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Archive 2011

Labour lobs science and innovation agenda at National — watch out Steven Joyce! Peter Kerr Dec 22

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Among the (little) talk of Labour’s shadow cabinet line-up, one small fact’s escaped general notice.

New Opposition leader David Shearer has retained the Science & Innovation portfolio.

Excellent.

This is the first time since the 1930s that either the Prime Minister or the leader of the opposition has held this role. (George Forbes had it back then).

Firstly it indicates that Shearer wasn’t just seat warming when he had the shadow S&I portfolio pre-election.

Secondly, it indicates that, given he could’ve presumably taken any shadow-portfolio role he wanted, he sees S&I as being important, by definition the most important aspect, in the whole scheme of lifting New Zealand’s wealth.

With deputy Grant Robertson taking on the tertiary education, skills and training role, and David Cunliffe fronting up on economic development, Steven Joyce is going to find some welcome (from the country’s point of view) pressure to deliver on the super-portfolios he’s taken onboard.

In fact, having a strong income-creating, as opposed to money-spending shadow ministers at the top of his caucus, will be a powerful indicator to middle NZ that Labour’s looking for a new direction.

Shearer’s new mini-mantra, ‘clean, green, clever and innovative’ also has the welcome look of an agenda (we won’t use the word strategy) about it.

As National kicks off the New Year, it will have to be careful it isn’t outflanked in the Science & Innovation stakes.

Sure, IRL’s going to morph into a High-Tech HQ (or Advanced Technology Institute or whatever it will be called), with double the number of staff over the next few years.

But, it can’t be expected to, nor should it be lumbered with, having to defacto create a S&I strategy on behalf of the country. It is part of the solution, a big part, but part of a whole.

That whole should, as has happened in Denmark, Finland, Singapore and Switzerland, start with a Science & Innovation Council headed by a very senior minister (Key preferably, otherwise Joyce).

Such a council, in conjunction with wider industry, research and academia, is the best place, really the only place, from which to drive a collective sense of ‘this is what we’re trying to do/this is where we’re heading’ (note the lack of use of the word strategy — a bit of a no-no word in National parlance, so we’ll just call it an ‘action plan’).

The need for a collective sense of action and a wider ownership is also why the Ministry of Science and Innovation can’t come up with such an action plan.

And though ‘clean, green, clever and innovative’ isn’t anywhere near being a plan of action, it slips off the tongue quite well, and could serve Shearer well if Joyce doesn’t deliver.

So, David Shearer, a big ups for the surprise of keeping the S&I portfolio to yourself.

In reality, being much cleverer, using our biological resources better and figuring out the niche high-tech areas in which we can succeed is the only way for New Zealand to get itself out of (what is still, essentially) a commodity mindset.

In other words, the notion that agriculture et al are sunset industries is wrong. Everything’s complementary in today and tomorrow’s economy — let’s just do it all much better. Have a look at the latest Bioscience report to see how well we’re on some of these fronts.

As Shearer gets out, and talks to those he’d want to attract as voters, talking science, talking innovation, will be a way for Labour to differentiate itself from its past, and potentially differentiate itself from National — if National’s not too careful.

Unexpectedly, the ball’s suddenly back in your court now Mr Joyce.


Take a bow biosciences Peter Kerr Dec 20

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A wee while back sticK reported how high tech companies should skite more.

The same can be said for our biological industries (which are also of course high tech).

Because, better late than never, the 2010 Bioscience Industry Report comes with some pretty encouraging news for those making clever use of biology and brains. See the actual report here.

In spite of the global financial crisis (2008) occurring in the middle of the report’s reporting period; 2007-2009, the sector’s shown remarkable growth.

At the same time, the report has taken the opportunity to expand beyond a biotechnology definition – which comes with a bit of implied gene jockeying baggage, whether true or not.

Biosciences is an OECD term — and focuses on primary applications within the bioeconomy (includes animal, foods, and human health, plant and marine), health (includes biomedical science and drug discovery) and the environment (includes bioprocessing and biomanufacturing).

