The technology sector is our third largest export market with the top 200 NZ tech companies exceeding $10bn of combined revenue and $7.3bn in exports in 2017. While often recognised for Dairy and Tourism, there are structural reasons to support New Zealand as a hub of technology and innovation.
- Built to Scale: With a small domestic market, ambitious start-ups need to be built with offshore expansion in mind from the get-go. This means having a scalable business model that can keep up with growth, and out-innovate competitors.
- Technology-Friendly Ecosystem: NZ is well regarded as an ideal market to test new technologies. With fast internet speeds, high technology penetration and a business-friendly environment. A recent example of this was the testing of autonomous air taxi’s in Canterbury by Cora.
“We quickly realized that there was only one place in the world that had everything we needed — Richard Pearse’s New Zealand. New Zealand’s Civil Aviation Authority has the respect of the worldwide regulatory community. A people who embrace the future. And a dynamic economy that could serve as a springboard for Cora.” (Cora, 2018).
Source: Cora, 2018.
Case Study: Gentrack
Outside of well-known names such as F&P Healthcare and Xero, there are a number of emerging technology companies succeeding overseas. One such company is Gentrack.
Gentrack provides billing systems to water and electricity companies. Behind your monthly power bill are a series of complex calculations to determine the cost of your power usage which varies throughout the day depending on supply and demand. Today you can switch provider within 10 minutes online, making customer satisfaction and competitive pricing incredibly important. Although this wasn’t always the case.
Historically many utility markets around the world were regulated meaning you couldn’t choose your power company. This allowed providers to get away with poor customer service and pricing. New Zealand was one of the first markets to deregulate with reforms in the 1990’s requiring electricity distributors to separate their retail arms. Gentrack launched in 1987 to take advantage of this and quickly established a strong presence.
Gentrack have since taken their billing systems into Australia, the UK and more recently Singapore, as these markets have deregulated their utilities. Despite the majority of their revenue being overseas, Gentrack has retained its research and development base in New Zealand due to the talent pool and cheaper cost of labour. With a global trend towards utility deregulation Gentrack targets long term average annual growth of 15% in EBITDA (Earnings before interest, tax, depreciation & amortisation).
Source: Gentrack Investor Presentations.