Joint alliance in lower South Island provides a whole community approach to entrepreneurship and innovation
Raising capital for scaling startups in the lower South Island has traditionally been challenging, but with recent collaborative developments making headway in the region, the future is looking bright for entrepreneurs on their journey to growth.
“Up until a few years ago, there wasn’t a cohesive ecosystem for startups and entrepreneurs in Southland, Otago and Central Otago” says Prue Halstead, the Chief Executive Officer for Invest South.
“So we realised that our three separate regional hubs – Startup Dunedin, Startup Queenstown Lakes and COIN South – would do better with a formal partnership, allowing each to play to their strengths. Mainland Angel Investors (MAI) was also established, providing a connector pathway for entrepreneurs so they didn’t always have to go ‘North’ for their funds.”
And it’s an alliance Halstead is particularly proud of.
“From my perspective, we think we have the foundations for something special. Combining the resources and networks of three diverse regions is not something that we believe has been attempted anywhere else in the country, in a location that can struggle because of its distance from the main centres of capital.”
“We’ve proven it’s possible to ‘boot-strap’ a startup in our communities. We don’t have a problem growing from a single founder to a few staff, but scaling a company is different,” explains Halstead.
“Given the size and isolation of the regions, it has been inefficient and cost prohibitive for startups to raise capital locally and businesses are often under-supported or overlooked when trying to raise capital. So the focus of this collaboration is to provide a framework for founders to look locally for that capital and support.
However, while money is certainly an important and necessary part of the entrepreneurial journey, the alliance also aims to provide entrepreneurs with access to a strong pool of capability, including specialised knowledge matched to the right business. And with the help of NZTE, they are also building strong local as well as national and international connections to increase the expertise and capital available to local businesses.
“Our hubs exist to support founders and startups in the early stages of creating or mapping out a business or idea. They have multiple resources, courses and mentors to support all founders through the establishment of their businesses,” says Halstead.
“Then MAI works with the hubs to help support the startups that are investment ready, helping to develop capital raising strategies, as well as providing a platform to bring together angel investors across Invercargill, Dunedin, Wanaka and Queenstown. We also help them to engage with other angel groups and other investors across the country, if we think there might be someone in a better position to assist.”
And Invest South provides the often ‘missing piece’ that allows startups within the regions to move through to scale up. It’s an investment fund (with Community Trust South as sole shareholder) which supports local businesses seeking capital and expertise for growth. The special part of this puzzle is that any returns from Invest South are injected back into the community by way of grants from Community Trust South.
Of course, one of the best outcomes from this intensive collaboration is that many businesses are able to stay in the region if they choose. With the current climate particularly challenging for capital raising, Race Ranger is a great example of a Queenstown-based business that was looking for capital across the country last year, and found it right on their doorstep through MAI. And a more recent local investment (yet to be announced) led by Invest South has also found additional capital through MAI.
“There’s a tonne of global research to show how important startups are to a region. And we’re not saying that everyone has to choose to stay in the region, but we just don’t want people to think that when the time comes to scale, they have to leave. And for every business that is here, they are contributing to making our region a more vibrant place to be,” says Halstead.
During turbulent times for the global economy, the team knows that acting and thinking locally is crucial, particularly for moments of strife, where having someone on the ground who you can talk to as an investor is essential. This is something which Peter Ramsay, the Network Manager at MAI, has benefited from first hand.
“Coming from a founder’s perspective, it is the start-to-finish all wrapped into one. It can be very easy to feel that if you’re ‘out of sight’ then you’re ‘out of mind’, but the companies that we work with feel really supported. And that’s what ultimately drew me to Mainland Angels. It covers all the crucial aspects of starting a business – not just raising investment.
“We’ve spent a lot of time making sure the right processes were in place and now we’re able to really ramp up our activity with a model that is very founder-friendly.”
With so many volunteers involved in developing the hubs and MAI, it’s a card that Halstead plays with pride. Backed by a network who are all working together with the right motivations, she says that a clear focus on regional diversification, growth and success is their secret sauce. And that while they are still at the really early stages of their potential, she can’t wait to see what the next ten years has in store for the hubs, MAI and Invest South.
“The strength of this region is the sum of all its parts, and it is only going to get stronger. And I passionately believe that this ecosystem has so much more to contribute to Aotearoa New Zealand’s productivity.”
Story by Erin Harrison. In partnership with Invest South & Mainland Angel Investors.
Innovation Nation is a series celebrating stories of innovation and diversity in entrepreneurship from around New Zealand.