If, using the last report’s biotechnology definition, there had been an additional 45 new companies in the period, while under the biosciences moniker, there were a further 57 organisations.

In all, it reveals that there’s 267 bioscience organisations — growth at a time when worldwide there’s been much contraction.

As the report says, it is difficult to separate out bioscience income and activities from other biological exports, but then it delves into the sector’s entrails, reveals that between the previous report in 2007 and this one, net profit for dedicated bioscience organisations (an estimated 108) has more than tripled to over $121 million.

It also gives a few observations about the industry — one not surprising one being that venture capital in the $5-8 million region is hard to obtain.

But angel investment has been a standout.

The report takes the opportunity to give a swerve to rules around intellectual property, particularly the fact that unlike other investments, the whole of the price of a patent sale (for example) is taxed. The costs of acquiring the knowledge, or legal fees associated with obtaining the patent aren’t taken into account.

All in all, the report’s a nice little reminder that the backbone of New Zealand’s economy has a biological base — and biosciences is the addition of brains to this base.

Sure, we need to be much cleverer about what and how we derive value — be it specific active ingredients, energy (with LanzaTech as the poster child) or the health area.

But, if there’s one thing the report does indicate, it is certainly that a little bit of bragging is due.


Ahoy me hearties; an offshore way around America’s green card requirements? Peter Kerr Dec 15

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Partly because they were cheeky enough to ask, and partly because it is such a wild idea, here’s a plug for would-be entrepreneurial pirates.

Along similar lines to Radio Hauraki, way back in the 1960s beating the then broadcasting laws by positioning their ship outside the (then) three mile territorial limit, Blueseed is looking to do something similar for foreign entrepreneurs in Northern California.

That is, set up a platform (also known as a seastead) 12 miles offshore in international waters, with regular ferries to the mainland — which just happens to have Silicon Valley and its associated innovation ecosystem just down the road.

As Dan Dascalescu (Blueseed’s CIO who sent the ‘do a story on us’ email) says, the investor-seeking start up is looking to establish a 1000 person vessel and offshore incubator in the second half of 2013.

‘This way we’ll allow foreign startup entrepreneurs to live and work in close proximity to Silicon Valley, in a unique setting geared towards creativity and innovation, with a streamlined regulatory environment,’ he says. The operation would be visa-free.

At this stage, Blueseed intends to charge $1,200 per person per month for a shared room and bathroom, up to $3,000/month for a private cabin/bathroom. The company’s business model includes taking a 1%-9% negotiable equity stake in younger startups depending on how much equity they have on hand.

The venture’s an attempt to get around the often-restrictive USA immigration laws that make it very difficult for those non-Americans attempting to set up new, innovative businesses in the land of the good and the free.

The founders (Dascalescu, Max Marty and Dario Mutabdzija) readily admit that there’s a hell of a lot of logistical, political, operational and financial hurdles to overcome. However, the trio has raised a small amount of seed money, and is looking to raise another US$500,000 in the next few months, and then obtain another $10 million to $30 million to charter or purchase a suitable vessel.

Blueseed recently announced that PayPal founder, Xero investor and promoter of the Seasteading Institute (see here), Peter Thiel, has offered to lead the seed funding round.

They reckon the space they’d create would be interesting and enticing and innovative, attracting the best startups and their founders. It could even entice U.S. entrepreneurs currently living on dry land, such would be the positive environment that could be part of the whole operation.

Obviously the reality gap between talking the talk and walking the walk for the Blueseed venture is immense. But, you can’t accuse the founders of thinking small. New Zealand entrepreneurs have recently been provided with a Silicon Valley ‘landing pad’ via New Zealand’s Ministry of Science & Innovation (see sticK story here).

As evidenced by the artist’s conception of what a potential seastead could look like, landing pads of a helicopter kind would be part and parcel of the Blueseed bid. At this stage, it would certainly be one way round the American visa problem.

As you can imagine, the ad(venture) has gathered media interest. CNET News gives it version of Blueseed here, TechCrunch gives its rundown here, and Slashdot here.

