipment and how it should be maintained. Nextspace charges businesses prices that are "appropriate to meeting its mandate" but also help the firm become self-sustaining, Mr Lennox says.

Nextspace has set itself the "big hairy audacious goal" of creating a $1 billion visual communications industry by 2018. The Government's loan was a bold move, "but we've been delivering tangible results for the last 18 months to two years".

- The Dominion Post

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