When it comes to picking winners it pays to back the jockey, not the horse. That’s the thinking behind Soda, a recently opened Hamilton-based business incubator for the creative sector.
Soda general manager Grant Collier (pictured) reckons the incubator is breaking new ground in the country’s eight-year-old incubator industry.
Yes, like most, it offers startups mentoring, training, advice, access to funding, networks and business support. But, unlike its peers, Soda is not affiliated to a university, is steering clear of government handouts, and has been set up to develop entrepreneurs rather than commercialise intellectual property.
“Traditionally incubators commercialise IP, something that’s strongly reflected in New Zealand,” says Collier. “Commercialising IP is about finding a horse that’s good enough, getting capital and selling the horse down the track.
“My take is that the jockey is more important than one or two big business success stories. We need a generation of people who understand entrepreneurship and grow the economy from there.”
If Collier’s ambitious three-year plan comes together, Soda will achieve a goal that has eluded all other incubators in New Zealand to date — self-sufficiency. International research from the US and the UK suggests incubators more than double a business’s chance of survival and do a good job helping cities retain businesses beyond incubation. Yet, very few have become financially independent.
If Collier is daunted by this track record, it doesn’t show. He’s confident about reaching a target of 30 to 40 incubator firms within 18 months. And he’s dogged about Soda gaining the financial footing it needs to strike out on its own.
“To be successful we need to be entrepreneurial ourselves. I come from the pull-yourself-up-by-your-bootstraps school of thought. I avoid handouts and believe self-sustainability will guarantee our future,” says the 37-year-old South African.
Part of the answer, he reckons, lies in Soda’s unconventional user-pays business model. Incubator clients shell out between $57 and $187 a week for a spot in one of four programmes. They cover their own rent, photocopying, phone bills and so on. There’s no signing over of equity and no payment of royalties.
A typical Soda entrant is a fulltime small business owner, with a proven entrepreneurial bent, who’s a bit unsure how to take the next step, says Collier, a former photographer and heavy-metal musician. They may run a performing arts or media business, or may have an accountancy or law firm that supports the creative industries. But it’s pretty unlikely they will be a graduate of the Waikato Institute of Technology, Soda’s majority owner.
“There’s no way Soda is a graduate playground. Sure, we can cater for graduates who are entrepreneurial. One of our programmes, Soda Air, is a great option for graduates. But they are not our main revenue driver.”
According to the Ministry of Economic Development there were eight incubators prior to Soda’s arrival — down from 21 — with seven part-funded through the government’s business incubator programme. This year programme agency New Zealand Trade and Enterprise will pump more than $4.5 million into incubators, bringing the total spend to $24.8 million since 2001.
The Soda vision isn’t entirely Collier’s own. It reflects five years of research and planning by Hamilton City Council and people like Cheryl Reynolds, Waikato polytech’s creative industries director. Both organisations want Soda to boost Hamilton’s emergent creative sector and turn around what Reynolds calls its reputation as a “cultural desert”.
She agrees the success of the city’s newest incubator relies on differentiating itself from the university model, by developing creative-sector entrepreneurs first and foremost, and by becoming self-sufficient over time. Right now, though, the polytech is stumping up the cash needed to get the incubator up and running.
Hamilton City Council, meanwhile, is housing Soda rent free in a trendy former soft-drink factory in the heart of the CBD. Business advisory firm Deloitte and lawyers Norris Ward MacKinnon are chipping in their services for free.
So does Collier see the country’s fourth-largest city as more creative and entrepreneurial than others?
“Having lived here for just a few months, it’s hard to say. All I know is that people here are really excited about what we’re doing.
“They say to me: ‘We can’t do this in Hamilton surely — it’s an Auckland or Wellington thing.’ That’s exactly the attitude we’re out to change.”