Investment
Finding capital to power high growth Kiwi innovations has been the subject of reams of research, hours of discussion and years of angst among financiers, civil servants and entrepreneurs alike.
Investment banker Rob Cameron, who chaired the government’s Capital Markets Development Taskforce, says there are lessons to be learnt from abroad, citing two trading markets that could hold the answer for New Zealand.
The first is AIM — the London Stock Exchange’s Alternative Investment Market, which has seen more than 3000 companies join its ranks since it opened in 1995. The other is the NASDAQ OMX alternative Nordic market, First North, with 127 companies on its books. Both have comparatively light listing rules and are aimed at high growth, higher risk smaller companies.
Cameron favours First North and is dead keen to get the NZX or its far less regulated competitor, Unlisted, to consider adopting a First North model for young Kiwi companies.
“Traditionally when you think of smaller companies the costs of listing and the costs of complying with continuous disclosure are just too overwhelming for most to even consider it.
But First North provides a trading platform and then more or less tells the company to establish its own rules, with a couple of provisos,” says Cameron.
These provisos force each First North company to have an Exchange-approved adviser and liquidity provider — normally a broker who’s responsible for publishing regular research on the company and ensuring there’s always a buyer and a seller in the market. These provisos, coupled with the backing of a credible exchange operator — and you can’t get more credible than the London Stock Exchange or Nasdaq — to enforce the rules, attract investors to invest, says Cameron.
“It’s not ‘high risk’ that scares investors away, because high risk can equal high returns. But investors want information before they buy and they want to know they can get in and out when they want to without being punished for it.
“So let’s start organising our markets so that private investors find it easier and lower cost to back smaller, growth companies and then we will have a public market that really fills in that gap.”
— Lesley Springall

Intellectual property
If you want to conquer the world, sometimes all you need is some smart thinking. Take the sale of HaloIPT to Qualcomm, the Nasdaq-listed mobile phone computer chip company. Under the terms of the deal, the University of Auckland retains the intellectual property rights to the technology and will receive royalties.
Qualcomm will commit $500,000 towards further research at the University of Auckland over the next four years.
That is Peter Lee’s idea of a sweet deal. Lee, the CEO of Uniservices, the university’s commercial arm, believes New Zealand is ideally placed to be a wellspring of lucrative IP and the HaloIPT deal is a prime example of what can be achieved. In the rush to build a smart economy, we shouldn’t discount the potential of good research, IP and licensing deals, says Lee.
Sure, startups are more visible and grab headlines when they are successful, but a successful tech transfer to an existing company, whether that is a New Zealand company or one offshore, can be far more lucrative, says Lee.
“It does make a lot of sense to license technology to an existing company that is up and running. It is the fastest way to get the technology applied.”
In the case of the HaloIPT deal, just two days after it was announced Qualcomm announced a trial of 50 electric cars in London using the technology.
That is the sort of scale a multi
billion-dollar company like Qualcomm can bring to bear. And the opportunity exists for New Zealand companies to manufacture the actual devices that will be used to charge electric cars, opening up another lucrative field. “There are a truckload of engineers here to power that level of innovative business.”
The best thing about IP is that it doesn’t wear out, says Lee.
Research into induction power technology began with an experiment in the basement of the engineering school at the University of Auckland in 1990.
It was licensed in automotive manufacturing and integrated circuit production and the royalties fed more research and spinoff companies like Power by Proxi and HaloIPT which Lee calls micro multinationals, New Zealand companies with a global product pursuing a particular niche.
Kiwis are good at coming up with innovative ideas, says Lee, but too often we think great companies are built around physical products.
Licensing technology to existing companies creates commercial value and takes away uncertainty around staffing, market networks and management.
“The evidence suggests we are innovative and we have a youthful exuberance that isn’t always found in other countries.”
— Mark Revington

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