New Zealand, ag-tech & accelerators

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This week I’ve been New Zealand, visiting plant breeders, seed producers and researchers.  It gave me chance to reflect on what makes New Zealand such a powerhouse in agricultural technology.

How come New Zealand is an Agricultural Powerhouse?

Dairy and beef are major exports for NZ

One thing that undoubtedly helps is that agriculture runs deep in New Zealand’s culture.  The sector is important to the NZ economy as a whole (5.5% GDP; 15% once processing of milk, meat and wool is included).  And a higher % population are engaged in the sector (6.7%) than most developed world nations, not to mention a proliferation of 10 acre lifestyle-farms run alongside non-ag day jobs.  

Some geographical basics explain some of this heritage.   New Zealand is a long way from anywhere, and is a sparsely populated – a recipe for self sufficiency.  It’s also a long, thin country, running from 35 to 46 deg South, generating climates suitable for avocados and kiwi fruit in the North to oats and merino sheep in the South.  In addition, being in the Southern Hemisphere, a global market in counter-seasonal provision of produce – from grapes to grass seed – is possible.

Adding value to the primary product…

Famously, NZ eliminated agricultural subsidies in 1984, but as an innovative country this unleashed a wave of entrepreneurialism in adding value, diversifying and driving efficiency.  As James Bell-Booth, the General Manager of New Zealand’s Sprout Accelerator put it: “New Zealanders are fantastic innovators”.  New Zealanders are also, in my experience at least, pretty internationally oriented.  This again, may come from being a small country. Learning from, and trading with, the rest of the world is natural, inevitable.  

Accelerating Innovation

I met James Bell-Booth over coffee at The Factory, Sprout Accelerator’s based in Palmerston North. Sprout grew out of a generic Incubator run by a community trust, assisting with spin outs from nearby Massey University, AgResearch, Fronterra and other organisations on the campus. In 2013 the company took stock and decided to refocus around its areas of strength.  The timing worked well, around the time that investment in AgTech began to take off, but timing alone is nothing without execution.  And Sprout took a dose of their own “execution is critical” medicine.

One of the things that makes Sprout different from some accelerators is, as James put it, being “entrepreneur first”.  They don’t take equity in the companies they support, and are not backed by a VC firm seeking deal flow.  They focus instead on giving their companies real leverage, primarily through getting fixated on meeting a market need, creating a sustainable business model, and building from there. 

Very appropriate – Sprout is housed in an old dairy factory

James also described that they look for “team” and “market” more than “technology”. His view is that if the team has someone who has experienced the problem first hand, and has a credible vision for resolving it, as well as someone who can profitably sell that innovation to customers, then technical problems can be overcome. Growth and profitability will follow.  With customer acquisition and profitability comes options – in terms of what financing to accept, what growth trajectory to pursue, and what new opportunities to explore.  As he sees it, leading through truly unique technology is the extreme outlier of entrepreneurial success and is often over-hyped.  A good team can build a profitable fast growing business without relying on the treadmill of repeated funding rounds – although they can still chose to take this route if they want to.

I wondered whether having an accelerator in New Zealand – especially Palmerston North – would present problems for recruiting a cohort.  “Palmy” is lovely, but (forgive me) it’s not perhaps the first place one thinks of as an entrepreneurial hub. Sprout’s 4th cohort, announced in February includes the first international participants.  The response: a refreshing re-framing – “Geography’s not a useful filter, it’s a self-imposed restriction”.

New Zealand: a country which is internationally oriented, agriculturally diverse and has long tradition of independently innovating. 

Sprout: focused on ensuring their cohort companies have genuine fit with customer needs, drawing on unique strengths and keeping the entrepreneur in control. 

Sprout, New Zealand, I like the cut of your jib.  

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