Though small in size, Wellington, New Zealand has grown into quite a hub for successful tech-based startups and social enterprises. In this week’s Hacker Tracker, we travel to what may just be the most southerly startup hub to see how the small city packs a big 20 percent advantage over other tech centers.
Before we jump into the post, here are a few quick facts about Wellington and its tech scene:
- Wellington has an estimated population of 496,000.
- The city’s median income is $49,192, higher than the national median of $45,760 and higher than Auckland’s median income of $48,204.
- New Zealand was ranked the number one country in which to start a business by the World Bank Doing Business Report 2016.
- Wellington’s economy is considered more resilient than other cities in New Zealand due to the strong presence of the government sector.
- Wellington’s unemployment rate of 5.7 percent is lower than other major New Zealand cities as well as the national average
- According to the New Zealand Trade and Enterprise, Wellington maintains the highest concentration of web-based and digital technology firms in the country.
Wellington, New Zealand is known for its 20 percent advantage.
According to the Wellington Regional Economic Development Agency, the tech-oriented city harbors great potential for global businesses because it is 20 percent easier to launch a tech startup, expand a business or seek innovative investment opportunities.
With lower overheads, cost of living and resourcing costs, Wellington is considered to be 20 percent more affordable compared to other global cities. The city’s tech sector also boasts a strong talent pool, ambitious business environment, and many businesses and individuals striving toward innovation.
”The talent base in NZ is amazing — there are many well-qualified and creative people around who are all well-educated and highly aware and in tune with the challenges and opportunities facing humanity,” Stefan Korn, CEO of Wellington’s startup base Creative HQ, explained to PYMNTS. “There is an excellent degree of social conscience combined with a down-to-earth Kiwi ingenuity that often results in entrepreneurs finding the obvious, simple solutions that others miss. To top it all off, NZ provides an amazing lifestyle and opportunities to live out just about any sport or hobby that people are into.”
Above all, one of New Zealand’s biggest draws is that it has been ranked the number one country by the World Bank Doing Business Report 2016 in which to start a business.
“Most of the trends stem from the deeply held cultural norms of New Zealanders, who on average are inquisitive, authentic and worldly,” Serge van Dam, a Wellington-based investor in high-growth tech companies, recently told PYMNTS. “This leads to deep customer and user empathy, which helps build great products and an ability to attract talent from wherever it may lie. The embodiment of those cultural attributes in our people is the most pronounced trend I have observed.”
Van Dam noted that the country also has a great combination of lifestyle and professional opportunities and for that reason was named the most prosperous country in the world by the Legatum Institute in 2016.
“This attracts entrepreneurs to New Zealand and keeps them here,” he added. “And that is almost the only surprising thing, how easy it is. Setting up a company is easy. Issuing capital is easy. Hiring people is simple. The tax scheme is comprehensible to entrepreneurs. And so on. Being easy-to-use is the biggest determinant of success for technology, and similarly ‘being easy’ is the most important source of competitive advantage for the New Zealand tech sector and its people.”
As attractive as New Zealand may be to entrepreneurs and investors, one of its biggest challenges remains its location. With such a far distance to other major tech regions, such as Europe and the U.S., geography and having a global view can be a barrier to startups in the region.
“The biggest challenge for Kiwi entrepreneurs is to think globally right from the start when implementing new business concepts. There is a risk that startups in NZ only consider NZ as a market and that they base solutions on how things are in NZ,” Korn explained. “International connectedness is key to the startup ecosystem in NZ. Creative HQ as well as other organizations are working hard on creating linkages or establishing pathways for Kiwi companies overseas.”
Eyes On FinTech
Late last year, New Zealand’s first FinTech Accelerator was established to help the country capture a biggest piece of the global $1 trillion sector.
Kiwibank, Xero, Callaghan Innovation and Creative HQ launched the Wellington-based Kiwibank Fintech Accelerator to initially fund and support eight Kiwi FinTech startups as they attempt to build, launch and expand products in global markets.
“The global FinTech industry is taking off, and New Zealand is ideally placed to take a leading role in the FinTech revolution. New Zealand has shown its ability to grow true digital-era disruptors that can foot it with the world’s best, so the challenge is to build on that success so [that] others can break into global markets,” Kiwibank CEO Paul Brock explained.
“The key is to give innovative Kiwi startups the support they need to take new financial products and services to the global stage and grow the New Zealand economy. The Kiwibank FinTech Accelerator will stimulate FinTech innovation in New Zealand by helping new ventures prove, build and launch their ideas. It will do this through providing funding, expert mentoring and connecting them with investors,” Brock continued.
As a small and modern country, New Zealand has opportunities in technologies where a complete ecosystem is required to get started, such as in payments, Van Dam explained.
“The ‘ecosystem-required syndrome’ is why New Zealand is and has always been so far ahead in its adoption of electronic payments,” he added.
New Zealand’s FinTech ambitions seems to fall right in line with the country’s ongoing transformation into a top destination for both innovation and investment.