New Zealand's tech sector is on a roll, with an impressive $133 billion enterprise value and a handful of unicorns to boot. But as we celebrate these successes, we must also ask ourselves a critical question: Are we doing enough to ensure that the benefits of these thriving tech companies remain within our borders?
The Catch-22 of Enterprise Value
While enterprise value gives us an idea of the overall success of New Zealand's venture-backed ecosystem, it fails to capture the full picture of the country's economic gains. Many of these companies, despite being founded here, have since moved overseas, taking their value and potential for further growth with them.
The true economic value of a startup extends beyond its initial success. It lies in the network of companies, capabilities, and capital that it fosters. Successful firms breed experienced leaders, engineers, and investors who can replicate their global-scale building prowess. This knowledge and talent pool is a precious resource that can fuel the next wave of innovative ventures.
Growth and the Shifting Geography of Value
New Zealand's venture capital landscape shows potential for growth, with room for more investment and a need for deeper financial pools to support global expansion. However, scaling up often means relocating key operations and decision-making centers to other countries, especially when foreign venture capital is involved. This shift in geography can result in a loss of value creation and talent retention for the country.
Finding the Balance
The key lies in striking a balance. We don't want to hinder New Zealand's tech companies from going global, as internationalization is often crucial for their survival and growth. Nor should we solely focus on attracting more venture capital, as it's not just about the money. It's about creating an ecosystem that fosters capability, experience, and global connections.
The True Measure of Success
The real success story is not just about the number of unicorns or the enterprise value they generate. It's about the capability they leave behind—the talent, knowledge, and networks that can spark the next innovation wave. This is the true legacy of a successful tech company, and it's what we should be striving to nurture and retain within our borders.
In my opinion, New Zealand's innovation policy should prioritize this aspect, ensuring that the benefits of our thriving tech sector are not just short-lived but have a lasting impact on our economy and future generations of entrepreneurs.
