Rod Oram: Celebrating our tech stars
Rod Oram celebrates the technology companies bursting onto the scene in New Zealand. They had their chance to shine this week at TechWeek. He finds a vibrant and growing sector that is now our third largest export earner.
From last Saturday to this Sunday people will have flocked to 538 TechWeek events the length and breadth of the country. There’s been something for everyone, from local kids to overseas investors, and from boot-strapping innovators to major corporates. Presentations and edited version of webcasts of the headline events will be available on the TechWeek site next week.
NZTech, the association of some 500 tech companies employing some 100,000 people, began the annual event in Auckland in 2012 with the same two drivers as today:
* to help New Zealanders build their tech capability and to connect across sectors and industries; and
* to become a platform for telling New Zealand tech and innovation stories to the world to help attract overseas customers, collaborators and investors.
The first year some 10,000 people attended 55 events in Auckland over 10 days. Last year, the event went nationwide attracting some 20,000 people to 287 events in 24 locations over nine days. This year’s theme of NZ technology that’s “good for the world” has almost doubled the scale of the event.
This rapid growth mirrors the fast development of the tech sector over the past decade or so to the point it is now our third biggest export earner after tourism and dairy. It has made big progress, for example, in:
* innovating its business models to help get local companies that are tiny in global terms out to the world, as shown by Xero to cite just one example;
* developing ecosystems of tech companies and support organisations to foster collaboration, the way, for example, Revolution Fibres, a nanotech company, helped Dotterel Technologies sharply reduce the noise of its drones used by the likes of film and TV crews, thereby winning international awards; and
* gaining a strong sense of place, identity and effective innovation culture which becomes part of their sales pitch to investors and customers, the way, for example, Rocket Lab talks of its technology and the great geographic advantages of New Zealand as a launch site.
While there are burgeoning opportunities in many tech sectors, the greatest lie in the intersection between sectors and in new tech applications for old sectors, In New Zealand, for example, financial services grow at about eight percent a year and the tech sector overall at about 20 percent. But the fintech sector is growing at some 40 percent a year, Mitchell Pham, the chair of NZTech and founder of Augen, an NZ-Vietnamese software company, said at the launch on Wednesday of Agritech NZ, the latest sector group to join NZTech.
The launch is timely because venture capitalists have greatly increased their interest globally in agritech in the past few years, thereby opening up extensive new opportunities for New Zealand companies. This was the focus of one of the headline events of TechWeek, 10 billion mouths, held in Tauranga.
Last year global VC funding for agritech hit US$1.5 billion from 388 investors, up from US$1bn the previous year and only US$300m a year 2011-13, Arama Kukutai, founder of Finistere Ventures, a US-based VC focused on the sector, told the conference.
This was a tipping point, he said, quoting Derek Norman, the head of the venture arm of Syngenta, the Swiss agrichemicals and seeds company:
“The competition for technology acquisition will intensify – for the first time, innovation capital invested in early stage equals or exceeds that of traditional agritech majors.”
However, the breakdown of the global picture by sector shows how tiny a part of the market almost all NZ agritech companies are focused on. Precision farming accounted for only two percent of the funding, while sensors, farm equipment imaging technologies, animal life sciences and plants were also slivers of the market. It was dominated by crop protection, which attracted 45 percent of the funding, indoor agriculture (22 percent) and ag marketplace and fintech (14 percent).
Indoor agriculture has a particular appeal to Silicon Valley VCs because growing food indoors, under LED lights and fed airponically or hydroponically is heavily dependent on capturing vast quantities of data, machine learning and systems engineering at which Silicon Valley excels.
One such US company is Plenty, which has attracted heavy investment from Jeff Bezos, the founder of Amazon, and SoftBank, the legendary Japanese VC firm. Earlier this year Plenty announced plans to build 300 facilities in or near Chinese cities and it is rapidly expanding the range of plants it can grow.
Yet, our style of agriculture and horticulture is spawning some very sophisticated tech companies that are attracting international investors. One example its RoboticsPlus in Tauranga. It is producing robotic apple packers and is prototyping a robotic vehicle to perform a variety of tasks such as pollination, spraying and fruit picking in kiwifruit orchards. The Silicon Valley venture arm of Yamaha, the Japanese engineering company famous for its robots and motorcycles, has invested in it.
RoboticsPlus was one of a wide range of other young NZ agritech companies profiled at the conference, attracting interest from a group of overseas investors. Many of the visitors are among the contacts and partners cultivated by Finistere since Kukutai, a Kiwi, founded it in San Diego in 2005 after a career in NZ Trade & Enterprise. There are plenty of signs other such international networks are developing here and abroad across the entire tech sector, which will further accelerate its growth.
So far, though, this tech infusion into our economy still relies heavily on small ventures in existing and emerging sectors.
Rocket Lab, one of the stars of this year’s TechWeek, remains for now a rare example of an NZ company pioneering a new global sector. Its founder, Peter Beck, saw that great advances in electronics were causing a rapid miniaturisation of satellites. It seemed logical to him that rockets to launch them should also become much smaller and cheaper, so he developed the technology and a company to make them. Existing aerospace companies, hooked on their massive rockets, never saw the opportunity.
Lots of small rockets will mean lots of launches. But when Beck went to existing launch sites in the US to ask for such a service, he was told such frequency was impossible given the country’s crowded airspace and shipping lanes.
So, Rocket Lab worked with our government to create a space regulatory regime for launches here, and then built its site on the Mahia Peninsula in the Hawke’s Bay. It turns out this deep south location is also beneficial for the range of launch trajectories and satellite orbits it offers.
Quite simply, the US can’t scale up launches. But New Zealand can, Beck told a TechWeek audience in Auckland on Monday.
Finding such niches we can turn into competitive advantages is the tantalising prospect for our increasingly sophisticated tech sectors.
Disclosure: I MC’d four TechWeek events.