Playbook for Expanding a Tech Ecosystem
The Back Story
Most people know North Ridge Partners as a regional tech investment bank based in Singapore. However, our origins (and our name!) come from the Deep South of New Zealand. We’re proud to report on some exciting developments in our spiritual home, Queenstown, where we are helping to build out the local tech community.
This stunning alpine retreat has lakes, fields and mountains to die for. It’s a year-round playground for skiers, hikers and mountain bikers. And yet despite all the fun, beauty and adventure to be had, there’s a clear challenge facing Queenstown - its reliance on tourism, clocking in at around 60% of GDP, making the district vulnerable to economic shocks.
At NRP we have a long history in travel tech and hold several live mandates in the sector. In addition, Roger chairs ASX-200 digital travel company Webjet, which like many travel companies needed to recapitalise urgently during the pandemic (but is now doing exceptionally well!). Shortly after Webjet completed its financing, NRP helped Magic Memories, a global tech scale-up based in Queenstown, to recapitalise.
During that process it became apparent to everyone in town that with the borders closed and with 60 percent of local GDP missing in action, Queenstown was in dire trouble. The upshot is that the region needs to diversify its economy urgently.
Tech is an obvious candidate — with its relatively low environmental impact, high wages and productive benefits for other sectors. So the seed of an idea was planted. With NRP so deeply involved in the tech sector, and its founder living in town, the solution seemed a no-brainer.
Big Steps Forward
The project recently took a major step forward when Fortune 500 professional services firm Accenture released economic analysis underpinning the thesis that $1bn in annual tech GPD can be built over the next 20 years. At the same event Technology Queenstown (TQ) was launched — the development agency charged with executing the strategy.
North Ridge Partners and its founder Roger Sharp have been active contributors to this effort, alongside many others, for some years now. We’ve now committed seed funding to enable TQ to begin operations.
We’re writing about it today not just because we’re proud of the support role we are playing, but also because we think there’s a blueprint here for other regions wanting to diversify their economies through building out tech ecosystems.
Here are the ten steps in our playbook:
1. Find someone to launch a movement;
2. Attract supporters who can bring resources and credibility to the table;
3. Measure the starting base line and consult widely to understand the issues;
4. Analyse successes and failures elsewhere;
5. Obtain credible economic analysis and forecasting;
6. Release a vision and explicit targets;
7. Work hard to gain public support;
8. Form an organisation to execute the vision;
9. Develop a funding model; and
10. Operationalise.
The project is at step 8 now. Here’s how the team has gone about it.
1. Find Someone to Launch a Movement
Motivated by the carnage that COVID-19 created in his hometown, spurred on by the team at North Ridge Partners and undeterred by naysayers, Roger laid the groundwork for this initiative over several years.
Understanding that he could well be perceived as the crazy guy dancing alone on the hill (see video), he set out to build strong foundations based on research, analysis and facts. Here he is on national TV.
2. Build a consortium of supporters who bring resources and credibility to the table
Over several years, we managed to win over credible organisations who have added weight to the thesis that robust tech ecosystems can be built in mountain towns.
The town council, QLDC, instigated the quest for economic diversification and embraced the tech theme, providing critical input and funding, while the country’s largest Government Department, MBIE, seconded a senior policy advisor to Otago for the duration of the project. QRC, the town’s tertiary training institute, pivoted to teach technology skills. The University of Otago provided the critical thinking of three professors and strategic support from its leadership team. Ngai Tahu, the regional Māori tribe, provided guidance. The builder of the District’s first dedicated tech infrastructure, RIQ, leaned in. There are too many contributors to name.
The collective heft of these organisations helped transform the vision of one crazy person into something different, and potentially quite credible. But having others dancing on the hill wasn’t enough. The project needed hard facts.
3. Measure the existing base line and consult widely to understand the issues
To work out where you’re going, you need to understand your starting point. So a small research team was put together, with the mandate to speak with anyone and everyone relevant.
It’s important to understand that there was no plan for the tech sector in this district, there were no statistics, there was no register of the people working in the industry, or even a list of the tech companies operating there. It was truly a black box. A glass half empty.
With funding support from QLDC, Roger and NRP, and the time of three professors from the University of Otago, we recruited a senior researcher. The team worked the old-fashioned way – wearing out shoe leather, meeting people and listening. Initial research was commissioned from local economist Benje Patterson.
We spoke with hundreds of people and dozens of companies around the district, uncovering more and more gold nuggets by the day. The wealth of tech talent hidden in the hills around Queenstown had long been suspected, but never fully appreciated, until now.
There’s actually a vibrant ecosystem forming across the district, but there has been no unifying strategy, no spokesperson for the sector and, other than a small council-funded start-up agency, no resources have been dedicated to putting the enablers in place to grow the sector in a systematic way.
It’s also clear there are a number of impediments to success that need to be overcome – a lack of affordable housing (any housing in fact), a shortage of quality office space, a shortage of tech workers, and of the support services to support a cohort of new tech workers. And so on.
We would need to produce a credible plan that took these constraints into account – positive enough to engage the community, but realistic enough to ensure success.
4. Analyse successes and failures elsewhere
Initially we did a lot of desktop work on successful (and unsuccessful) tech communities overseas, to see if we could find a model for Queenstown Lakes. The borders were closed, making this a desktop exercise with lots of Zoom calls at odd hours. Then the borders opened momentarily (observers may recall that New Zealand sealed its borders for a couple of years).
