Spark's Moutter takes lead in rattling cages for venture capital
Spark [NZX: SPK] New Zealand chief executive Simon Moutter will take a lead role in trying to shake out support from the big end of town to boost New Zealand's underdeveloped venture capital market.
Moutter was one of 54 delegates who travelled to Israel earlier this year on a fact-finding mission to help kick-start New Zealand's capacity for smart entrepreneurship and technological ideas, and today outlined the group's post-mission report to the Trans-Tasman Business Circle. The delegation wants to pursue programmes to build capability in New Zealand's capital formation, collaboration, capability, culture and commercialisation with a view to building a tech sector that matches dairy in its contribution to the economy within six years.
The Spark chief executive is focusing on the capital element of the programme, which would develop a venture capital fund backed by large New Zealand companies, institutional investors and iwi. Two other aims are to identify ways to increase venture capital presence and investment in New Zealand and for delegates to advocate incentives for direct investment into early-stage companies rather than "non-productive speculation-based investment" such as residential property.
"Now that we've said 'here's a workstream we'd like to get going', we can actually have a conversation with people who do know what they're talking about," Moutter told BusinessDesk. "I will be wanting to ... engage with them and get some really clear steers on how we might put something together that might be attractive."
The next step for Moutter will be talking to venture capital experts to help develop a framework which he can then shop around for potential commitments.
"If we're going to approach organisations and say would you come on board with this type of thinking, you've got to go with a pretty well-constructed proposition," he said. "With the few conversations I've had with big business leaders, there's an acknowledgement around the lack of funding in the system and an acknowledgement that big business in New Zealand, by and large, are not big spenders on R&D."
One of the delegation's ambitions is to lift research and development investment to 4 percent of gross domestic product by 2022, of which the private sector would make up 2.5 percent. New Zealand's R&D spend was about 1.2 percent of GDP in 2015, of which businesses made up about 0.5 percent.
Spark has dabbled with early-stage investments in recent years with its ventures unit, which houses the online video streaming Lightbox, internet service provider Bigpipe, Skinny mobile brand and data business Qrious.
Moutter said Spark's ventures unit had been more successful in developing new businesses within its business, such as Bigpipe and Skinny, and chasing growth opportunities with Lightbox and Qrious. However, it faced more challenges when it worked alongside entrepreneurs, such as with the Putti app developer and biometric monitoring unit Vigil.
"We're better at the first two than we are at the last, so I would like to keep this as a part of the system that encourages start-ups and working alongside others, but I'm attracted to having a professional organisation that we can work with and maybe do that through a fund that other big corporates are investing alongside," he said.
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