Dascalescu also recommended Blueseed’s FAQ page as answering some of the host of questions asked for what is, if nothing else, a potentially clever way around the USA’s green card issues.


Stalking horse comments on innovative Auckland — Gluckman Peter Kerr Dec 13

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There’s a certain amount of stalking horse-ishness to Sir Peter Gluckman’s recent ‘Auckland conversation’ (formerly known as Mayoral Conversations; speakers of repute).

As the chief science advisor, Gluckman’s past kite-flying thoughts on research and other matters have generally preceded government action.

This speech (see here) will be no different, and as has been much of his direction lately, Gluckman’s concentrating on making money from our brains in ‘Innovation through science: the pathway to economic prosperity’.

He’s pushing Auckland, as the country’s only centre with the scope and aspiration to be a truly international city, as doing more, much more, to lead the development of a true innovation ecosystem.

Briefly doing justice to his talk, Gluckman’s strong on the notion that while we have the capability, we’ve got to massively increase our combined effort to make more money in the high-tech areas that have protected and allowed countries such as Denmark and Switzerland to flourish. (He includes advanced foods for health in this category too).

It won’t be easy — again he gives the examples of Israel where the evaluation of at least 100 ideas thought to be of value only sees one that justifies investment.

‘Yet, the Israelis have no more researchers than we do, just a better linked up system,’ Gluckman says.

Unlike Israel or Singapore or some of the Nordic countries with which New Zealand compares its itself, we’ve never had a sense of crisis and urgency, and together with our inbred egalitarianism have undervalued the role of intellectual activity and science he reckons.

Our country also has the habit of believing in single interventions rather than integrated system wide approaches, when the ‘key to all of what I’ve been saying is the need to have a multi-layered innovation ecosystem,’ he says.

This has many components, with local government promoting, encouraging and if necessary part-financing an ‘innovation city’. It needs the development of technology parks (he gives the Wynyard quarter project a big boost later in his talk), clustering academia and entrepreneurs along with support services.

It also needs the institutions — hospitals, universities, technical institutes — to cooperate rather than compete. (He makes another aside point on whether universities are producing what a high technology economy needs. ‘Unfortunately a number of incentives in play in the tertiary sector can be counter-productive and drive an over-emphasis on individualistic institutional behaviour.”)

Gluckman’s better than many people at not just stating the problems, and fires up a few ideas that would drive more innovation — again, drawing heavily on Israel’s example.

Many Israeli innovation incubators are owned jointly between investors and the local authority, or between the local authority and the university, and work with large sums of both government and private money.

‘The Israeli model is based on a high ideas flow, an aggressive culling, high levels of investment and international management and technology input from the start,’ Gluckman says.

Importantly (in sticK’s opinion) ‘new ventures are supported with loans, not grants, to encourage entrepreneurial activity — written off if the product does not make it.”

Auckland, he argues, is uniquely placed to create an environment for this type of innovation (again mentioning the Wynyard quarter).

Gluckman gives other examples of what success could look like (another post).

As he says though, ‘at the end of the day this is about environmental and cultural change — it starts at the bottom and it starts at the top.’

And while Auckland has been giving a lot of its infrastructural attention to transport, ‘to make this truly a global city we also need to think about the knowledge infrastructure in the sciences and technologies.

The investment needed is partly fiscal, but so much more of it is psychological and motivational. Let us do the things that enable Auckland to brand itself as a city of innovation, a smart city in a smart nation.’


Testing business helps prove products’ promises Peter Kerr Dec 06

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One way to test the properties of a biological product, such as a honey or native plant extract, is to feed it to an animal or human and measure (hopefully) the results.

This takes a fair bit of time, and quite possibly money.

Another way to do it is using models of biological effects, something that acts as an indicator of a product’s efficacy. This can cut the time down to weeks, and causes a much smaller hole in the wallet.

Which is exactly what Wellington company Trinity Bioactives carries out for its mostly Australasian, but also global clients. It uses scientifically proven and established methods to indicate on the label, as a proxy, that a product has been shown to have biologically active ingredients.

