NZTech Inform – Success breeds success

If someone told me a year ago that multiple billion dollar tech deals would play out this month, I wouldn’t have believed it.  However, the continuing growth and dynamism of the New Zealand tech sector was shown last week when Christchurch geoscience and ground modelling software company Seequent, was purchased by Bentley Systems for $1.46 billion.  In another deal last week, retail point of sale software company Vend was purchased for $486 million by Canadian firm Lightspeed.  Earlier this month, Rocket Lab also announced it is on the verge of listing on the Nasdaq in a deal that values the New Zealand-US startup at $5.7 billion.
 
New Zealand has a history of entrepreneurs creating world leading companies and while the sector celebrates them at the annual Hi-Tech Awards, the media, Ministers and the general population don’t seem to be aware how important the sector is for the future prosperity of New Zealand.
 
There seems to be a major disconnect between the value these firms are bringing to the New Zealand economy and areas of Government policy aiming to help create more firms like these. While the Digital Technology Industry Transformation Plan (ITP) is progressing well and will focus Government and Industry energy on initiatives to help grow the tech sector, the Government’s R&D tax incentive (RDTI) practically rules out software developers.
 
However, the Inland Revenue Department is working on improving access for software developers to the RDTI by extending the definition of viable R&D to include ‘system uncertainty’ which ‘can arise from or during the integration of technologies, the components of which are generally well known.’   Inland Revenue are also looking into the tax treatment of software development as they try to decide whether it should be expensed or capitalised.  We have been facilitating meetings with several different firms to help Inland Revenue understand that software development is not just one business model.  Our recent survey of the tech sector found that while 60 percent of software developers expense, 20 percent use capitalisation and another 20 percent use both at different times.
 
We are also working like crazy to help our members get access to managed isolation and quarantine (MIQ) places to enable them to bring in the scarce talent needed for these high growth firms.  At the same time, as detailed in our Digital Skills for a Digital Future report, we are also working with the industry and education, to accelerate and improve the flow of local talent.
 
So as more New Zealand tech success stories emerge, it is exciting to think about how those founders and the staff of their firms will invest in the next wave of ideas and talent.  As we can see with the New Zealand tech sector, success breeds success!

Ngā mihi 

Graeme Muller
CEO 

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