Developer heads offshore
- 08 February, 2004 22:00
Local developer Bulletin Wireless is moving its operations to the US, blaming the government’s lack of support for startups.
Operating chief Bruce Herbert (pictured) says Bulletin had a “frustrating” time trying to secure a grant from an Industry NZ business development fund.
“We just seem to have some problems with the people we were dealing with, their understanding of the industry,” he says.
Bulletin, which develops corporate messaging systems, has offices in New Zealand, the US, Australia and the UK. The firm recently signed a multimillion-dollar deal with an American auction company.
Herbert says Bulletin would be staying in New Zealand if it had received a grant, but the company’s European-based angel investor and CEO was discouraged by the lack of support for local startups.
If Bulletin had received a grant from the Business Growth Fund it would have grown faster and probably have established offshore offices sooner, he says. Instead, the company found itself putting management resources into a “frustrating” funding process that never reaped any benefit.
Officials seemed more interested in funding larger, offshore companies, Herbert says.
“However, we owe New Zealand a lot. It’s due to the likes of Vodafone and Telecom and all the customers we have got that we are now in this position.”
Bulletin employs about 18 staff in its New Zealand office; about a dozen have been offered jobs in the company’s new development offices in Sarasota, Florida, and Herbert says all have accepted. The move is likely to happen in March or April.
Bulletin’s team manager, Mark Easton, was given the job of preparing the funding application. The first job was to identify the grants that were available and select the most suitable.
In March of last year Easton completed and despatched an executive summary to an Industry NZ official. The application process was “quite onerous”, Easton says. Over May and June Bulletin sent four funding applications to Industry NZ, only to have it returned each time with a new set of instructions, he says.
The Business Growth Fund — since replaced by the Growth Services Fund scheme — offered cash matching what the company invested. Bulletin planned an $800,000 project and asked for a $400,000 grant, but was told to reduce it to $93,000 to fall below the official’s funding limit of $100,000.
Easton found himself preparing applications that were artificially contrived to meet Industry NZ’s requirements. “We’d say ‘We’re applying for the funding, but we don’t really need the funding. If we didn’t have the funding, we’d be doing this anyway’.”
None of Bulletin’s applications were actually submitted for formal consideration. Each application was returned by the official who handled the process with a new list of changes to make.
When the fourth application was returned in June, the official said an “independent advisor” had cast doubt on Bulletin’s technology. At this point the official seemed to “lose interest” and Bulletin decided to cut its losses, Easton says.
Easton estimates about six weeks’ senior management time was lost in the funding process.
If an application had been successful Bulletin would “absolutely” remain based in New Zealand, Easton believes. He says Bulletin’s CEO and main investor, David Macrae, would have welcomed a gesture of support from the government.
In July last year, Industry NZ merged with Trade NZ to form New Zealand Trade & Enterprise.
Dominic Cavanagh, NZTE’s client manager for ICT, declined to comment on a specific client’s funding application but says the agency has “an ongoing relationship” with Bulletin Wireless and was happy to discuss any concerns with the company.
A list of successful Business Growth applicants provided by NZTE shows $9,008,593.50 was granted to 147 companies between July 2002 and June 2003. The grants ranged from $6750 to $100,000.