Trinity’s Managing Director and Director of Research and Operations Paul Davis, a biomedical researcher by training, is a large part of the brains behind the 160-170 tests, or assays, that the Gracefield-based seven person team is able to apply for (would-be) makers of nutraceuticals, functional foods and products sold over the counter at the likes of chemists, supermarkets and health food stores.

Trinity’s genesis came about in 1994 when the Biological Investigation Group (BIG) was set up as a research and business unit under the auspices of the Otago University’s Wellington Medical School. It was triggered by Davis going into a Johnsonville Mall health food shop and observing nine different brands of shark cartilage being on sale.

‘I wrote down what the product said it was and its price,’ he says. ‘Then I went home and calculated the price on a cost per kilogram basis. The price varied from $450 a kilo to $3,300 a kilo. The labels all listed what was in the cartilage, the fat, protein, mineral and so on, but nothing told me about the effectiveness of the product. Was the $3,300 product eight times more effective than the $450 one? There was no way of knowing. They could’ve all been dead for that matter, and had no active ingredient.’

This failing from a biological effectiveness point of view helped bring BIG into existence, along with valuable assistance from George Slim and Richard Furneaux; from Industrial Research Ltd.

Over the next 14 years, Davis and BIG developed different assays to measure a diverse range of biological potencies and efficacies. Many of these assays are cell cultures — perhaps of stomach cells or cancer. There are other tests that measure the diabetic response. Others measure a skin response. There are also many, many other tests.

One common feature of all the assays is the method has been proven and written up in reputable international scientific and medical journals. Somebody, somewhere, has demonstrated that using a particular method demonstrates a particular measurable, response.

Trinity uses these publicly-available methods, to prove the activity or otherwise of the biological products it is asked to investigate. These range from emu oils to green lipped mussel extracts, bee propolis to dairy extracts. .

The University sold BIG, which was renamed Trinity Bioactives, to Davis and a group of investors in 2008, and though the laboratory moved from its Wellington site to Gracefield in 2010, Trinity continues to use the Medical School’s animal testing facility at times.

‘It doesn’t matter to us what sort of test material you want to look at,’ says Davis. ‘For example, if the client wishes to investigate the effect on inflammation, there’s so many different types. But we can test the multiple cell types and biochemical pathways that couod eb involved. What we do, is discuss with the client what they want to investigate, and then design a study to address those questions.’

The results, obviously mostly when the product demonstrates a favourable outcome for say its appropriate properties, are able to be published often as part of the fine print often seen on the back of a package.

Manufacturers can’t publish something without our approval.’ Davis says. ‘In fact, neither party can publish without the other’s prior approval. This to protect them and us’

This provides an evidence-based approach, that an independent agency has provided a report. All these assays and models are in the public domain and literature, ‘so the methodology is recognised,’ he says. ‘When we discuss the investigation of a product with a client, we can also give a copy of the methodology in the paper that has been publicly published.’

No other Australasian company provides such a comprehensive service, and ‘it provides, for companies looking for a market advantage, evidence that a product does have an effect.’

Along the way, Trinity has also established some important collaborations. It doesn’t conduct many trials of pharmaceutical products, ‘We simply wouldn’t have enough inquiries,’ Davis says. The safety/toxicity aspects using experimental animals would cost at least three to four times our current rates

For that sort of work, Trininty refers the project onto a Melbourne partner, who in turn directs natural product, nutraceutical and functional food tests its way. ‘At the moment, Australian inquiry has been quite active, and we’ve obtained a fair bit of work from our partners across the Tasman.’

Over the years, Davis has had to apply an increasing quantum of knowledge on methods, procedures and applications for testing biological activity. In being aware of different methods, and new ones that are being published all the time, it means that often Davis is a problem solver needing to work out a particular way that different biological effects can be demonstrated.

‘We often need to develop a test that’s relevant for the product that a client is producing,’ he says.

An increasing amount of business, and one that is good from a steady income point of view, is testing on a batch basis, levels of biological efficacy in natural products . This means a bioactivity certification or indicator of quality can be provided with every delivery that a manufacturer may make to its own client which in turn is making up a formulated product. .

