This is a follow up to yesterday’s post, ‘Importing the Israeli Technology Incubator Model into New Zealand’.

In yesterday’s post, I quoted extensively from Oren Gershtein’s explanation in Callaghan Innovation’s recent Accelerate e-zine as to how the Israeli Technology Incubator model worked. Today, I am looking at the New Zealand perspective of this model as explained by Chris Somogyi, General Manager of Acceleration Services at Callaghan Innovation.

The Skys the Limit: Photo: Chris Williams: from the NZ Story Asset Library

The Skys the Limit: Photo: Chris Williams: from the NZ Story Asset Library

First though, let’s look at just how technology incubation has transformed the wider Israeli economy to become one of the world’s leading high-tech hubs.

Israel’s technology incubator program was started in 1991 as a wholly owned and managed Government initiative. In 2002, the program was effectively privatised when the incubators were put out to tender. Today, the private sector has improved both their commercial focus and their capability. It is reflected in the numbers.

Over the past 20 years, the Israeli Government has invested over US$ 600M into the program. At the same time, the startups in these incubators have collectively raised a further US$ 3.6 billion in foreign investment. Roughly 60% of startups graduate from the incubation process creating a significant R&D hub. This supports Oren’s position in yesterday’s post that “Israel is in the business of exporting companies, but whilst we export our companies, we retain the know-how and inject cash and capability back into the ecosystem to build the next company. Our strategy is to think ‘exit’ from day one.” Israel has, in short, developed a rapidly growing and self-sustaining ecosystem for its high-tech sector.

So back to the title of this post. Can New Zealand Replicate the Israeli Technology Incubator Model? The answer is yes, but it will require a change in mind-sets. The thought that businesses are built with the sole ambition of being sold is a concept that many Kiwis will find hard to accept. Surely it is better to grow them over time. Not according to the Israeli model. Think growth, think exit, think rinse and repeat.

Callaghan Innovation’s new tech-focused incubators have been established to replicate the Israeli model. Each is a ‘for profit’ venture and each has access to a repayable grant fund established by the New Zealand Government. In the words of Chris Somogyi, each incubating business is being born in an airport lounge. They are global at birth. Their IP is routinely picked up by bigger global machines. Think Google, Cisco and Facebook. Then rinse and repeat.

Talent and funds are retained in New Zealand and the next set of startup businesses are identified and incubated. The process becomes ongoing as the country’s economy starts to transform.

It is a big picture and a big vision. In Tauranga and the Bay of Plenty, we are fortunate that WNT Ventures was selected by Callaghan Innovation to be one of its three new New Zealand tech-focused incubators. It provides the city and the region with an opportunity to break new ground by converting complex IP into products and businesses that can grow the local and national economy. It is an opportunity in which the founders of WNT Ventures are well placed to execute.

For more details about WNT Ventures, click here.

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