Why crossing the ditch is hot right now

For Kiwis looking to make the leap overseas, Australia has long been a favourite first stop. And understandably so. 

Not only can a founder leave Wellington at breakfast time and conduct a business lunch on the Sydney waterfront the very same day, the two countries share a world-leading free trade agreement, under which any goods meeting the Rules of Origin can be traded at a zero tariff rate.

They have also committed to the Single Economic Market, which builds on the Closer Economic Relations agreement and streamlines the process further. 

Recent years have found New Zealand businesses traversing the Tasman at increasing rates. New Zealand Trade and Enterprise’s (NZTE) customer numbers have grown 400 percent in the past four years while the tech sector grew eightfold. 

“What happened in Covid is that New Zealand reawakened to how lucky we are to have such a country as our close neighbour,” says Glen Murphy, NZTE’s Australia and Pacific regional director.

Australia is accessible, has a similar culture and offers opportunity to scale due to a population at least five times that of New Zealand – factors that have long made it a hot market for Kiwi businesses, he says. 

On top of that, its GDP per capita is 30 percent bigger than New Zealand’s and cities like Sydney and Melbourne have well-developed VC ecosystems, thanks to nearly three decades of continuous economic growth. 

Australia is the “easiest market” for Kiwis to enter internationally, says Murphy. 

But – and this is important – he emphasises the two markets are different. 

Here are his dos and don'ts for export success across the ditch. 

Do remember the cultural nuances

Companies in any sector need to “think hard” about who their target is because it is different to New Zealand, says Murphy. To start, familiarise yourself with Australian data.

Within the Australian population, around 29 percent are born overseas, 49 percent have a parent born overseas, and 18 percent speak a language other than English at home. The country also has large migrant populations from China, India and Vietnam.

“If you [know your target], that then flows through to how you message, what channels you're going after, how you design your websites, and how you communicate in your sales programmes,” says Murphy.

Don’t neglect your company culture 

A reconfigured target doesn’t require a complete business model overhaul. In fact, Murphy says NZTE encourages companies to retain their authenticity – just prepare to tweak it slightly. 

“What we would say is, ‘look, don't change your essence, [don’t] change the core of what you are as a business and what your purpose is. But you are likely going to have to change the nuance of how you communicate that and who you are communicating it to,” he says. 

Having a clear understanding of what you stand for then makes hiring local talent much simpler. 

“You're not just hiring somebody ... they're an extension of you and of what your company is about,” he says. 

If you make conscious decisions, in line with your company culture, then you’ll increase your chances of scaling sustainably, he says. 

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Do speak Australian

Business is highly competitive in Australia so be clear in your communication – and not just for the customer. 

A typical New Zealand approach can get lost in translation, Murphy says, citing an anecdote from a big liquor retailer who is often visited by New Zealand wine sellers. 

“The quote was, ‘often the meeting finishes and I just feel like giving them a hug because they've been so lovely, but I don't understand why they were here’.” 

To overcome this, New Zealanders need to make a clear ask, he says. Be forthright with what you want. 

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Don't assume the details

“If you haven’t got the details right here, you can make a fatal mistake,” says Murphy. And while in New Zealand you can “fix things as you go along”, in his experience, the Australian market demands more certainty. 

He says the easiest remedy for this is to check assumptions, particularly around the ‘little things’ like compulsory superannuation, payment cycles and higher salary expectations. 

“We've seen companies trip up on that, where their cash flow gets under serious pressure if they haven't built ... that knowledge into their plan.” 

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Do improve digital commerce 

If you want to do business in Australia, investing in digital commerce – the buying and selling of goods or services online – goes a long way. 

Murphy says that in New Zealand, other CEOs are typically just a phone call away. As a result, a Kiwi business doesn’t need a good online presence because it’s easy to give someone a ring and make a pitch. In Australia, that two degrees of separation is gone and “you actually have to be good at [digital commerce] to get cut through”. 

His advice for Kiwi businesses is to “up their game” in this respect. 

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Don’t get deterred by regulations

Australia has three levels of government: federal, state/territory and local, with each responsible for different rules and regulations – and often the state/territory regulations differ from each other. Companies must comply with all laws applicable to their business if they want to trade internationally. 

