Archive August 2011

‘Genetically engineering’ web start-ups one way to overcome gaps in the Kiwi ecosystem Peter Kerr Aug 30

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We may be inventive and entrepreneurial, but it doesn’t mean that New Zealand’s innovation ecosystem is as optimized as it could be to develop ideas to living, breathing businesses.

From an IT point of view, Wellingtonian American Dave Moskovitz thinks we can do a lot more to get good internet initiatives cranking quickly.

As chairman of seed investor/incubator WebFund, Moskovitz is more aware than most that while there are strong points in the start up ecosystem, there’s also gaps.

Moskovitz (as befits a man also deeply interested in linguistics) isn’t short of a pithy analogy.

Larger markets such as the USA have a random mutation, a natural selection dynamic where all the components of a successful ventures can fit together.

‘There’s the sperm of an idea, the egg of execution and the womb of resources where elements can combine randomly, if there are lots of each as they have in overseas markets,’ he says.

‘In a place like Wellington, because of our smaller scale, there’s not the luxury of natural selection or random mutation. What we’re proposing is to genetically engineer our start ups to give them every chance of success to enter overseas markets.’

To this end, Moskovitz has spent the past 18 months looking at overseas models such a Y Combinator, TechStars, and Lean Launchpad (among others), but saw such accelerator examples need tailoring for NZ conditions.

The result is ‘HyperStart’, which will be preceded by a ‘Start-up Weekend’, though in the context of what Moskovitz (and Grow Wellington/Creative HQ/Biz Dojo) are putting in place, HyperStart is where the rubber will really hit the road for taking a good idea to market. (More about ‘Start-up Weekend’ in another blog).

HyperStart will take place next February and March in Wellington as an intensive — well, for want of a description – hands-on degree from the school of hard knocks probably works the best.

The first two weeks will be significant course work, including Eric Ries’ lean start-up methodology which Moskovitz sees as a ‘real enabler to get something off the ground quickly.’

Lean start-up works on the principle of a minimal period to get a ‘minimum viable product’ out to the (internet) public, and let users decide what works, what they’re willing to pay for. This compares to a new company building an internet product to something that is perfect (at least in their own eyes).

‘The most expensive development for a product is to put in features that people neither want or use,’ says Moskovitz. ‘Done is better than perfect.’

With a lean start-up, the initial product can be relatively ugly, but is a way of finding out what people might want to use, find out what works.

‘One element of the lean start-up methodology is smoke tests,’ he says. ‘You can put a link on a page to a feature you don’t know whether you should develop. That landing page for the link is a dummy, saying that the feature is in development and people should come back. If there’s no clicks, it isn’t worthwhile spending time or money on it, and you might as well test other features. You can measure what people are actually doing, compared to what you think the market might want.’

Lean methodology is the cornerstone of the coursework which also covers market validation, product and customer development; intentional expansion, and funding.

An important goal of the Hyperstart Programme is for the companies to get customers onboard. If people can’t get customers, ‘they’re obviously barking up the wrong tree.’

Entry to HyperStart will be competitive, with entry opening in October, closing in late November. The best 20-30 ideas will present five minute pitches, and around 10 of these selected to enter the programme proper.

‘They will receive investment immediately on acceptance into the programme,’ says Moskovitz. ‘The best one, two or three that get through will have another $225,000 invested, to prepare them to do a local angel round or Series A and to launch overseas.’

The expectation is that within nine months of finishing the six week course, the start-ups will be ready to launch, fully invested, overseas. WebFund will work very closely with those selected to do this he says.

WebFund is managing this particular exercise as a separate fund, taking out no other fees other than legal and accounting — a model that’s different to overseas examples where management takes a fee at the beginning and during the start-ups’ development.

There will be a performance incentive for WebFund, once the investors investment and a stated rate of return interest is provided via a trade sale or IPO,

‘The key is, there is not a fee at the start,’ Moskovitz says. ‘We’re investing our own money, and we obtain an upside only if the start-up succeeds. That’s new for the New Zealand market.’

Moskovitz says that many parts of the start up environment are present in Wellington and New Zealand. Examples such as Grow Wellington’s ‘Bright Ideas’ programme, TechNZ funding, incubators, and investors such as Angel HQ and Movac are all strong points.

‘But often we’re operating as islands in a sea, some not very far apart, but still somewhat siloed,’ he says.

‘We want to fill that sea in, become an archipelago, ideally connected to one another as one big long diving board. When people make the jump overseas using New Zealand technology and knowhow they need to do it in a sustainable way.’

‘HyperStart’s a way to bring together the ideas, capability and the resources in order to enable the businesses of tomorrow to take off in Wellington.’

