Securing investment to help scale the New Zealand AgTech sector
On Friday, Wharf42 signed a Memorandum of Understanding (MOU), with Xiaohui Xu, Director of New Zealand-based InnoHub Holdings Limited. The signing was witnessed by Hongbo Xu, founder and CEO of Guangzhou-based innovation incubator, InnoHub.
This is significant news for the New Zealand AgTech sector and a major primer for the upcoming Farming2020 event during Techweek17.
Back in 2015, InnoHub established a $20 million fund to invest in Auckland startups. The initiative was a result of Len Brown’s visit to China for the first New Zealand-China mayoral Forum. Both Xiaohui and Hongbo had graduated from the University of Auckland so the New Zealand – China connection was reignited.
In recent months, Wharf42 and InnoHub Holdings have been discussing different opportunities for supporting the AgTech sector. Under the terms of the MOU, Wharf42 will work with InnoHub Holdings to identify potential investment opportunities. Areas of interest include, amongst others, robotics, sensor technologies, IOT and big data.
Last April, when I joined the 23 Kiwi AgTech companies on the 2016 Silicon Valley AgTech Immersion Program and Conference, lack of access to capital in New Zealand became a key talking point amongst the delegation. We had witnessed at first-hand just how VC investment was allowing our Silicon Valley peers to scale. I believe that with Friday’s signing of the MOU, work can now begin to address this challenge here.
Leveraging the WeChat ecosystem
It’s not though just about money.
Whilst, there is recognition that InnoHub is China’s largest Incubator network, (InnoHub manages 800,000 square meters of incubator space and services in Guangzhou, Shanghai, Shenzhen, Beijing, Wuhan, Tianjin, Hangzhou, and Qingdao), what many people have not understood is InnoHub’s unique relationship with China’s largest social media network, WeChat.
The $20 million New Zealand Innohub Holdings Fund is part of the ‘WeChat Growth Fund’. It actively promotes the WeChat ecosystem. And this is another key aspect of the Wharf42 – InnoHub Holdings MOU.
Together, we intend to identify and support businesses looking to access the Chinese consumer directly. If you want to learn more about the WeChat platform, Xiaohui wrote an excellent White Paper in September that you can access here.
On Friday, Hongbo spoke to me about the opportunities that InnoHub’s deep WeChat relationship offers the Kiwi FMCG sector. It is based on m-commerce, rather than e-commerce. To put this into some perspective, at the end of 2016, WeChat had 864 million active users. WeChat is currently home to over 300,000 wholesalers: a number expected to triple within a year. That’s some market. The focus and opportunity for New Zealand business looking to connect directly with Chinese consumers via this channel is immense.
For bricks and mortar-focused sales, Innohub has a JV with China’s largest owner of shopping malls. If you think Sylvia Park is big, think again. These malls attract up to 300,000 visitors a day. That’s each mall.
Part of InnoHub’s commitment to its New Zealand investee companies is access to these and other networks back in China. For AgTech companies building hardware, this includes introductions to some of Guangzhou’s high tech manufacturers. They can provide volume and scale which is often difficult to locate in New Zealand. For Agribusinesses looking to reach out to individual Chinese consumers, we can tailor programs that leverage the extensive WeChat ecosystem.
This is just the beginning.
Wharf42 and Innohub Holdings fully support of the Auckland – Guangzhou – Los Angeles tripartite sister city relationship and we look forward to working closely with everyone connected with this program. This MOU is designed to help add a significant commercialisation aspect to that relationship.
Wharf42 and Innohub Holdings also recognise that in order to get a real understanding of the opportunity that the China market offers, an AgTech Immersion Program and Workshop of the type initiated by Wharf42 and Silicon Valley Forum last year, should be organised in China. Discussions for such a visit have already started.
Over the coming weeks, we will provide more detail about how YOU can engage with us on some of the key initiatives we are looking to launch. Building and strengthening bridges into New Zealand’s largest export market are helping drive this partnership.
One final point.
In April, Wharf42 is coordinating a second cohort of New Zealand AgTech participants to the 2017 Silicon Valley AgTech Immersion Program and Conference. Is there a conflict with this new initiative? In a word, no.
We both view this Partnership as an opportunity to engage with Silicon Valley VC for potential market scaling opportunities. US venture capital takes a global view of investment opportunity (many of the Tier 1 VCs already have substantial Chinese Funds). We believe that this MOU will generate more conversation in April with New Zealand’s growing AgTech ecosystem and the opportunity for increased collaboration and investment by these funds. For clarity, I will be advising the funds joining the SV AgTech Immersion Program & Conference of this initiative well before NZ8 departs Auckland.
Friday was of course the start of the Chinese New Year. I cannot think of a better way to celebrate the beginning of a new relationship which is designed to support and scale New Zealand AgTech companies in one of our largest offshore markets.
As part of that celebration, to our Chinese friends, we say:
Over the coming weeks, we will continue to update as the MOU takes effect. Check out this blog and the Wharf42 website for further details.