I posted a few days ago after a discussion I had with Rod Drury abut Xero. Some readers commented with concern about the fact that a seemingly well funded business was deemed eligible for funding from Government organisations such as New Zealand Trade & Enterprise (NZTE) and the Foundation for Research, Science and Technology (FRST)

I contact NZTE and gave them the opportunity to respond to the comments, to their credit they did and here is what they said;

Firms that apply for New Zealand Trade and Enterprise (NZTE) funding pay the costs of any activities or projects identified in their grant application and then NZTE reimburses them up to 50 percent. Therefore Xero, or any firm applying for NZTE funding, needs to be able to demonstrate (as part of the criteria for funding) that they have the financial resources to cover costs up-front.

On the wider question, NZTE’s focus is on working with companies that are committed to growth and want the type of support that NZTE can offer them, to achieve it. They might be of any size, but what we are most interested in is their capacity for growth and, in the case of the grant programme that Xero applied for, their capacity for international growth.

One of your blog correspondents summed it up well when he said that he “believes the system is all about building scale and developing new businesses and technologies. I don’t believe it should be skewed in favour of entities without the means but it should be skewed towards those who can execute.”

Fair comments and, I believe, good justification for the funding that occurred. Thanks NZTE for the response.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

  • While I don’t philosophically agree with the Govts approach of trying to “pick winners”, I appreciate your followup to an earlier post. Thanks.

  • Good on Rod for getting it. We tried back in 2000 in Aus and were sent away with a “come back when you have some customers” and then we did and they said “oops, you’re probably too commercialized now”.

    Grants could be regarded as government VC style commitments. Lots of little commitments to lots of companies. i.e. an out-of-the-money call option book/investment business. If the governments of countries giving grants out are serious about probability they should act like VC’s and give the money to guys like Rod who are cheap call options because he can execute. Higher probability of success and nearer tax revenues from a post IPO company further increase the chance of generating a “velocity of money” for the Fund givers meaning more options they can buy next round.

    Your blog is a good read Ben 🙂

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