W(h)ither the high value manufacturing review? Peter Kerr Aug 25

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What’s the bet the high-value manufacturing review never sees the light of day?

The March announcement, mid-April expected to be delivered review by Prof John Raine of Auckland Engineering School, Prof Mina Teicher from Israel and BusinessNZ’s Phil O’Reilly was supposed to be a once over quickly taking of the sector’s pulse – with some answers.

But, April, May, June, and July have come and gone; and the Ministry of Science and Innovation recently put out an email saying it would be coming out one day.

We’ll see.

There’s a suspicion floating around that some of the pre-conceptions around Industrial Research Ltd, and its location in Gracefield, Lower Hutt, were mis-construed. (After all, the high value manufacturing review was mostly aimed at that particular CRI).

One of these ideas is that the only manufacturing (as such) that occurs in New Zealand, takes place in Auckland and Christchurch.

That’s simply not the case.

As for the notion that science and technology expertise has to be embedded in the exact same location as the manufacturing – well, Pattrick Smellie’s recent article in Idealog about the irrelevance of distance in a country as small as New Zealand deserves highlighting (see it here).

All in all there’s a feeling around, that from IRL’s point of view, we don’t have to destroy the village to save it.

When asked at this week’s post-cabinet press conference what was happening with the review and IRL, John Key was very, well, diplomatic.

“We’re working through the issue, and very committed to building the capability,” he says. “We’re also very conscious of the role IRL plays in the Hutt, and the high significance the mayor and community put on its presence there.”

“Before the election, we’ll be in a position to expand our vision for IRL and high value manufacturing.”

Now, call me a cynic, but I can’t imagine that Mr Key and his colleagues are going to come out with a swinging axe with regard to IRL, just before the country goes to the polls.

Indeed, given the role that the government wants innovation to play in the country’s economic future, and given that IRL is the most concentrated source of chemistry, physics, mathematics and applied engineering expertise, don’t be surprised to see a cabinet recognition that while also building IRL’s Auckland and Christchurch presence, that the whole institute also gets a boost.

Just don’t expect to see the high value manufacturing review!

Free competition to find Transformative Technologies 2011 winner — give LanzaTech a hand Peter Kerr Aug 24

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Those of a patriotic come competitive come interested in boosting cool technology bent may like to help LanzaTech in Biofuel Digest’s competition to discover the Transformative Technologies 2011 winner.

In an ever decreasing round-robin ‘playoff’ two individual companies go head to head, with Biofuel Digest subscribers (free to sign up, comes to your email address) able to put in a daily vote.

Go here to register, and the next day start voting when the digest turns up in your email. The free registration in in the top right hand corner.

LanzaTech, the Auckland-based, globally project oriented company that uses industrial off gases to make ethanol and other useful products, is currently up against Novozymes, as at this moment, just ahead 52 — 48.

It is a pretty interesting competition, and takes little effort to support an NZ company that has the potential to scale rapidly and drag other Kiwi science along in its slipstream.

The Transformative Technologies 2011 is a neat concept, and the Digest itself reckons it is the world’s leading publication on renewable energy options.

So, there’s nothing to lose, quite a bit to gain for a couple of minutes effort. It might even be a safer bet than the All Blacks.

It’s sort of a pity we seem to have lots of underground hydrocarbons Peter Kerr Aug 18

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The Bioenergy Association of NZ had a liquid biofuels conference in Wellington last week (BANZ website here, proceedings soon to go up).

Under the radar, especially it would seem of a government more intent on fossil fuel exploitation, biodiesel and bioethanol are slowly increasing their market share.

The 50 or so attendees heard a number of case studies from users and suppliers of the renewable and carbon neutral forms of transport fuel, including Explore New Zealand’s William Goodfellow who says its use is an important part of the tourist company’s marketing.

Currently the rest of the world’s transport has about 3% renewable fuel use – compared to New Zealand’s 0.2%, with bioethanol responsible for 75% of our figure.

BANZ has, when you look at the potential, a quite achieveable target in 2040 of 30% of the nation’s transport fuels as biofuels.

One major component of those fuels would be the conversion of what is currently forestry waste into biodiesel – based on technology that currently exists, and which will only get better.

But one fly in the ointment is the lack of certainty on biofuels grants (effectively a subsidy, as one of many taxes doesn’t apply to biofuels) after June 2012.

In fact, a large Auckland ‘Ecodiesel‘ plant remains only three-quarters completed because no one knows whether the biofuels grant (which every other country has in some form or another) will be rolled over after next year. Though biofuels are gradually becoming price competitive compared to conventional diesel, it still can’t compete without the grant.

