Major investment in Hector’s World

InternetNZ announces major investment in Hector’s World

Media release – 16 June 2008

InternetNZ (Internet Society of New Zealand Inc) is to provide up to $200,000 in funding for the ongoing development of Hector’s World™, a world-leading cybersafety resource for young children. Hector’s World is produced by Hector's World Limited (HWL), an innovative social entrepreneurship venture and charitable subsidiary of New Zealand’s cybersafety organisation NetSafe.

Hector’s World teaches young children cybersafety as they first experience the Internet, by engaging them with free online animated stories, puzzles and cybersafety buttons. This is coupled with educationally appropriate parent and teacher resources.

The value this affords children, parents and teachers has been recognised by the support already given to Hector’s World by Microsoft New Zealand and the New Zealand Community Partnership Fund and also by the confidence shown by CEOP, a division of the UK Home Office, which recently took the first international licence of Hector’s World materials. Keen interest is also being shown by other countries.

InternetNZ President Pete Macaulay says the funding will provide Hector’s World Ltd with the resources it needs in the short term to build on the success it has already achieved in New Zealand and internationally.

“NetSafe is the leading centre of expertise and resources in New Zealand and is a recognised centre of excellence internationally. That is why we have supported NetSafe in a strategic partnership with significant funding since last year. The agreement builds on InternetNZ’s partnership with NetSafe by giving the world-leading Hector’s World initiative the opportunity to realise its potential,” says Macaulay.

Hector’s World Managing Director Liz Butterfield and NetSafe Chair Rick Shera have welcomed the funding announcement. “We are delighted with the confidence InternetNZ has signalled with this decision,” says Shera.

“The funding will allow Hector’s World to take critical next steps in developing the commercial capacity to make best use of its intellectual property. Not only will that allow us to share the education benefits world-wide but it will continue to showcase New Zealand’s talent and thought leadership on the world stage.”

InternetNZ’s funding will be made available to Hector’s World by means of a concessionary loan. At a future point where Hector’s World no longer requires the funds, they can be returned to InternetNZ along with appropriate levels of interest. This support also gives InternetNZ the option to consider future possible commitments to help promote the Hector’s World concept, by securing for InternetNZ the right to consider a further commercial investment once a business case is developed.

Macaulay says the relationship between InternetNZ, NetSafe and Hector’s World, is about far more than money. “All three organisations are concerned with ensuring the Internet is safe and accessible for everyone. Our partnership in sharing ideas and research is wider than this funding agreement, which will only strengthen it.”

Liz Butterfield, who is also a Councillor of InternetNZ, declared her interest in seeking support for Hector’s World and did not participate in the InternetNZ Council’s deliberations or decision as to whether to provide funding, aside from briefing the Council on what the funds would be employed to achieve.

InternetNZ and Hector’s World anticipate finalising and signing a loan agreement to implement this decision in the next few weeks.

Hector’s World can be found at www.hectorsworld.com

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Questions and Answers

Why did InternetNZ make this investment?

InternetNZ regards the Hector’s World concept as an extremely effective way to improve cyber safety among the next generation of Internet users. Since Hector’s World is a subsidiary of NetSafe, there is high confidence it is backed by strong research and best practice in cyber safety. This funding enables Hector’s World to build on its success by developing a commercial business plan and further resources to take it to the next stage.

Who else has invested in Hector’s World already?

Hector’s World has been developed with the assistance of the Community Partnership Fund, part of the New Zealand Government’s Digital Strategy ($428,000), and by numerous sponsorships and in-kind donations with an estimated value of over $1.5 million including the Ministry of Education, Microsoft and the Tindall Foundation. In this context, InternetNZ’s investment is small but comes at a crucial time in leveraging this past investment and allowing Hector’s World the chance to grow.

What results does InternetNZ expect to see from this investment? With its licence into the UK and strong interest from other countries, Hector’s World has proven itself as a concept. It is now time to take this social entrepreneurship venture to the next level. To do that, it is hoped that this funding will enable introduction of export business development and international licensing expertise to Hector’s World. Within the next 12 months we would then expect to see announcements of further international licensing, plans for further content development and consideration of the best way in which to introduce commercial opportunities so that the project ultimately can become self-funding.

Why did InternetNZ choose to advance funds to Hector’s World by way of a loan?

InternetNZ considered three possible options: a grant, an equity investment and a loan. A loan allows InternetNZ to specify the purposes to which the funds will be applied (i.e., so that they may only be used consistently with Hector’s World’s current objects, which in turn further InternetNZ’s objects), and to do so in a manner which allows greatest flexibility in terms of cash-flow and repayment as the business develops. An equity investment is not seen as appropriate at this stage and a donation or grant would not have allowed InternetNZ to specify how the funds would be used, thus potentially weakening the funds’ benefits in advancing InternetNZ objects.

Will InternetNZ be making any future investments in Hector’s World? The loan agreement will preserve for InternetNZ a right of first refusal in any future opportunities to investment in Hector’s World. However it makes no commitment that InternetNZ will do so. Any further investment will be considered entirely as a separate question, if any such opportunity arises.

What if the loan cannot be repaid?

InternetNZ is very confident that the Hector’s World venture will succeed. It has already been adopted by the UK and negotiations with several other countries are well under way. This expansion in availability and use of this resource, combined with the strong governance arrangements NetSafe has put in place for Hector’s World, mean that InternetNZ has every confidence that these funds will be repaid in the medium term. If the enterprise is not successful, then the risk will lie with InternetNZ as it does with any lender. Regardless of any financial return to InternetNZ, the funds provided to HWL will be spent furthering the objects of InternetNZ and will further showcase New Zealand talent and expertise to the world.

ENDS

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