In all cases, it involves sitting down with a client, and negotiating what Trinity is going to do to try to address the question that the client wants answered..

‘We get an agreement before we start, and we both know what is going to happen through the production of a Study Plan,’ says Davis. ‘From that we can produce a formal report on a personalised basis at the completion of the study.’

In designing a study, Trinity is able to supply an estimate of what it will cost to measure biological activity, along with toxicity and safety measures.

‘Davis says. ‘Often we’re doing blind tests, we don’t even know what we’re screening. This helps to remove the chances of bias in determining the results. .’

Davis says there are big opportunities for New Zealand companies to sell biological products, where the level of activity is provided as part of the whole package. This will establish that the products are biologically active.

The combining of different products, which often will show a synergistic effect is another opportunity, for which Trinity is able to provide methods that show the beneficial enhanced activity.

One of these was a green lipped mussel extract, for which a company tried different combinations of additives/combinations. As a result, one showed increased effectiveness, and this is now being marketed and sold as a superior product

‘There are untold possibilities out there for New Zealand,’ he says, with a number of sources of government funding being available to ease the cost of testing biological effectiveness.

‘And the great thing is, when I come in in the morning, I don’t know who is going to knock on the door,’ Davis says.

‘And our job’s about solving problems. There’s a real intellectual buzz to being able to do that.’

Davis says there’s also a range of opportunities for innovative and brave New Zealand companies looking to add value to the country’s biological resource.

Being in a position of an ‘honest broker’ he receives inquiries from both the market/consumer end, and the producer.

‘If we open our eyes and ears, there are many people who are after the high quality products that this country can offer,’ he says.

‘As long as proof is provided that something does what it says it does, then the rest of the product’s story can largely write itself.’


Prime Minister as prime innovator — get going on #13 Peter Kerr Dec 01

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We probably shouldn’t be surprised that amongst all the next to ‘do’s’ from the incoming National-led government, the one with the greatest potential to be a game changer, has been ignored by most of the media.

Issues of teapots are much more pressing!

However, the under-the-radar announcement early in the election campaign of the doubling in size of IRL to become a high-tech HQ is exactly the type of initiative needed to support an economic revival in New Zealand.

The same day (Nov. 3) release of a ‘Powering Innovation’ report also had a number of recommendations.

Number 13 could be the most important in the scheme of setting an agenda, theme, direction or strategy (in the absence of one as noted by businesspeople in a survey before the election).

#13 – Form a Science and Innovation Council, led from a very senior ministerial level in Government, with representatives from the university, public and private research
organisations and from industry. Members should represent a wide range of science and technology themes, including the social sciences. The role of the Science and Innovation Council should be to establish a national innovation strategy and advise on science and innovation policy and priorities.

In Denmark, Singapore, Finland (all smaller countries with which New Zealand so often, so unflatteringly compares itself) that ‘very senior ministerial level’ is the Prime Minister.

And so it needs to be in New Zealand. Key is key to cranking up the money-making creativity, and for the nation to give itself permission and capital and build the skills to grow the value of what we produce.

This was noted in the New Zealand Institute’s press release that ‘The Prime Minister should be the prime innovator’ (see here). ‘An Innovation Council chaired by the Prime Minister would ensure that any policy, business and education impediments would be addressed alongside the inventiveness improvements already commenced.’

Put another way, having Key as the prime innovator means all the ducks are flying in formation — helping to ensure that impediments are removed, tracks are greased.

Of course Key would need to have a pretty good second in command to help achieve all this.

A rumour floating around Wellington is that Stephen Joyce may look to have a super-portfolio that has the Ministry of Science & Innovation, the Ministry of Economic Development and the Tertiary Education Commission all coming under his bailiwick.

Part of the thinking is that though all three ministries produce excellent policy, it is often produced in a silo. At the macro level, the policy can be perverse, even contradictory.

So, Key to pick up #13 of Powering Innovation as prime innovator, and Joyce to pull it all together?

sticK calls it first.


