THIS month two companies graduated from the Auckland University of Technology (AUT) Technology Park incubator model to become Hi-Growth companies.
AUT Technology Park marketing manager Tara Lorigan says incubation companies receive funding through New Zealand Trade and Enterprise (NZTE) for 25% of operating costs.
NZTE has a budget of $3 million available for grants to incubated companies.
“Nationwide, NZTE has set a target of 18 graduate businesses annually. Our share of that is two. It sounds reasonable but incubation can take anything from six months to three years. Not graduating as a Hi-Growth business isn’t a sign of failure; I know of a few companies who have gone on to do extremely well,” says Lorigan.
Hi-Growth companies must achieve revenue of at least $500,000 within two years of entry to the programme and have raised $500,000 external capital during incubation.
2004 Hi-Growth company Xegen develops intelligent business solution software using artificial intelligence. Its flagship product, Intellagents, will be released to the market in 2005.
Xegen director Ian Shields says the company is close to commercialisation.
“We’ve got an alpha version and have already gone into negotiation with a government agency - at this stage I can’t say who it is. We’ll be taking the full version to market next year,” he says.
Established in 2001, the programme helps businesses become profitable and established during their start-up phase. There are 14 incubation facilities around the country and most are connected with universities.
NZTE incubation manager Richard White says 65% of incubator companies are ICT-related. “We intend to be a valuable pipeline for them and this gives them a hell of a head start,” he says.
Lorigan says the biggest challenge is finding good quality start-up businesses. “It’s really hard to find the right businesses and that’s not helped by a lack of awareness about the incubator programmes.” She describes the application criteria as stringent and the incubation period as hands-on.