Icehouse to target fewer start-ups in more focused programme
By Suze Metherell
May 11 (BusinessDesk) – The Icehouse, a New Zealand business growth and start-up incubator, is cutting the number of start-up companies it focuses on in favour of a more in-depth programme designed to get kiwi companies into the international marketplace.
The Auckland-based global business incubator will focus each year on a maximum of 25 small to medium sized enterprises, down from an annual average of 75.
Fledgling companies approved by its newly established Start-up Investment Committee will enter into The Icehouse Incubation Programme, receiving up to $250,000 in funding and be paired with a support manager from Icehouse.
“In the context of what we are trying to achieve, which is ultimately to create more jobs and create more wealth, it is an expansion. It is not really a contraction,” Icehouse chief executive Andrew Hamilton told BusinessDesk. “What we’re trying to do is dial up the start-ups that have great international potential that we can support with great expertise, networks and funding.”
Tech-based start-ups which can be developed and brought to market quickly will be the main focus for incubator programme, and there will be no requirement for the businesses supported to remain based in New Zealand, although part of Icehouse’s new focus is to create 25,000 New Zealand jobs by 2020.
In recent years, several government-assisted start-ups have been bought out by international companies, meaning intellectual property and control over market potential have headed offshore too.
For example, in 2010 NextWindow, the local touch screen developer which had been the poster child for New Zealand tech innovation, was bought out by a Canada’s Smart Technologies for $82 million, only to be mothballed earlier this year.
“We don’t see ourselves as an incubator for America,” said Hamilton. “Ultimately the question is what is the source of their competitive advantage and can they maintain that? Is there a rationality for them having that source of competitive advantage in New Zealand or does it need to go where the market is?”
Last month, Microsoft bought out GreenButton, a Crown-funded cloud services start-up in which ICE Angels, Icehouse’s partnered angel investor network, was a shareholder. The New Zealand Investment Fund, a government start-up investor, had held an 8.4 percent stake in GreenButton before the takeover, and said at the time investors had made a “very healthy return” on the buyout.
“The GreenButton situation is they (NZVIF) were a piece of the pie. They weren’t the whole pie and for them to take that technology to scale required somebody large who cared deeply with big reserves to invest in the commercialisation of that technology,” Hamilton said.
Icehouse’s new start-up investment committee is a veritable who’s-who of New Zealand entrepreneurs, to be chaired by Tim Williams, who took two companies public in Japan. Other advisors to join the incubator include: Adam Clark, co-founder of M-Com which was acquired by the world’s largest banking technology provider, FiServ; Claudia Batten, whose own start-up was also snapped up by Microsoft; and Pumpkin Patch founder Sally Synott.
An equally high-powered International Advisory Board will help network in overseas markets, involving the likes of Sean Simpson, chief scientific officer and founder at emerging global bio-fuels innovator, Lanzatech, which is moving headquarters from Auckland to Illinois, and Vegas Valley Angels’ Bill Payne, and a range of Asian investors.
By 2015, a new Icehouse Seed Fund is also planned to be established.
Icehouse was founded by the University of Auckland Business School and launched in 2001 and attracts both private and public sector funding to support its activity. It says it has created 880 jobs, produced $425 million in revenue and raised $170 million in investment capital, including $50 million of capital from partner ICE Angels.