New Zealand-based startup investor David Moskovitz says cities shouldn’t be trying to replicate Silicon Valley

- August 19, 2015 3 MIN READ

It was in 2002 when Californian-born, New Zealand local David Moskovitz sold one of the country’s earliest web technology businesses and began to use the proceeds from that sale to help develop New Zealand’s startup ecosystem.

Right now, there is also a lot of money making its way back into new New Zealand ventures from people that invested in Xero, TradeMe and other companies that have sold or listed early, which means that early stage funding is really starting to take off in a big way.

“My mission is to help young tech companies get off the ground,” says Moskovitz. “I’ve been working on that since 2002 and there’s been a lot of changes since then. I think one of the great indicators of that was when we started getting recycled money coming back into New Zealand from people who’d executed their startups overseas.”

Based in Wellington, Moskovitz says that one of the strengths of the startup ecosystem within the country is the strong community vibe it has going for it. An example he cites is Startup Weekends; even though the events are targeted at ‘newbies’ to the industry, everybody ends up attending them including seasoned entrepreneurs, investors, and those that run accelerators.

They say it takes a village to raise a startup and New Zealand prides itself (particularly in Wellington) of having a village atmosphere, meaning that everybody in the tech space knows about each other and even competitors care deeply about the people – perhaps not as deeply about their interests, but definitely each other’s well being and personal success.

“This is what makes Wellington special,” says Moskovitz. “It was one of the things that attracted me to the city when i arrived in 1982 and one of the things that really keeps me firmly rooted here”.

In regards to government policy, Moskovitz says that some of the areas that need to be looked at from a national perspective include making it easier for entrepreneurs to move around between countries – that’s both in and out of New Zealand. Such initiatives are already being worked on, including similar legislation around making it easier for investors to do the same.

The other area that the entire community needs to become better at is telling their story to a global audience.

“As a startup, every week that you spend focusing on a market of 4 million people is a week that you’re wasting not chasing a market of 7 billion people,” says Moskovitz.

It’s clear that for New Zealand to be a global startup competitor, founders need to attract offshore users and customers as quickly as possible, It’s easy in the short term to focus on being local, however it is critical to the success of the ecosystem for founders to recognise and focus on the global opportunity as a priority.

One thing Moskovitz believes needs to stop though is the idea of “Making Wellington the next Silicon Valley” – a thought process that seems to continue to appear in almost every city across the globe, except for Silicon Valley itself.

“I don’t want Wellington to be the next Silicon Valley,” says Moskovitz. “I want Wellington to be the next Wellington. If I wanted to be in Silicon Valley I’d move there.”

In her article on replicating Silicon Valley’s culture in Australia, Australia vs. Silicon Valley: Replicating a culture of innovation, Startup Daily Editor, Tasnuva Bindi makes a great point about the impossibility of replicating a culture that has at least 50 years head start on ecosystems like Australia and New Zealand.

While we can try to copy Silicon Valley, it’s very unlikely that we will be able to successfully replicate the culture – because there’s at least half a century’s worth of effort that makes the Valley what it is today.

We would need to have the same series of events occur in the same chronological order with the same people for us to be anything like the region. We would need history to repeat itself in an entirely different location.

Cities in Australia and New Zealand both experience the same issues when it comes to raising Series A rounds and above. In the Valley, you can quite easily raise a $5 million round on a $15 million valuation, whereas in a place like Wellington, you are more likely to close a $750,000 round with a $5 million valuation, which is closer to a Silicon Valley ‘seed round’.

Moskovitz is right when he says Wellington and other cities in New Zealand need to be much better at telling their stories and implementing support mechanisms that will attract both new entrepreneurs and investors into the country. Replication only works if you are able to do something better than your competitor is doing it, trying to out-Silicon Valley is stupid.