Hi Rowan, I wonder what your thoughts are on the availability of funding for startups, particularly tech startups in NZ? I see many reports of "lots of money available", but equally have many anecdotes of "couldn't get funding". One thing I note from various tech successes in NZ(which may be my bias) is that they had very short-term paths to generating revenue and very low research requirements (eg: Xero, Vend etc) ie, lower risk), as opposed to many US startups which stay in (funded) stealth for years and get funded for products that might not even conceptually work (high research requirement, Snowflake would be a good example). I don't see many examples of companies with complex tech products getting funded in NZ. Rocketlab being a notable exception. In your view, whats the relationship between seed funding and time to MVP? Logically, it should be correlated (more funding for longer MVPs, more uncertainty, more potential reward), but it seems inversely correlated. Is Peter Beck right, that Kiwis don't think big enough, or does the ecosystem not allow that thinking big?

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Hi Greg.

There is so much capital available for new ventures at the moment it's awkward when people point to this as a constraint. As I've said for a while, if you can't raise the capital you need for your particular venture in this environment there are two possible reasons:

1. You're not as great as you think you are; or

2. The investors you're talking to don't realise how great you are (so talk to different investors!)

I always ask people who complain that it's difficult to raise capital in NZ to point me at the most impressive company they know that has been unable to raise investment. I don't often get an answer but when I do it's rarely a truely impressive company.

Xero raised $15m in an early IPO (i.e. pre-revenue) and many hundreds of millions of further investment as they scaled. During my time as Chair at Vend we raised around $40m of new capital. So even these low-tech examples require non-trivial amounts of capital as they grow.

Maybe you're right about NZ investors being risk averse. But my response to any founder complaining about that would be: why are you limiting yourself to NZ investors? There are now many examples of companies started in NZ but funded by investors all over the world (Rocketlab, Xero and Vend would all fall into this category).

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Thanks Rowan, I was probably a little unclear in my first (flu-ridden) comment. I was more asking about the ability for 'moon-shot' type (RocketLab almost literally!) companies to raise capital in New Zealand. So high risk of pre-revenue failure (ie, they can't get the idea to work).

RocketLab got an early wealthy backer who loved the idea as I understand it.

So not to do with "being great" because by definition these companies cannot be great until their moonshot works. But if their vision of the future happens... ?

I'm really asking whether you think Peter Beck is right, and there is a problem with how big Kiwis think, or whether Kiwis are constrained by living in this country?

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Q: Do kiwis think too small? Possibly, although Peter Beck making this comment is a bit like Usain Bolt saying most people run too slowly. Nearly all of us think much smaller than he does. I'm not sure that saying "think bigger" is going to close that gap much.

Q: Is this because we're constrained by "living in this country" or because "the ecosystem doesn't allow that"? That feels like an excuse to me. As I said, there are now lots of examples of companies with big dreams who have raised capital offshore, so being located in New Zealand when you start should not be the constraint.

I'm interested if you have *specific* example of "moon shot" type ventures that have failed because they didn't get funding, or if you're making this comment generally. I think it's an easy and common general observation, but more difficult (and interesting) in detail. So far in this thread we've only mentioned examples that were *successful* despite struggling to raise local capital. If you think there is a gap to close then we should really focus on those that didn't make it across.

Q: Would it be better if more people dreamed big? Maybe, although my view on that is that each founder and each investor needs to understand their own risk tolerance and optimise for that. Different people will land in different places on this, and that's okay - there is room for everybody.

PS I'm not convinced that your "moon shot" vs "quick to revenue" is the right way to categorise ventures either. Xero was quick to _some_ revenue, but only just now, 10+ years later, getting to cashflow breakeven. So I don't think it makes a big difference - if your revenue is $0 or if your revenue is less than expenses, you are "default dead" unless you can raise the venture capital you need to continue. Both Xero and Rocketlab are examples of venture-backed businesses. A better distinction to those would be "bootstrapped" companies which tend to not need to raise large amounts of capital, as their grow, while slower, is funded predominantly from sales. Again, there is room for both of these models of growth in my opinion - the important question is: what is the right fit for the founders and investors?

Hope that make sense?

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Thanks Rowan, no specific examples (although we'd never hear of them right?).

I'm talking specifically about pre-revenue companies when your only ROI is 'tech progress' for an extended period, vs ('paying customers' or 'product/market fit', 'ROI'...). Experimental in nature.

My thesis is: Bigger thinking => more complex tech + higher likelihood of failure + higher capital costs + pre-revenue period extends = ... lower likelihood of funding in NZ... = NZ is an importer rather than exporter of "big thinking businesses".

re PS: re-read your reply after coffee! bootstrapped vs venture funded doesn't quite hit what I'm going for. It's more that dependence on uncertain "research" to get to revenue (eg: RocketLab) vs dependence on more certain "development" (most software companies).

How much "research" is NZ capable of funding through private means versus how much "development"?

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