Wellington Startup Ecosystem

Wellington's Startup Ecosystem Report

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Introduction to Wellington’s Startup Ecosystem

For a small city of only 200,000 inhabitants, Wellington certainly has a vibrant startup scene, one that has grown from strength to strength in the last decade. The southernmost capital city is nestled amongst steep hills and deep valleys and the region enjoys almost 500 kilometers of rugged and beautiful coastline. The landscape is a stunning legacy of the city’s location at the nexus of earthquake faults that bound the Asia-Pacific region. In StartupBlink’s 2019 report, Wellington is ranked 403rd globally.

Wellington is also one of the windiest cities in the world, ensuring the air is always fresh and clean. Some say this is what attracts hardy and strong-minded entrepreneurs to the city. Around 25% of the population are imported from elsewhere and many of the city’s startups have been founded by recently arrived migrants. With a solid base of corporate firms, government agencies and two universities, the city also boast the highest median incomes of any in New Zealand.

However, Wellington’s business scene, like its fault-lines, is also at somewhat of an economic nexus, squished between the brash, booming big brother Auckland in the north and southern sister Christchurch, which is rebuilding substantially after some rather devastating earthquake fault-line activity of its own recently. So the Capital has lately been at risk of becoming economically sidelined as the focus was directed elsewhere. Prime Minister John Key was once famously embarrassed by the media for his quote that Wellington was “dying”. But nothing could be further from the truth. The city is home to the Peter Jackson movie empire that spawned blockbusters such as King Kong and the Lord of the Rings trilogy. Top director James Cameron owns a rural property near the city and has committed to follow-up with more Avatar movies in conjunction with Wellington-based Weta Digital. A recently announced project will see much of Jackson and Weta’s movie paraphernalia on display in a new downtown museum in the future.

Success Startups in Wellington

Wellington is not resting entirely on its previous successes, however, since economic gains from movie-making can be sporadic. In fact, talent and capital spawned by the film sector is now spilling over into the startup scene.

  1. Virtual reality startup 8i (@8iReality) secured a $20 million funding round in 2015 with Founders Fund and Aston Kutcher’s investment vehicle Sound Ventures getting onboard. At the time it was one of the largest funding rounds for a tech startup project in the city. A year prior 8i had three founder employees and a smart idea. Deals of this scale are few and far between, however. Most of the major funding action recently has been offshore driven.
  1. Tim Norton’s 90 Seconds TV (@90Seconds)TV came a close second in the investment stakes by securing $11 million from Sequoia India.
  1. Area360 (@AreaThreeSixty) received $5.5 million in funding, also from offshore sources, in 2015. The company has recently pivoted towards addressing the visitor attractions ticketing market and now has an office in Seattle.
  1. Green Button was another Wellington success story. The cloud super-computing company also sprung out of the movie industry, received local angel funding and was eventually acquired by business partner Microsoft.

These placements demonstrate that Wellington is definitely on the radar as investors increasingly look outside the Valley gene pool.

Strengths of the Wellington Startup Ecosystem

New Zealand has an active angel investor scene and a well-connected network that facilitates deal syndication. Included in this elite are Sam Morgan and Rod Drury. Morgan started New Zealand’s version of eBay, known as TradeMe, in a small apartment on a damp Wellington hillside. A decade ago the company sold to Fairfax Media for $700 million. That sale had a ripple effect with a number of the original founders and investors diving back into the web venture game or investing in other startups. Drury founded Xero, a global accounting SaaS business that is still growing and counts Peter Thiel amongst its investors. Many Wellington startups feature entrepreneurs that cut their teeth being previously employed at one of these two firms.

Another important facet of the Wellington startup scene is the acceleration and incubation pipeline that is underpinned by a strong ethos of community-building.

The city is also home to a burgeoning game development scene and that has grown from an underground movement into a bubbling cauldron that continues to attract creative talents from far and wide. Game house Pikpok @PikpokGames is the most established hero having created game titles for Sony and Mattel in the past. The company is also New Zealand’s largest locally owned game dev firm. Founder and CEO Mario Wynands @MarioWynands has been a stalwart of the industry and big on community.

