NZ's startups.


23rd November, 2018

Is NZ really an easy place to do business for startups?

NZ is officially the easiest place to run a business in the world – but for NZ’s startups, it doesn’t always feel like that.

For those who have experienced it, building a startup can feel like assembling a parachute after you’ve jumped from the plane. But a recent report indicates things may be a little easier in Aotearoa.

Recently, the World Bank came out with its updated Ease of Doing Business rankings [PDF] and NZ came out on top for the second year running

But that doesn’t mean it can’t be even easier, and NZ’s startups have a few ideas on how business conditions can be improved.

Previously, the MYOB State of Startups report found that one-quarter of businesses in their first two years of operation find staying ahead of the competition places extreme or quite a lot of pressure on their business.

The research also found that more than a fifth (23 percent) say managing cash flow was an issue and 21 percent agreed the costs associated with attracting customers was a burden.

That’s why MYOB recently ran the Head Start for Startups competition, in conjunction with NZME, to give one lucky startup the best chance of success and alleviate a lot of those early-stage pressures.

Five finalists were selected to go head-to-head pitching their idea to a team of expert judges in a bid to win a $100k startup package.

As part of that process, we got to speak to dozens of emerging startups about their challenges, hopes, and dreams.

From the trenches

For example, we spoke to Uri-Go cofounder Brendan Hale, who told The Pulse that, although NZ was indeed a great place to start a business, more could be done.

“Some aspects of setting up a startup in NZ are great, certainly registering a company is trivially easy,” said Hale.

“We are finding lots of smart and innovative thinkers here to help us along the journey, and the flourishing startup scene fosters a supportive community.

“The government administration for a small business here can be a bit overwhelming, though.”

Meanwhile, CarbonClick co-founder Paul Brady said government administration wasn’t the issue.

“We have some very favourable conditions – a simple tax system, sensible business compliance legislation, a very good financial regulator and a very approachable government,” said Brady.

“On the other side, we tend to lag behind the US, Europe, and Asia in terms of being at the forefront of technology adoption and access to capital.”

Trickle founder Adrian Wills on the other hand is upbeat and optimistic about being a startup in NZ – and it’s more about Kiwi spirit than government policies or market conditions.

“I’ve spent some time working with businesses in places like San Francisco and while they can be helpful, there’s something different about Kiwis. We’re just generally bloody good people,” said Wills.

“There’s such a good energy around starting a business in New Zealand at the moment – we’re a really smart bunch with some amazing ideas and when we work together a rising tide really does lift all boats.”

The latest MYOB State of Startups report indicated that the government could help them out by:

  • Reducing tax on early-stage companies (43 percent)
  • Aiming to improve market conditions (38 percent)
  • Helping to increase consumer confidence (22 percent) and;
  • Streamlining or reducing red tape (21 percent)

But while the government could help, it’s also up to the NZ startup community to step up to the plate.

What can the community do?

Previously, MYOB research has found that the greatest challenges startups face in NZ include the ability to scale up their business by accessing new people and sources of capital.

NZ’s economy is smaller than the likes of the US or the UK, so NZ’s investment circles are naturally more risk-averse – and that doesn’t spell good news for startups.

For NZ’s startup economy to go to the next level, the system needs a cash injection.

Elsewhere, more access to co-working spaces can unleash creative capital and connections.

If there’s one thing that has characterised the successful startup hubs of Silicon Valley and Tel-Aviv, it’s being able to work in close proximity with others pursuing their startup dreams.

By putting naturally creative people in vibrant environments designed to support the way they work, you see a rise in the number of creative exchanges – and at the heart of it, that’s what being a startup is about: applying creative thinking to solve a problem.

Take the case of dairy farmer Glen Herud.

He’s working on a new model for milk distribution, and says he’s gotten more value out of working out of BizDojo in Christchurch than he ever got on the farm.

“It’s been almost life-changing here, to be honest,” said Herud.

“I’m sitting right next to a games developer here, so that’s awesome.

We’ve also got sales people, graphic designers, web designers, entrepreneurs with multimillion dollar exits.”

NZ is legitimately a great place to start and grow a business compared with the rest of the world, and the data backs that up.

But that doesn’t mean that those startups aren’t continuing to face challenges that must be overcome for the sector to thrive.

It’s how government, partners, and the startup community respond to those challenges that will make or break the prospects of many NZ startups in the years to come.