Hon Trevor Mallard

Minister for Economic Development

5 October 2006 Media Statement

Incubator programme nurtures high-growth firms

The government is helping New Zealand’s business incubators to turn bright ideas into successful companies, with 20 high-growth firms graduating from incubator facilities in the past year, Economic Development Minister Trevor Mallard announced today.

During a visit to the Creative HQ incubator in Wellington, Trevor Mallard said incubators had graduated 107 companies since the Incubator Support Programme run by New Zealand Trade and Enterprise’s began five years ago.

"A primary measure of the programme’s success was for 20 high-growth companies to be graduating from the incubator network each year by 30 June, 2006. Achieving this target shows how valuable the incubation process can be to start-up companies that go on to become significant contributors to New Zealand’s economy."

Eight high-growth companies have gone through Creative HQ since it started three years ago and another 15 are currently part of it. The incubator also runs Fashion HQ as a sector-focused service to support Wellington’s apparel sector.

"Creative HQ’s graduates include high-growth companies like technical consultancy Optimal Useability, which was named Start-up of the Year at the 2006 Incubator Awards. It’s great to see Creative HQ helping a range of innovative software developers, publishers and digital technology companies to succeed in the global economy."

Performance data from 68 of the 107 companies graduating from incubators since 2001 show they generated $50.3 million in revenue in the past financial year, of which 23 percent was from exports. The 68 firms also raised $19.6 million of capital to fund future growth and directly employed 544 people.

Meanwhile, the 20 high-growth companies that graduated from incubators in the 2006 financial year were among 34 firms in total to do so. These 34 businesses raised $8.5 million in capital and tripled their annual revenues during their incubation. In addition, more than one third of their revenues were from exports.

"The results being achieved by incubators and their graduate companies show that this industry is rapidly maturing. Incubators are also playing an important part in influencing New Zealand’s levels of entrepreneurship, innovation, and early-stage investment.

"We recently established the $40 million Seed Co-Investment Fund to provide more support to young, high-growth firms. So it is pleasing to also see that two of the four inaugural ‘angel’ investment networks teaming up with this fund – Ice Angels and Powerhouse Ventures – have been established by NZTE-funded incubators. This shows that the investment community views incubators as important and credible parts of their networks."

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About business incubators:

A business incubator is a facility designed to assist businesses to become established and sustainable during their start-up phase.

Through its Incubator Support Programme, NZTE currently assists nine incubators nationwide to deliver support such as: introduction to markets and market networks; advice on strategy, risk management and governance; help with raising capital; and introduction to experts in fields such as intellectual property and marketing that early stage companies might not otherwise have ready access to.

"High-growth" companies graduating from the scheme are defined as those achieving two of the following criteria during incubation: doubling full-time staff, generating $500,000 in revenue, or raising external capital of $500,000. Such companies must also have the potential and ambition to generate revenues of at least $5 million within three years of graduating.

For more information see www.nzte.govt.nz/incubators

About New Zealand Trade and Enterprise:

New Zealand Trade and Enterprise (NZTE) is the New Zealand government's national economic development agency. NZTE is a global organisation committed to improving the international competitiveness and sustained profitability of New Zealand businesses.

NZTE offers a wide range of services and programmes throughout the lifecycle of firms from start-ups to established groups of exporters.

For more information see www.nzte.govt.nz

ENDS

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