Making Aotearoa an Innovation Nation
“New Zealand is an amazing place with natural beauty, cultural history and a strong economy, but with some elements that are missing in providing opportunity for people,” says Cohort 7 Fellow and Quidnet Ventures Founder, Mark Bregman. “As a small and remote part of the world, it can be difficult to maintain its place. I see a need for New Zealand to strengthen its innovation fabric and I’d like to help it become known as an innovation nation.”
With 30 years of experience leading Silicon Valley companies including IBM and more than 20 years working with companies in Aotearoa, Mark brings to the Fellowship a laser focus on New Zealand tech startups and a desire to activate latent opportunities in Aotearoa’s ecosystem. “The core challenge I see is a by-product of the well-known ‘tall poppy syndrome’. What results is a vicious cycle where a lack of investment leads to a lack of ambition and vice versa. I see those two problems as very closely related.”
With Quidnet Ventures, Mark is looking to support bold and courageous New Zealand entrepreneurs who are not afraid to show their ambition and look for innovative ways to bring Aotearoa’s startups into the forefront of the global tech industry. “The message I want to give is that ambition is not hubris. And that the frugality sometimes associated with the Number 8 Wire mentality can hinder breakthroughs. I hope that by working with entrepreneurs, I can bring money, coaching advice and connections as they look to move and scale out of the New Zealand market.”
Experience, Mark says, is one of the biggest skill gaps in New Zealand, with few globally successful tech companies operating here and few expat founders returning to New Zealand with the knowledge they’ve gained overseas. “If you sit down in a bar in Mountain View [in Silicon Valley] and you mumble something to yourself about a problem you’re trying to solve – say a question about your CAP table – 3 people will hear you and approach you with their advice and experience. There’s an infrastructure here of people who can help you.” He is now working to create some of those networks here in Aotearoa and to support the tech sector as it matures.
The other challenge, Mark says, is that the New Zealand market, despite being small, has a tendency to be quite siloed. “Kiwi tech entrepreneurs need to be looking at ways to stop competing with each other and instead focus on how they can collaborate, get together, and build that fabric and network around innovation. We need to enlist government, the existing industry and the startups themselves, around a rallying cry to make New Zealand the innovation nation and put it on the map.”
A physicist by training, Mark likens the difference between early stage startups and more mature businesses and corporates to the difference between science and engineering. “In startups, the primary goal is to learn something. If you go out to market and ask potential customers if they like the blue or the red option and they choose blue instead of red, that’s not a failure. That’s just great knowledge to have. But if you build a fantastically successful telecoms company and you try to make a new phone handset that’s round and everyone hates it, that is a failure because you’ve lost something. Investors need to understand that if you invest in a startup, that’s an experiment. And if it fails, great, you’ve learned not to put more money into that business. It shouldn’t be treated like engineering, when it’s actually science.”
After decades of trans-Pacific collaboration with New Zealand companies, Mark decided in 2018 to come to Aotearoa, explicitly to learn if it was worthwhile to raise a fund here. “Many people I spoke with in Silicon Valley said it was stupid and that Kiwis lacked ambition. But after a week, I knew that the opportunities in New Zealand were bigger, better and more ambitious than most investors realised. All of the founders I talked to confirmed the need for help entering US markets. I also learned that there is a very interesting disruption in the capital market for New Zealand startups: there’s lots of angel money to get you started, but then no one to fund your $3-$5m Series A or B raise.” The goal of Quidnet, Mark says, is to fill that gap and to fund startups who have a real reason for being from New Zealand. “If you look at Xero, it makes complete sense for that to be a New Zealand company, because it’s a country of small businesses and Xero’s specialising in supporting that market.”
Mark’s first funding round closed in April and he’s excited to be supporting some emerging New Zealand startups, including two in what he calls the WineTech sector. “WineTech is a subset of AgTech and there’s some really exciting work being done in this space which, again, makes perfect sense for New Zealand as an innovative, wine-producing country. There are two companies, in particular, that we’re supporting now. The first, Winely, is using Internet of Things monitoring to help makers understand and manage fermentation in real time, rather than sampling from each tank each day and then doing a lab analysis. With wine, you really only get one chance a year and if you blow it in the fermenting process, that’s it. So Winely is helping producers to reduce that risk. We’re also working with Marama Labs which produces UV-Vis spectrophotometers that can effectively measure the colour and chemical properties of cloudy liquids. There are a lot of applications for this, but in the wine industry it can assess the wines throughout the production stages and actually give you insights on how your variety stands up against others on the market in terms of commercial viability.”
The real power in New Zealand’s tech sector, Mark says, is in collaboration. “If you have a few WineTech startups each trying to break into the US market, they all need to hire a sales team, build collateral and work with production managers. But what if they worked together? So instead of getting a call from Winely or Marama, you get a call from New Zealand WineTech Incorporated, offering you a whole portfolio of products and services.” Mark is excited to have recently closed the investment round with Marama Labs, a round which was led by Quidnet and where they negotiated and set the terms. “It really puts us on the map,” he says, “so we’re definitely due for a coming out party in the next week or two.
Looking ahead, Mark is eager to get back to New Zealand to start building more meaningful relationships with potential portfolio companies. “I’ve been in and out of New Zealand for 20 years and deeply in the entrepreneurial sector for the last 4 or 5. Ultimately, I just ended up on the wrong side of the fence when they closed the gate last year. When the borders reopen, I hope to split my time between Aotearoa and Silicon Valley so that I can help New Zealand companies on both ends. We’ve got 8 more investments in the pipeline now, but it’s really hard to do due diligence by Zoom. If you’re investing in an established company, you have the records to fall back on. With early-stage startups, it’s really all about the people. You need to sit around the fire and get to know each other; building confidence on both sides. This is like a marriage for maybe 10 years and the due diligence process should work both ways. Startups should be asking themselves if a potential investor is the one they really need.”
Mark continues to look at great companies and raise the Quidnet fund. His focus for the period ahead, he says, is on diversity in the tech industry and increasing innovation as a driver for New Zealand business. “We need to be giving more than fair consideration to founders who are female, Māori and Pasifika. Innovation is a process that starts with knowledge or wisdom and, while much of Western knowledge comes from lab science, this is a really restricted view. There’s also intrinsic, historical or tacit knowledge in our indigenous communities which should be at the forefront of innovation. The whole meta problem of driving innovation can be guided by those communities, and we need to do that not as a bunch of silos, but as a web of innovation.”
Mark hopes that the EHF network can help him continue to build relationships with Māori and Pasifika founders and encourages Fellows from the EHF community to contribute, even in small denominations, to the Quidnet fund to support innovative New Zealand tech startups. The key for both founders and the Fellowship, he says, is to think big, but build small. “I often encourage founders to write their future history. Sit down and project yourself forward some number of years and then write the article in Fortune or Forbes which talks about this incredible success story that got you there. And do it again in a year. And again in another year. And look at the path. It’s not a business plan. It’s a guiding story.”
To connect with Mark and learn more about investing in Quidnet Ventures, visit https://www.quidnetventures.com/.