The minute the border opened, Roger hopped on a plane to the US, visiting a dozen mountain towns in the USA. Starting in Portland Oregon, this epic road trip snaked through Bend Oregon, Spokane Washington, Boseman Montana, Denver Colorado, Boulder Colorado, then a host of small towns up the length of the West Slope of the Rockies from Durango to Telluride, then Aspen, before ending up in Denver for the long schlep home.
The insights from this trip have been well choregraphed in a series of LinkedIn posts and in Accenture’s report (below). The key players in each town – mayors, Economic Development Agency heads, investors, tech companies and so on – provided remarkably consistent advice on what worked – and what didn’t.
We thought the lessons from abroad – and the effort to get them (especially at the heart of a pandemic) would add credibility to our mission. They did.
5. Obtain credible economic analysis and forecasting
We needed hard economic analysis.
Arrowtown-based, highly experienced economist Benje Patterson started the ball rolling with his analysis of the contribution the tech sector makes to the district.
During the later stages of COVID-19 the Tech Council of Australia (TCA) was launched, with foundational research from McKinsey and Accenture. The TCA is the peak body representing the tech industry in Australia; it is member-funded, influential and commands attention. We zeroed in on the TCA as a potential role model for TQ.
So we started a long courtship process with Accenture, who are both a strong supporter of TCA and coincidentally are on a mission to grow rapidly in New Zealand. After literally dozens of meetings Accenture did something quite unexpected – they offered the services of their dedicated Economics unit to write the economic analysis underpinning our strategy. The thought of a Fortune 500 company with nearly 800,000 professional services personnel globally writing the economic analysis behind TQ was a revelation. Game on!
6. Release a vision and explicit targets
Accenture’s report can be downloaded here.
Their White Paper presents an ambitious blueprint for transforming Queenstown Lakes District into a thriving niche hub for technology and innovation.
Recognizing the tech sector's nascent stage of development, with a contribution of only ~1.5% of local GDP, Accenture sets out a vision to significantly increase this figure by harnessing the district's unique assets and leveraging global best practices.
Their analysis identifies the potential for the tech sector's GDP contribution to soar to between $650 million and $1300 million by 2043, alongside creating up to 3,000 high-value tech roles and supporting an additional 5,400 jobs indirectly. This transformation is predicated on a multi-pronged strategy focusing on education, housing, infrastructure, and the establishment of TQ to catalyse the whole initiative.
We have chosen to target the upper end of Accenture’s range by targeting $1bn in annual Tech sector GDP by 2043. Every 1% of GDP in Queenstown Lakes District is currently worth around NZ$40m. With Tech in the area currently sitting at only 20% of the national average, just getting to the national average is worth more than $250m per year in the community’s pocket. Getting to the same level as successful tech towns overseas would add at least $1bn to GDP by 2043.
That’s our goal, and we will measure ourselves along the way. Whether we get there, beyond the target or fall short isn’t really the point – just getting to the national average will be an achievement.
7. Gain public support
It’s not easy to know if you’re succeeding or failing in the quest to gain public support. Do you ever really know?
We’ve spoken with hundreds of people and companies, evangelising the need, the dream and the solution. The support has been overwhelming.
The local community cares deeply about its environment, but it also recognises the need to build another economic engine. These two concepts aren’t mutually exclusive, and TQ’s plan is sympathetic to the community’s values. The future isn’t going to crowd out the district with tens of thousands of techies - instead, it proposes a niche, high value approach.
The plan also recognises that there are major impediments to be addressed (like housing and talent availability), and contemplates a slow start while solutions are found. By being cautious, open and pragmatic, we are giving ourselves time to do this in a measured way.
8. Form an organisation to execute the vision
Without an action plan, dreams are just dreams.
One of the big lessons learned overseas is that to implement a dream you need a plan, and you need resources to execute that plan.
So TQ has been launched to execute on the vision.
9. Develop a funding model
Schlepping back and forth to the capital Wellington, seeking Government funding for TQ, didn’t work too well. After several false dawns and a number of knockbacks, we decided to liberate ourselves from the notion that this enterprise should be funded by Government. After watching other organisations scramble to secure funding prior to and after each election, we began to realise that being tied to a political cycle isn’t the best way to develop a long-term vision.
To do this, we would need to take a fundamentally different approach.
We began to target corporate stakeholders who see the benefit in co-creating the tech community in Queenstown Lakes. Everyone has a different reason for joining, and to join you have to pay. For some contributors, it’s an expression of their commitment to New Zealand – a signal they’re here for the long haul and are investing in the community and in building local resources. For others, it’s a CSR/ESG initiative.
For QRC, its about transitioning from tourism education to tourism + tech education. For the University of Otago, it’s about extending its reach and cementing its foothold in the international gateway to Otago. For NRP, it’s about demonstrating that we think long-term, we aren’t just deal junkies, and we feel the need to help fix a deep-seated problem in the firm’s spiritual home.
We’ve treated the raising of funds for TQ as a book-building exercise. We led by offering up the first hard cash - a five-year funding commitment. We took this to corporate partners and as at the date of writing this newsletter, had handshakes on at least a third of funds required. The rest will flow in during the year.
TQ won’t have millions in the bank, but it should lock in its first five years of funding during 2024 – enough to get up and running. We expect quite a bit of the funding to be in kind or via contras – rent, recruitment, PR etc.
10. Operationalise TQ
It’s a surreal experience taking on a challenge this big. We have effectively launched a not-for-profit start-up. We are amazed by the people and companies who have given generously of their time and capital. From the local council, the local tertiary training institute to the university, to Accenture, Government departments, to a prominent media and PR firm, to executives from a local investment fund – all have been generous to a fault.
When funds are raised we will recruit a small team to start to operationalise TQ. That’s when the real work will begin.