Starting out in a small, developed, well-reputed economy that speaks English is a pretty useful advantage if global domination is in your sights.
Serge van Dam
I moved to New Zealand from Argentina as a ten-year-old. My grandfather - who, for good reasons, obsessed over the future - encouraged us to move here. This country is in the middle of nowhere, speaks English (or some version thereof!) and due to its size, still has a communitarian culture.
When it comes to starting a high-potential business, New Zealand’s lack of scale can have its perils. Most obvious is the fact that in many business domains, building a profitable domestically-focused company is simply impossible - there are not enough customers to make your idea economically viable. This is especially true for narrow domains, or niches.
But there are thousands of niches to go and get if you have a global perspective. I operate mostly in the SaaS sector, and in this context, niches are great and aplenty. In terms of exits, for example, a niche 3D geoscience modelling software company called Seequent was sold for US$1.05 billion in 2021. Companies like; EzyVet, Cin7, Unleashed, Auror, LawVu, Tradify and Re-Leased are doing splendidly by focusing on niches. You get the point.
Yes, everyone likes products that are derived from cow milk, but the real potential for New Zealand lies largely in finding pockets-of-intrigue that seem small at first, but are fertile ground for enduring success. That was the essence of our Productivity Commission’s research report findings which outline how specifically ‘Frontier Economies’ (small, developed economies like Aotearoa) flourish in the long run.
Yes, there are things we need our government to do to facilitate a ‘niche nation’, such as education programmes, tax incentives, geo-political relationships and so on, but founders and their startups obviously have their role to play.
Might Aotearoa become a wildly successful country by focusing on niches?
Being ‘small, but perfectly-formed’ feels like a predictable, cute thing to claim, but what specifically does a small economy offer a start up? What are the tangible benefits?
In my experience with startups, there are many reasons why commencing your business journey in New Zealand can actually help you go further, faster. Namely:
Invariably, Kiwi companies do have to be present in international markets if they want to win their category and change the world. Sometimes, you even have to erase your ‘Kiwi roots’ to increase momentum and enterprise value; a process that can feel both awkward and inauthentic for many Kiwi founders. That might be the price you pay to achieve your ambitions, but most likely, that’s not today’s problem.
Many startup founders bemoan the size of our domestic market and its implications. On balance, I think it can be a competitive edge for your startup.
Treat it as such!
Serge van Dam is an early-stage startup investor, focused on going-global productivity software (SaaS) companies. He spends much of his time with a bayonet in hand yelling “now!” in the startup trenches.
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