If you pitched the analogy of Johnny Appleseed vs Gordon Gecko to a roomful of Kiwi investors, you'd get a split vote and more probably a rabid aversion to being likened to either of them.
The sowing of seeds is the right analogy to put next to seed funding, the first tranche of investment early stage companies get. Often it's their savings, or a roundup of family, friendly neighbours and assorted associates who pitch in a few thousand each. It's hard to get professional investors to open their hearts and minds to the mere prospect of investing in a team with a smart idea, a ready market in mind and a vision to drive something innovative into a gap in that market.
Typically, it's a conversation about how they'd like to see a bit more rubber on the road, some customers on board and some early revenue. There's a multitude of variations on that dialogue but the cut and thrust is, show us you've got something before we put our time on the line, let alone our money.
Which makes the response to Lightning Lab a fabulous story.
The accelerator model has been around globally for a few years since, and Lightning Lab takes the best of these models and applies it locally for New Zealand digital startups. Pushing the best digital startup teams through a full-time three month pressure cooker, surrounded by 100 of the best Kiwi entrepreneurs, innovators, motivators and done-it-before types, it promises to fire some stellar companies out of the barrel at Demo Day in May 2013.
The first true full-time, seed funded digital startup accelerator in New Zealand, Lightning Lab is the product of some key investors, successful entrepreneurs and fabulous individuals saying, "we'll put our time AND our money on the line, to back the best prospects New Zealand has got".
The catch is, they haven't even got of sniff of who they are investing in yet.
Franceska Banga, head of NZ Venture Investment Fund, reckons Kiwi investors are seeing the buds of digital success getting global buy-in and that gives them faith in the long game.
"One of the things that I see happening, is New Zealand technology companies (especially software) holding their own, receiving investor support in much bigger markets, especially the US. I think that gives local investors confidence to support the early stage market, because they know we have world class technology being developed from New Zealand."
Banga, whose organisation co-funds startup and growth capital investment throughout New Zealand, believes local investors have come a long way and have a line on the true global pathways.
"Courtesy of Bill Payne, Rob Adams and various other leaders and veterans of the US angel investor community, New Zealand investors are more confident, better understand how to approach investing in start-ups, taking a portfolio approach, being disciplined in valuation method, investment structures and funding against milestones.
"All of this results in an overall more professional industry, which in turn attracts a wider range of business people who have been successful in their own right, to come alongside seasoned technology investors."
Whether that confidence gives them the sort of future vision to tackle the element of "a wing and a prayer" that all early stage investors know well, is another story. But clearly they're in a better place now than 10 years ago.
To have hundreds of thousands of dollars committed on a promise of 10 stunning digital startups is an endorsement of what Lightning Lab can deliver, and a demonstrable nod to the New Zealand entrepreneurial ecosystem and our digital potential. The founding investors are from across the board, and all have committed to three years of funding. The Ministry of Business, Innovation and Employment has backed it with considerable resource of their own.
Banga says "nothing beats a few successes, which there have been recently, to reinforce interest". If that is true, then to pave a path to more of it, it is this investment in the future and the people-based infrastructure to deliver it that is going to deliver smart tech-based startups from Godzone to the Globe.
- Nick Churchouse is the venture manager at Creative HQ, Wellington's business incubator and startup hub. CreativeHQ.co.nz or email: CreativeHQ.co.nz
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