Startup investment scene in NZ, like the rest of the world, is changing fast Peter Kerr Nov 24

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The world of investment in startups is changing, and what’s happening in the rest of the world will soon be occurring downunder.

Part of the change comes about because one of the little uncool secrets of the venture capital world, is, generally speaking, it ain’t doing that well from a returns point of view.

And, it is not only in New Zealand that VC funds are finding it tricky to attract new capital. Around the globe apparently, more than 1700 VC firms are looking for more cash.

The biggest and best known VC firms such as Khosla Ventures (investor in LanzaTech) and others are getting bigger. These super VC’s are managing to provide a decent return mainly by virtue of the fact that they get first pick — they’re the best known, so people go to them early on; and many of the ideas will be crackers.

But back in the USA, it is estimated that half of the institutional investors who invest in VCs are going to refuse to put in anymore promised monies (they don’t put in all the money upfront, instead drip feeding it in). These Limited Partners are effectively saying to the VC, ‘sue me’, banking that they won’t.

Here in New Zealand, we’re not immune to under-performing, or even completely unperforming VC companies. Apparently the Number 8 Ventures Number One fund made absolutely no money for its investors. The Number 8 Ventures Number Two fund got off the ground before Number One reported back its performance.

This isn’t a surprising way of doing things, indeed similar things happen in the USA as, Hatm Tyabil and Vijay Sathe provide in a great overview article of ‘Venture Capital Firms in America: Their Caste System and other Secrets’ here.

The NZ Venture Investment Fund, and their associated VC partners have been pleading for more time (than the originally estimated seven years) to obtain a return from the fledgling companies they invested in. NZVIF and its VC partners have just started to exit some of their investments, HaloIPT, and inductive power transfer technology to Qualcomm for millions of dollars — the first of what must be hoped is a number of divestments.

All of which is a roundabout way of pointing out a fascinating article by Pascal-Emmanuel Gobry, at Businessinsider.com. His article on ‘The Way Companies are Getting Financed is Completely Changing’ is here.

Gorby argues that though the VC market is moribund, there are many new financing options for growing companies that weren’t available a year ago.

These include:
 Crowdfunding
 Accelerators
 Super-angels
 Late-stage private equity
 The long-delayed IPO

He goes into some detail explaining these options, most of which have a parallel in New Zealand.

There isn’t, yet, a local crowdfunding play. For that matter there doesn’t have to be in a sense, since the way global markets work, a newly hatching start-up can hang their shingle, put their pitch on sites such as AngelList.com or Kickstarter.com (similar but for ‘creatives’) and see if they garner enough collective money to allow them to get going.

The Securities Market Conduct Bill might manage to get through Parliament in the first quarter of next year, and this contains provisions for peer to peer lending (for smaller amounts that doesn’t require the person receiving the money to issue a prospectus) which will legally allow crowdfunding type setups in New Zealand.

Who fills this Kiwi-centric void will be a fascinating space to watch next year.

Accelerators are a more advanced, more IT-centric form of our incubators. The incubators are doing a reasonable job in New Zealand, and as a previous sticK story reported, MED can’t kill them (see here).

The angel investment scene has been an expanding bright spot — with early November’s Angels Summit in Tauranga deliberately coinciding with the announcement of a new ‘Enterprise Angels’ body centred on the Bay of Plenty. It initially has $4 million in its investment pot

New Zealand’s Angels are filling some of gap currently not able to be filled by VCs, as most are fully subscribed by their investment companies. An exception is the Movac #3 fund which is now looking for investment opportunities.

It is the later, slightly more mature start-ups that find it difficult to expand in New Zealand.

These slightly larger companies are still too small for private equity companies to buy out, while a stockmarket listing is usually deemed too expensive and/or comes with too many reporting obligations.

This is part of the NZ conundrum called the ‘Valley of Death’ funding gap. It’s the $2 million to $10 million next capital injection required by growing companies, expanding their footprint across the rest of the world.

All and all, this means the next period of startups and commercialisation and investment promising to be very interesting in New Zealand.

