A suggestion for the ATI EB…..and a ‘to note’

By Peter Kerr 23/08/2012

With the makeup and function of the Advanced Technology Institute Establishment Board recently made public; dispensing a suggestion is decidedly easy before they get a huge job underway.

So, on that front, assuming the ATI’s brief is relatively wide ranging, something that should be well worth following up.

The government’s startup business investor, NZ Venture Investment Fund, takes an equity stake in the investee company as part of its ownership proviso.

Israel on the other hand at a country level has tended to increasingly shy away from equity investment in companies. Instead they provide a loan. (Some of this, plus a great and wider explanation of the Israeli startup investment scene can be found here).

Equally in New Zealand, we should recognise that it is taxpayer money at risk, but that going down a (repaid if the idea/innovation comes off) loan road is a much simpler model.

What’s the advantage?

Firstly it keeps the ownership structure clean. It also doesn’t mean there’s a contingent asset/liability on the capital providing entity’s books. And, if and when new capital is introduced to the startup, the founding providers of capital don’t get pushed to the bottom of the heap.

At the same time, should the startup go belly-up, the debt (loan) provider, has first call over the assets (which will often be a form of intellectual property).

Finally, if the startup does well, the loan capital plus interest is repaid – and able to be reinvested again.

Whether such a move would slow or even stop the (almost inevitable it seems) sale of promising and growing businesses to overseas would remain to be seen.

But it is clear that we need a level of other capital investment beyond the healthy angel scene.

To be noted

And while we’re on the subject of ATI getting up and running, an observation on the appointment of the Ministry of Business, Innovation and Employment’s deputy chief executives.

The advertisements for these five roles were advertised on Friday 3 August, applications closed on Monday 13 August, and appointments (though this isn’t definitive) are lined up for Monday 27 August.

The advertising and selection process is all taking place in-house (i.e. no outside HR consultants involved).

Now, (presuming they’ve applied) these acting deputy chief executives may be the best people for the job(s). Equally, it could be argued that any outsiders with an interest in the DCE roles, would had their CV hot and heavy, ready to be posted.

But it’s a bit too close to being a stitch-up, cum fait accompli.

Why weren’t they simply appointed deputy chief executives in the first place and save everyone the bother of appearing to go through due process?

Not a good look fellas. Not very innovative.