A recommended entry point to this community is the Game Developer Meetup. Leaping Tiger @LeapingTigerHQ is an interesting new startup that is making waves by offering a platform that connects like-minded gamers globally. Co-founder and social media queen Amy Potter @HelloMissPotter is a woman on a mission and one to watch. But many people say that Wellington’s greatest strengths are its numerous coffee houses and fine craft breweries, the produce of which have fueled many entrepreneur conversations.

Weaknesses of the Wellington Startup Ecosystem

New Zealand is somewhat isolated from global capital flows and the number of “VC” firms in the entire country could be counted on one hand. Movac @movac_vc and No. 8 Ventures are based in the city. However the scarcity of money, in many ways, is an advantage because Wellington startups learn how to bootstrap with minimal resources and hence retain ownership.

Another challenge is that many of the local angel investors are former corporate high flyers who moved back home from offshore gigs, but only a handful could rightfully claim to have built a major technology company from the ground up, exited and started over. That is an ongoing issue, with a dearth of experienced mentors available to support new ventures with “smart money”.

Biggest Players in the Wellington Startup Ecosystem

It is difficult to point to individuals who wield the most “influence” because some of the most successful entrepreneurs in the city are also the most reclusive. The biggest players, however, tend to be grassroots community people and organisations who are contributing to building out the ecosystem.

Here are some organisations that lead the startup ecosystem:

  • At the front of the innovation pipeline are Startup Weekend Wellington events, which many of us from the community contribute our time to organising, sponsoring and mentoring. Startup Weekends are held six-monthly in Wellington and are a brilliant place to find co-founders and meet amazing and well-connected mentors and investors. There is also a calendar of Startup Weekend events available from all around New Zealand.
  • Dave Moskovitz @DaveMosk is a Startup weekend facilitator and is sometimes called the “godfather of Wellington startups”. He’s an angel investor, serial founder, professional director and a brilliant connector of people and companies.
  • Creative HQ @CreativeHQ is the original startup incubator and welcomes applications from early-stage entrepreneurs in tech and other kinds of businesses. The incubation team also have fingers in a lot of other pies including angel group AngelHQ. Creative HQ were also responsible for setting up New Zealand’s first digital accelerator programme Lightning Lab. The first lab ran in Wellington but has now gone nationwide. Dan Khan @LeanCTO was the manager of the original lab but has recently launched ZeroPoint Ventures which offers a milestone-driven approach to investment and business coaching.
  • If CreativeHQ is the leading incubator and accelerator hub, then Biz Dojo @BizDojo is innovation meet-up central and should be an early port of call for every visiting entrepreneur. Biz Dojo is Wellington’s largest co-working space and has also become the focus for innovation-related events in the community. CreativeHQ and the Dojo work closely together to provide numerous informative community-building events with Startup Garage being at the forefront.
  • Built In Wellington is a portal that aggregates much of the news and event activity for the city relating to the startup scene and is another feature of the Wellington entrepreneur toolkit.
  • A subscription to the free New Zealand Startup Digest is also highly recommended in order to keep informed of all the best startup related events. Entrepreneurs looking to set up in Wellington need to start showing up to events and participating. That is the key to integrating into the city’s supportive startup community and the fastest way to get introduced to the movers and shakers in the Capital.
  • The are several accelerator programmes rolling out in the near future, including R9 for Govtech and programmes focussing on Fintech and energy sectors.

Conclusion

While Wellington has the right local ingredients such as angel investors and communities necessary for success, it needs to be integrated with the global economy to truly become a startup ecosystem to reckon with.

About the Author:

Paul Spence is a co-founder of global domain name registrar iwantmyname and a co-founder of machine learning technology consulting firm Polanyio. He is also the New Zealand editor for Startup Digest and mentor and organiser at Startup Weekends.

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