The development of new funding options will coincide with the launch of the Science and Innovation Council (to be chaired by a senior cabinet minister, with sticK speculating it will be John Key; see story here).

It’s all part of a stirring of the innovation pot (actually turning a good idea into something that makes money).

The more this happens, the more it will happen. It’s a virtuous spiral that can only be good for all of us.


Report brings facts for the fluffy functional foods and nutraceuticals industries Peter Kerr Nov 22

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You have to give Coriolis top marks for what it has come up with in its food report for the Ministry of Economic Development on ‘Nutraceuticals & Foods for Health’.

This paper hovers between information and knowledge, with enough observations and learnings thrown in that it immediately is (partly in the absence of anything else) THE go to document for the whole area. (Find it here).

Given Coriolis have produced it from a standing start, with pretty short notice compared to the dairy, meat, seafood, produce, processed foods and beverages sector reports that are also up on the MED website, the Auckland research, consulting and strategy company has pulled together an impressive 129 page document.

For the first time ever, instead of anecdote and guesswork, the often nebulous, sometimes snake-oil masquerading as cures, industry has facts pulled together in one document.

In fact, Coriolis, led by Tim Morris, found that as the MED-initiated project rumbled into life, various other government players also came on board — with money! Thus, the Ministry of Science and Innovation, MAF, Ministry of Foreign Affairs and Trade, NZ Trade & Enterprise, Ministry of Fisheries and Dept of Labour all have their monikers on the front as well.

Not that those organisations were much help in collecting the raw data — there’s precious little of that, no universally accepted definition and its difficult to quantify.

As a CEO of one NZ company they interviewed says, ‘all natural product areas are tricky to define, they have such huge scope, and lots of small players.’

But Coriolis has managed to corral this ‘scope’, kicking off with its methodology and definitions, and following an upfront summary and conclusions, segwaying into the separate nutraceuticals and functional foods global and NZ situation reports. There’s a hefty appendices section profiling firms and products.

What this is though is a damn good resource. What Coriolis has called observations is also useful — an intelligent and well-argued 25 pages built around three central themes:

 Legitimate & credible
 Collaborate and consolidate
 Industry & science alignment

For longtime observers of New Zealand primary industry, some of these observations (much of it the same ‘stuff you, stuff you’ mutual fingers to each other by NZ competitors who should be collaborators) will be distressingly familiar.

Morris and the Coriolis team also wrote the Seafood Information Project, and reckon that industry has a much more coherent view, and most participants reached the same conclusions on what is required for future success.

As befits what is a much more ‘fluffy’ industry, there is nowhere near the same level of coherence of view by the nutraceutical and functional foods players — but at least some of this divergent opinion is out in the open and there is a definite place from which to move forward.

Coriolis’ summary is best shown in its SWOT analysis of the nutraceuticals market. The entire document will be required reading for anyone in, or contemplating a sector that has arguably the best potential to add significant value to New Zealand’s biological resources.

Here’s the SWOT.

Strengths
 Unique flora and fauna due to NZ’s geographic isolation
 Unique products proven success (e.g. manuka honey)
 NZ trusted country and products with secure food source
 Able to leverage favourable opinion of NZ in key markets, (e.g. China, Korea, Japan)
 Cheaper to manufacture than Australia

Weaknesses
 High cost of robust scientific validation of claims (e.g. clinical trials)
 Fickle markets often fad products with inconsistent consumption
 Narrow consumer market
 Regulatory environment in export markets challenging to understand and frequently changing; no global standards or agreements
 Most NZ firms have low/no economies of scale
 Lack of capital for research and capital investment

Opportunities
 Large waste streams from existing food and beverage manufacturing
 Expansion into high-demand nutraceuticals market (e.g. East Asia)
 Native, unique plants
 Research into key high potential products with proven track record (e.g. manuka honey, blackcurrants)
 Marketing NZ’s unique environment and products
 Marketing to tourists in NZ
 Online shopping
 ‘Country of Origin’ labelling supporting NZ products
 Special dietary requirements (e.g. for use in retirement homes, hospitals, etc)

Issues/Threats/Risk
 Counterfeiting of NZ products, particularly in China
 False claims bring disrepute on the industry
 Increasing amount of regulatory restrictions
 Backlash, negative publicity in sector with products with unproven claims
 Companies repacking imported ingredients as produced from NZ
 Scare/contaminations/disease damaging consumer image of NZ

However, the document is much more comprehensive than this SWOT alone — as already said, it’s a great resource.