While the layers can induce a headache in a founder looking to get a foot in the door, Murphy says most businesses don’t need to worry.

‘If you start by wanting to go to three different cities, then yes, you're in a world of complexity .... But the likelihood is you're not going to do that and we [NZTE] certainly wouldn't advise it unless you've got some incredible business model,” he says. 

Generally, you’ll start in one place and deal with one set of rules, he says. 

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Do consider moving…but don’t feel you have to

While setting up shop in Australia is not necessary for a business to succeed, Murphy says it is something to consider. 

Citing data from the manufacturing sector, he says businesses that get to about $10 million in revenue but don’t build on-the-ground capacity, typically plateau and “start to fall backwards”. 

However, companies that invest and put people on the ground can easily grow to become a $50 million business, he says. 

“Anybody can make some sales from New Zealand…and that’s fine. But how ambitious are you to actually grow a sustainable business?” he asks. 

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‍MedSalv: attracted by sustainability push

Founded in 2017, Medsalv was born from founder Oliver Hunt’s desire to eliminate environmental and financial waste in New Zealand's healthcare sector. To do so, the business remanufactures single-use medical devices, subjecting them to specific processes that make them clinically safe and suitable for reuse. 

As one of Australasia’s highest scoring B-Corps, Medsalv works with more than 70 surgical hospitals across Australia and New Zealand.

The company recently announced a new Australian manufacturing and R&D facility in Melbourne, which will create up to 49 new jobs over the next five years, with support from the Victorian Government. 

A major draw for Hunt was the regulatory expertise and commitment to sustainability he saw in Australia. He says this is lacking in New Zealand and part of the reason why MedSalv is making the jump. 

“If New Zealand was to turn around and say ‘look, we're going to have an agency that helps New Zealand companies take products to be in-line with the best international standards...then that would be a more attractive place for us to do innovation.” 

Hunt has found engaging with the locals on his product, gauging feedback and getting introductions to industry players essential in Australia. 

It’s a bit of a ‘meet someone to meet someone’ culture, he says, and more direct. He’s found Australians more likely to take action if interested in the product, and fast. 

“We have had one customer [in New Zealand] that had a goal of zero waste to landfill by 2030 take four years to adopt our products into their hospital; similar-size hospitals in Australia [have taken] literally months,” he says. 

Overseeing businesses on both sides of the Tasman is not without its challenges, particularly when one side is established and the other is starting out. Hunt found managing the different scales required the company to retrofit the New Zealand-formed organisational frameworks to Australian needs. Efficient internal communications have been central to this process, he says. 

He advises people looking to move to treat each state as having individual priorities, not just one big country. 

“Australia is not just Australia. [It] is a number of different states, and the drivers for people to do things in different states are different – particularly within a regulated or a public purchasing market – because the objectives of each state government are different,” he says. 

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IGC Studio: global from day one

Auckland-based IGC studio is a disruptive gaming company that brings player-personalised video game characters into the real world through the creation of on-demand physical collectibles. 

The startup says the product solves a “big part of the problem” for the gaming industry by removing the guesswork around demand for collectibles – a sector that sends millions of dollars worth of products to landfill each year.

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The idea behind IGC was sparked in March 2022 when founder Craig Herbison, a long-time gamer, was watching his sons playing Doom Eternal, a first-person shooter game. He found himself asking ‘why can’t I buy Doom Slayer, the game’s protagonist?’ A month later, he started the business. 

By October, Herbison had brought co-founder Constant Meiring into the business. In the new year, he took on $1 million in VC funding that went towards setting up manufacturing equipment in the US and “some smart people to work on AI stuff”. 

Herbison’s hard work paid off two months ago when the technology officially launched and two customers, New Zealand-based Flightless and the Sydney-based Fenix Studios, integrated it into their games. He says he is now in discussion with about 80 companies globally. His original problem statement is still pinned to the wall. 

Though gaming is a fast-growing industry worldwide, Australia wants to establish itself at the helm. The Australian gaming market is projected to crack the billion-dollar mark within the next 10 years. 

Herbison describes Australia’s gaming sector as “fertile”, which he attributes to industry tax incentives of up to 45 cents in the dollar for eligible game-development spend. It led to a number of New Zealand studios crossing the ditch (or considering it), although the New Zealand government responded in its May 2023 Budget by promising a smaller, 20 percent rebate providing companies meet minimum expenditure thresholds.