Which is a roundabout way of getting to the point that biofuels are an opportunity that New Zealand (are you listening Ministry of Economic Development) is failing to grasp.

The distraction (in the long term sense) of underground hydrocarbons, is stopping us from looking at harnessing the sun’s energy – today.

We are one of the few places that could, relatively easily, make a huge contribution to our energy needs through bioenergy.

We have biomass going to waste (literally), spare land on which to grow extra biomass, a low population, and clever scientists, technologists and engineers. Many knowledgeable overseas visitors can’t believe we’re not seizing the chance to go much greener.

This is perhaps the best, last, most emotional point.

We purport to be clean and green (but please don’t look too closely under the covers).

We’d be much more seen to be acting in that light if we did more than just talk the talk.

If government really got in in behind biofuels in particular and bioenergy in general, New Zealand would be much more seen as walking the walk.

BANZ is doing a good job, with limited funds.

Imagine what it could do with a bit more concerted encouragement.

Weltec and IRL cozy up in innovative move Peter Kerr Aug 16

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More good stirring of the innovation system in Wellington, with a fair potential for much of central New Zealand to benefit as a result.

Weltec’s Smart Product Centre has co-located, and as well as its Petone base camp, has set up alongside Industrial Research’s Gracefield campus.

One of the Smart Product Centre’s main foci is helping manufacturing companies develop prototypes, and small pilot runs.

Next year it is also about to produce its first batch of B. Engineering Technology graduates – of which part of the course is to work on specific problems/challenges for manufacturers and technology companies.

Setting these students and part of the centr’s engineering facilities alongside the applied engineering skills of IRL (as well as its chemistry, physics and mathematics brains) is a great synergistic move.

IRL has a pretty impressive workshops as well, so the increased cross-fertilisation and intersection of clever thinking for those companies looking to move up the value chain must be enhanced.

There are also 20 or so clever independent companies located in and around the IRL campus, an example being Robinson Seismic, who make earthquake proofing solutions for buildings.

Weltec Smart Product Centre director Paul Mather has described the concentration of companies and skills as an ‘asset hub’ – a very neat description of these focused efforts.

Weltec was also one of MSI’s accredited providers of high value manufacturing research under the Technology Transfer Voucher scheme introduced late last year.

Mather says the TTVs have had the added benefit of raising Weltec’s Smart Product Centre profile – and brought to light a number of innovative Hutt Valley companies he didn’t know existed.

Some of the challenges put up by companies wanting prototypes and solutions are very tricky. Being alongside IRL can only benefit all of us.

The cozying up of the CRI and polytech is innovation at its most apparent, and part of what the government must be glad to see happening.

Roll on the development of some good intellectual property as a result.

High level ‘innovation’ thinking receives scant attention Peter Kerr Aug 04


At last, some slightly solid thinking about the innovation part of our economy.

Sir Peter Gluckman’s under-reported speech on the ‘Globalisation of science: New Zealand’s R&D direction’ is the first tentative indication of some higher level views on how we turn ideas into income.

The PMs chief science advisor gives some pretty sobering statistics and examples along the way – shorthand to say, ‘this innovation caper ain’t easy’.

Speaking at a recent NZ Agricultural and Horticultural Outlook Summit, Gluckman says it is essential we transform away from commodity-based trading, though he didn’t mention that the current boom commodity environment makes this more difficult to achieve than ever.

NZ has lagged behind other small advanced nations which have transformed their economies via government-led basic and strategic research and development because “we have failed to invest sufficiently in strategic and holistic scientific research in a manner sufficient to create a fully-functional innovative ecosystem,” he says.

“A key understanding of those countries which have thrived, Ireland excepted [earlier he pointed out Ireland's success was due to tax breaks to attract multinationals], is that their systems only work if there is sufficient idea flow for entrepreneurs and businesses to develop and that in turn can only come through investment in basic science. There is no other way,” he says.

Then he gave some numbers.

In Israel it is accepted that only 1 in 100 ideas leaving a university or institute will make it to the first round of commercialisation, and of those, if well managed and governed, 50% will succeed. Israel’s about our size, and reviews more than 10,000 ideas a year, half from the university sector. NZ’s nowhere near that.

Meanwhile, there’s a global recognition that in an increasingly weightless economy, it is ideas that generate money. The product can be produced anywhere [cue China], but in the end it is the source of the ideas that generates the return.

“We need to understand that idea generation is where it starts,” Gluckman says. “There are a then a series of steps that transform that into real dollars – at the end it is about scale and marketing.”

NZ needs to think hard and innovatively about scale, with one of our problems about marketing with this in mind is it takes a very different skill set to that that comes from traditional corporate training.

