Venture Capital Details Unveiled
The $2.25 million a year incubator programme to help innovators access the skills and finance they need for developing ideas will be launched by the end of April, Enterprise and Commerce Minister Max Bradford announced today.
The concept was first proposed in August as part of the Government’s Bright Future package.
Mr Bradford said National would follow the successful BIZ model and tender the programme management out, rather than using government-appointed bureaucrats which were the cornerstone of opposition party industry development policies.
The incubator programme would comprise:
Training for small businesses and innovators on getting ideas and enterprises to the stage where they are attractive for outside investors.
Linking the innovators and ideas with the necessary expertise, reputable business people and sources of capital to secure investment.
Mr Bradford said incubators would be tasked with identifying the best and brightest ideas with commercial potential from CRIs, universities, business incubators, and the general community.
He said it was clear from the series of 5 Steps Ahead forums earlier this year and consultation with the private sector that there were too few financiers focused on business start-ups and early stage innovations in New Zealand.
This was largely due to the higher risks and costs involved in assessing, investing in, and monitoring these projects.
In addition, small firms and innovators often did not have a good understanding of when or how they should seek or access seed capital.
“But there are a significant number of incubator initiatives already underway in New Zealand and increasing numbers of venture capital and finance companies willing to invest in SMEs.
“A recent example is Telecom’s plan to put $20 million into a development fund for New Zealand and Australian developers.
“The incubator programme is designed to build on, not discourage, these positive initiatives,” Mr Bradford said.
The Government is also considering ways the additional $18 million set aside in the Bright Future package for the expansion of the Technology New Zealand scheme could contribute to the success of the incubator programme.
Officials will report back to Cabinet by 31 March 2000 on the recommended approach for this.
The incubator programme has been designed to link in with the New Capital Market, to be launched by the New Zealand Stock Exchange in April 2000.
A draft of the rules for this market is being finalised and will be available on the Exchange's web site (www.nzse.co.nz).
A formal national promotion campaign would be launched early in the New Year, Mr Bradford said.