“Games have been global from day one,” says Herbison. “Nobody is creating a game in Australia for the Australian market.”

Having engaged with a few international markets, Herbison has found you need someone on the inside in Australia to get you to the top of the list with potential customers. “If you want a meeting, someone needs to call someone for you [beforehand],” he says.

This differs from other markets like Japan, where he’s found ideas travel more by themselves. 

Now his technology has been “proven”, Herbison plans to eventually expand in Australia and beyond, although he won’t be moving just yet.

As much of the gaming industry has embraced remote working, there is no requirement for him to move abroad, he says. What matters is the ability to travel, attend events and talk to people – which is exactly how he connected with Fenix Studios. 

Herbison met one of the studio’s representatives at a Melbourne gaming convention and “a week later, they had the technology in the game,” he says. 

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Scroll Media: second time's a charm

It's the second time around tackling the Australian market for Scroll Media founder Jane Orsmby.

She founded online advertising inventory network Response Directive and spent three years based in Australia building it into an Australasian market leader, before making a trade exit in 2008.

After a stint with APN (now NZME) helping with its digital advertising growth (including leading a paywall for The Listener and launching Bite), Ormsby decided to go out on her own again, launching Scroll Media in 2018.

The digital advertising network helps media platforms such as Pricespy, Autotrader, Healthline.com and Supercars make revenue with advertising technology and scaled media partnerships. The outsourced ad sales model, where publishers get 70 percent of the ad revenue, can be less risky for smaller publishers as there are no costs until sales are made, says Ormsby. 

Scroll Media runs campaigns for advertisers including Apple, McDonald’s, Pizza Hut, Lenovo, 2degrees, Universal Pictures, Auckland Airport and Roadshow Films. 

It has built a clever bit of technology to help advertisers target key audiences while still ensuring independent publishers generate revenue from their content. The technology includes the ability to hold regular auctions for ads to drive up the price paid.

Scroll has also started building mini-games for clients and developed a video game with Gameloft for Universal Pictures to support the new animated Trolls movie in Australia. 

Ormsby expanded the company into Australia two years ago and revenue is now split 50/50 between New Zealand and Australia, which is growing at a healthy 100 percent compound annual growth rate.  

Growth in online advertising spend in Australia grew by 1.6 percent in the 2023 financial year to NZ$2 billion, with video advertising growing by 8.9 percent and podcast revenue booming, according to IAB NZ. 

Scroll now has a network of 25 publishers in New Zealand and 20 in Australia.

Ormsby is expecting revenue from Australia will outpace that in New Zealand within the next year, given the market is five times that of New Zealand – although there is more competition across the ditch.

Scroll’s 10 Australasian staff work out of co-working spaces in Auckland and Sydney. 

Ormsby says getting established in Australia, the first of several export markets she is eyeing, is hard work because the digital media industry is so competitive. Her focus in the first two years was on getting the right staff on the ground and meeting with as many publishers as possible. 

She’s bootstrapped the business to date, although a grant through the NZTE’s International Growth Fund has helped her set up in Sydney.  She says help from NZTE’s export team has been invaluable.

“The first time around I got nothing, though it was easier to make money back then,” she says.

Having people on the ground in Australia is important and she’s been able to scale back her monthly trips to Sydney now key staff are in place: “This is a real relationship game.”

Her key advice to other Kiwi founders eyeing the Australian market is to have belief in yourself and what you’re doing.

“You will have daily problems coming your way that you have to find solutions to, so you need a positive mindset. You also have to make the business accountable and have structures and goals and revenue targets.”

Taking time out for yourself and not working too hard while you try to run a business on both sides of the Tasman is also important, she says, to avoid burnout. 

Given the increased complexity of Australian regulations, including having to register your company and get an ABN number, she recommends getting an Australian accountant in addition to one in  New Zealand.

It’s also more expensive to run a business in Australia, she warns, including having to pay compulsory superannuation, higher salaries, and state and government taxes. 

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Hot Markets is a monthly series that explores promising global markets for Kiwi startups. For more information on the Australian market, check out NZTE’s website here.