What can incubators contribute during an economic crisis?

Mitali Purohit, who oversees Callaghan Innovation’s Technology Incubator Programme, believes incubators can contribute to pulling countries out of economic crises. 

In her recent LinkedIn blog, The role of technology incubator programmes in economic crisis, Purohit explains how an unstable economy results in investors defaulting to lower risk options, so high-risk industries, like deep tech innovation, suffer. 

However, the continued investment and support into deep tech can facilitate long-term economic growth by creating new ventures, industries, and jobs. This is where incubators come in. "During economic crises, these tech incubators establish and provide deep tech ventures with funding and people capability. While the country continues the hard job of transforming highly impacted sectors like tourism, deep-tech venture support will help build high-value IP and export opportunities," Purohit writes in her post.

But incubators are not working alone. Purohit emphasises the importance of government funding and private partnership for the deep tech ecosystem to thrive. In an interview with Purohit, she explained:

“Government support for deep tech is needed all the time, but the current economic climate makes it even more important. During an economic crisis, the first things that become impacted are jobs and money. If the government can continue funding research at a seed level within Universities and CRIs, then the pipeline for new technologies can continue to grow.”

Cooperation between the government and the private sector can create new initiatives and opportunities for technology's continued innovation.  "Government support de-risks the opportunity for incubators, and the partnership between incubators and the government de-risks the opportunity for follow-on investors," says Purohit. 

The Callaghan Innovation 2020 Technology Incubator is an example of a public-private partnership. The programme helps boost the economy out of a crisis by creating investable ventures that spawn export and job opportunities. 

For the eight-year programme, Callaghan Innovation has selected four partners (one of which is Bridgewest Ventures) to find and develop startups and bring their world-changing technologies to market. By participating, ventures receive $750,000 as a repayable grant from Callaghan innovation and an equity investment from one of the partners. Callaghan Innovation has committed to funding up to 20 ventures per year, during the eight-year period. 

"The programme intends to bring intellectual property and technology out of the lab from Universities and CRIs that otherwise aren't making it out into the market," says Purohit,

"These technologies could have a significant impact on humanity and our day-to-day lives. They also have significant economic opportunity, so it is important to bring them off the shelf."

Callaghan Innovation has seen previous success and an appetite for developing deep tech through a previous incubator programme. The pilot programme, which ran for four years, funded 44 companies, many of which have gone on to the next round of investment, collectively raising $100M+. Of the 44, only four have wrapped up, 12 are generating revenue, and there has been one exit and one merger. 

Purohit hopes the traction of the incubator in New Zealand will inspire more innovators to commercialise. She hopes innovators and scientists will see the support and funding opportunities available and feel they can commercialise their innovations too. 

The incubator programme is only one aspect of the deep tech ecosystem. According to Purohit, for an ecosystem to function, the different players need to work together. "Universities need to research," she says, "and you need the government to provide initial funding, and you need experts and corporates to help ventures scale, manage business, and understand the supply chain." 

Purohit feels technology incubators can facilitate a way for all these players to collaborate. New Zealand is well-positioned to develop a strong deep tech industry because of our size.

"Being small is our strength. The size of New Zealand allows for the players in the deep tech ecosystem to easily work together from idea generation to commercialisation, to exit," she says. "New Zealand can also be treated as a place to validate or test your product because the market is smaller and accessible. We can collaborate easily and can develop technologies easily that scale quickly."

The 2020 Technology Incubator programme kicked off in April this year, and the partners are currently accepting applications. At Bridgewest Ventures, we are excited for the opportunity to participate and hope that we can contribute to the New Zealand economy through the creation of ventures and specialised jobs during this time of uncertainty. 

Read Mitali Purohit's LinkedIn article here.