“We have the tradition of thinking that we must own the whole value chain from New Zealand, then try to sell it to the world,” says Gluckman. “In a country with a low capital base and a small number of technologically savvy managers, to try and do it on our own can only have a high failure rate. Too often we end up with clever ideas, undercapitalized, slow to be developed and likely to fail in the market. But there are solutions – we must be innovative and grab them.”

He says Israel is the most successful small economy in the knowledge based sector, whose first rule is to make sure they have enough ideas flow so that the good ideas can be identified and filtered, and effort is not wasted.

“They insist on international expertise on their boards, on proper scientific advisory boards, and high-quality skilled management with experience in knowledge based industries,” he says. For them the ownership of the idea is often more important than the site of manufacture.”

NZ could develop strategic partnerships at every level in the value chain says Gluckman. This would be both pre-commercial and commercial, generally with small advanced economies, where there is an equity of interest.

“We need partners who can do what we cannot do, be it access to markets, going to scale and/or expertise,” he says. “We are better to own a fraction of something large than stay small.”

From sticK’s point of view, this is the first real time that the PM’s science advisor has given some indicative thinking about how we might better turn ideas into income. First, start with lots of ideas – and we’re nowhere near Israel in the production of those.

Hopefully it is an indication of more to come – though the deafening silence of media about Gluckman’s innovation thinking isn’t encouraging.

See a copy of the speech here.

Nano tech fabricated into new use Peter Kerr Aug 02

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Nano technology’s been touted as the next big thing…..for quite a while now when you think about it.

But so far there’s been precious little product that found its way into everyday use; not counting cosmetic products with nano particles that no one’s too sure what effect they have.

However British-based Kiwi Simon McMaster may be onto a use of nano technology, which he describes as ‘bucket chemistry’ in developing a fabric that’s able to register a person’s vital signs.

Up till now, being able to measure factors such as heart rate or respiration via a piece of clothing required the incorporation of fine, usually comparatively brittle, wires into the fabric.

McMaster, who as a mature student obtained a B.Sc in chemistry from the UK’s Open University, and has just completed a Textile Technology masters degree at the Royal Melbourne Institute of Technology, has figured out a way to measure electrical potential by tweaking the fabric itself.

“It’s about the way the fabric itself is knitted, along with the way we will carry out the nano particulate deposition,” he says. This is the foundation piece of IP that he and Wellington-based business director Karen Bender are obtaining patents for under their company ‘Footfalls and Heartbeats‘. The company is currently based at Grow Wellington’s CreativeHQ.

“The way we create the structure affects the signal from the electrically conducted fibre,” McMaster says.
He says many uses of nano technologies use a “top down approach”. From that point of view, others have attempted to put miniaturized electronics into a garment.

“Using chemistry, we’re using a bottom up methodology,” says McMaster. “We’ve taken a basic textile, mucked around with its structure and added nano at the molecular level. We’ve produced a robust, durable fabric that doesn’t feel or look any different to the original textile.”

The technology allows registering of vital body signs, and one use will be to allow monitoring of people who are unable to monitor themselves. Think the elderly and the very young.

Such information can, through a wireless device, be sent to a doctor or nurse.

Another market is athletes, whose coaches are keen on measuring and monitoring anything that can be. The nano impregnated fabric is also potentially capable of measuring bio-electrical factors such as muscle activity, and biomedical elements such as joint movement; with no wires involved.

While McMaster heads to complete a PhD at Leeds University and further develop the IP, linking into the design school’s strong base of nano researchers and knowledge, Bender is working with IRL and local Wellingtonian researchers to validate his initial research.

“We want them to prove its repeatability,” says McMaster. “Then hopefully we’ll have a prototype piece of clothing by the end of the year.”

Some electronics and power supply will be required to collect and “we need others to do that type of work for us,” he says.

Footfalls and Heartbeats’ business model will be to licence the technology, though “we may keep one of the vertical streams for ourselves.”

“We want to get the technology out and be innovative in that space. There are some markets we haven’t even thought of yet.”

McMaster, along with a very understanding partner, have up till now bootstrap funded the fabric’s development. The company is now at the point where it requires $150,000 – $200,000 of outside investment to develop the prototype.

He’s confident of obtaining the funding, as knitting’s a very simple technology, and the incorporation of nano particles doesn’t require much of a change.

“It’s a very culturally well-known form of clothing,” he says. “People know already know what knitted fabric feels like, and we’re not changing its feel.”

Perhaps it could be called a knitted nano technology. The company can see an end-market potential for its fabric that, without wires, can measure a body’s electrical potential.

There’s even the possibility of using the body’s movements itself to generate electricity, but as McMaster says, that’s a way down the track.

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