Science medal and link to wealth creation a great endeavour Peter Kerr Nov 18

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It’s great to see some public recognition of scientists and (by implication) science with the just announced medals presented to 13 New Zealanders by the Royal Society.

Reading some of the citations and background on the women (with the main gong, the Rutherford Medal being won by a member of fairer sex for the first time) and men, the depth and breadth of research carried out in this country totally punches above our size. The list of winners and their ‘story’ can be found here.

Of particular note from an innovation point of view, mention should be made of Neville Jordan.

He’s picked up the Thomson Medal awarded ‘for his contribution to the development and application of science and technology to wealth generation through his management of MAS Technology Ltd, Endeavour Capital Ltd and his role as a director of numerous spin-out companies he has supported through the latter.’

As an august body, the Royal Society’s role is to advance science, technology and the humanities — which it does across many different spheres. Its strapline (on its home webpage) is ‘a place for knowledge and excellence’.

This certainly doesn’t preclude wealth creation, and indeed, without the money that wealth provides, publicly funded science couldn’t be carried out.

Science produces ideas, be it thinking or products or understanding.

In a sense though, ideas are easy.

It is turning them into something that is of value, often measured in monetary returns, that is the real trick.

Or, put another way, if innovation were easy, everyone would be doing it.

But it is not. It takes hard work, market understanding, good management, sometimes a bit of luck, and guts.

Jordan’s demonstrated these attributes, and New Zealand’s better off as a result.

Conferring the Thomson Medal on him is a boost to the idea that using our brains to make money is a good thing.

It also demonstrates that science, and its pursuit, is not antithetical to riches.

Overseas, those with a science and engineering background are encouraged to (also) get into business.

In its own small way, Jordan’s winning of the Thomson Medal is another small move for New Zealand down a similar path.


Technology companies need to skite more Peter Kerr Nov 17

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Perhaps the main ‘problem’ with the majority of the companies that make up the TIN100 is they fly beneath the general public’s radar.

They’re not about fashion, or coffee, or rugby, and 90% of the revenue earned by these clever companies is from easy-to-miss exports. If they were in the USA or Germany or China, they’d be feted.

Even though the ICT software/services, high tech manufacturing and biotechnology companies that make up the ‘Technology Investment Network 100’ had record revenues of $7 billion last year, many New Zealanders would be hard-pressed to name half a dozen of them. (The TIN100 report is here.)

Which is a pity, because in a time of economic tightness, the top 100 (there’s also a second 100) grew revenues by 5%, and lifted employee numbers by 6% to 30,000.

One of the reasons for such strong performance is that R&D spend by these companies is 5% of total sales. At the same time they’re selling stuff, they’re getting the next products ready for the market as well.

And there must be faith in this strategy — R&D employee numbers grew by 6% in these companies.

For TIN100 principal sponsor, IRL (about to become high-tech HQ), the statistic that R&D partnerships with universities and CRIs by these companies grew from 13% from 7% must be heartening. As IRL’s commercialisation manager Gavin Mitchell said at the Wellington launch of the report, there’s also a large opportunity for the company to work with the high value manufacturing and other sectors ‘and help grow on something that’s more than the number eight wire mentality.’

TIN100 managing director Greg Shanahan said one of the features of companies doing well in exports, is how they’re using Australia as a springboard for initial large growth, and leaping to the rest of the world from there.

There’s a heck of a lot of good stuff happening in and by these companies says Shanahan.

‘People just aren’t aware of it,’ he says.

‘If there’s a real plea, talk about your successes locally. That will build the desire of students to study science, to be entrepreneurs. The trouble is, most of these companies are invisible apart from this forum [TIN100].’


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