Start-up Archives - Page 2 of 2 - Whangarei Accountants - Elevate CA - Tax, Xero, Business Development, Accounting

Stiff Competition for Kiwi Entrepreneurs

I am writing this post somewhere over Nebraska, returning to Whangarei from a week at the Advanced Invention to Venture boot camp in Boston, MA. The AI2V was a sobering experience. Kiwi Entrepreneurs who want to take their innovation to the world are up against some rather stiff competition.

It’s not that American entrepreneurs are smarter or more tenacious or better educated than their Kiwi counterparts. That isn’t the case – Kiwis are great at coming up with innovative solutions to market pain.

Let’s assume you have a killer one-in-a-million idea. That means maybe four people in New Zealand are having the same idea. But the chances are, you’ll be the only one of those four to put the hard yards in to implement. We all know that great ideas are ten-a-penny, and what really counts is the ability and resources to turn that great idea into reality. So let’s say that only one in a hundred folk with your great idea will put in the massive effort required to make any great idea into a reality.

So chances are there will be three people just like you in the USA – folk who share your one-in-a-million idea, and are also part of the one in a hundred who will back themselves and execute.

No problem, right? Surely a Kiwi entrepreneur can compete with three Americans and come out on top? Maybe. But here’s what I have seen this week which makes it not that simple:

Government Incentives. The federal and state governments bend over backwards to help their entrepreneurs with support and cash. For example, the federal government doles out US$100 million each year to provide funding to small businesses with early stage ideas that, however promising, are still too high risk for private investors. State governments compete with each other with generous tax credits or benefits such as free office space to attract start-ups to their state.

Presence of Capital. The Venture Capital system is alive and well – and provides investment to early stage ventures that need cash to expand and dominate their target market. For example, despite the current decline in VC funding, the software industry alone received US$614 million (around NZ$1 billion!) VC funding in the first quarter of 2009.

Good People. The USA attracts the cream of talent worldwide. If you’re a start-up in the Silicon Valley or New England and need to hire a talented CEO or tech guy who knows the ropes and has done it before, that person will be available. Try finding such a person in Whangarei – or even Auckland.

Presence of Customers at Home. It’s trite but true to say that the US market is huge. The advantage is more than that; there is a culture amongst US corporates that is normal to purchase and deal with small companies. Often US corporates make a conscious decision to “outsource” their R&D by dealing with entrepreneurial start-ups in the course of developing leading edge solutions in their industry rather than maintaining an in-house team.

Of course, there are fantastic examples of Kiwi entrepreneurs taking on the world. But the competition is stiff and the playing field is not level. We’ll talk more about this.

Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.

Taking Great NZ Health Ideas to the World

New Zealand is a hotbed of innovation. We have all heard that before. The number 8 fecing wore mentality, punching above our weight in all sorts of areas from winning yacht design through to dairy farming techniques. But why is it that this innovation translates into so few world beating businesses?

Numerous studies have been done on this question, and one of the factors which repeats itself is the lack of specific skills in taking these fantastic innovations to the world. New Zealand Trade & Enterprise is well aware of this, and they have identified the Health sector as one area where we are rich in innovation but poor in taking these innovations global.

Hence the NZ Focus on Health innitiative, designed to take great Kiwi health ideas to the world – particularly the lucrative US market where annual health spend is a staggering US$2 Trillion.

Participants submit their health innovation ideas in the form of a robust executive summary – and will compete for $750,000 in prizes designed to help commercialise your great health related idea in the US market.

Up to Twenty semi-finalists will be selected by the Judges. The semi-finalists will be able to attend a “pitch” training workshop to prepare the semi-finalists for pitching their ideas to the Judges in Round Two.

If you operate in the health space, entering this competition really is a no-brainer. Our very own BrightMind LABS from Tutukaka will be there competing for the action, and we would encourage others to join us in getting involved. Entries close on 31 August. Check it out , and watch this space where we’ll keep you posted on progress.

Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.

Lessons from MySpace

Silicon Valley is a long way from Whangarei, but there are certainly lessons to be learned from that hotbed of innovation. The MySpace story demonstrates that dominance today doesn’t necessarily translate into success tomorrow. Who remembers MySpace, the company destined for stardom that Rupert Murdoch purchased for US$580 million not so long ago? Who now has a MySpace account? And for those who do, who regularly uses it? Exactly.

Now ask the same question of relative newcomers FaceBook, YouTube or Twitter? The answer is very different – see my point.

Who could have forseen that MySpace would have been so unceremoneously dumped by tens of millions of users defecting to FaceBook, YouTube and Twitter?

What went wrong for MySpace? Of course, there would have been an element of fickle consumers chasing the latest cool application. But really it boils down to MySpace’s failure to remain relevant to its massive user base while the new competitors emerged with offerings that more exactly met those user’s needs.

So what? Here we are in New Zealand – and a Kiwi venture is unlikely to emerge as the next Twitter, right? Well that probably is true, but there are broader lessons which are encouraging for startups everywhere. Even where there are encumbants who dominate your industry and appear to have a stranglehold on the market, there are likely to be opportunities for a disruptive newcomer who is prepared to listen to what the market actually needs and to tailor their offerings exactly to that need.

I would even argue that the more dominant and comfortable the existing players are, the greater the opportunity to enter the market and fill a niche that is currently being underserviced or ignored.

So how do you identify the opportunities? Simple. Talk to the market. Make phonecalls, knock on doors, attend functions. Talk to everyone you possibly can in that market and ask the questions. What keeps them awake at night? What are their frustrations with the current products or services on offer? What could the incumbents do better or differently? What might motivate them to change to a new product or service that better meets their needs? What barriers might prevent them from changing suppliers? Talk to hundreds of people if you can – before you spend a cent on developing your new offering. Even if you THINK you know the industry inside out, the answers will probably surprise you.

Armed with this intelligence, you will be in a great position to plan an offering that will disrupt the comfortable dominant players. And once you have planned your offering, talk to the market again. Would they buy? How much would they pay? What’s wrong with your planned offering?

If you follow this process, with rigour, you’ll have a very good idea of whether you can successfully roll out an offering that will disrupt the “MySpace” which dominates your industry.

Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.