From Palmerston North to Paris,

A glimpse into agri-food accelerators on opposite sides of the globe

Each have their quirks, but there are some stark differences between Palmerston North, and Paris. This is no surprise with an age gap of 2200 years, and distance of 18,929.6km separating the two cities.

But what’s something they have in common?

Interestingly, both are home to their country's largest Agri-Food-Tech start-up accelerators: Shake Up Factory in France, and Sprout in New Zealand.

I’ve been fortunate to work with both organisations, judging finals pitches in Palmerston North, and recently reviewing 35 European applications sent to Paris through the EIT Food programme.

The differences have been eye-opening.

Access to investment (the EU > NZ chasm)

After evaluating applicants from a dozen countries across Europe, the difference in availability of funding is massive.

- Majority of the start-ups in Europe had already accessed a sizeable grant, ranging from minimum EUR€40,000 (NZD$71,000) up to EUR€2.5m (NZD$4.4m).

 - Majority of the start-ups in New Zealand had bootstrapped their way to the final pitch podium, and any grants received were smaller, and co-funded.

In short, European start-ups get access to a lot more early-stage cash.

This contrast in ease of access to grant funding might be expected with such a chasm between the size and scale of the economies, but the more interesting insight was where and how these funds are targeted.

- In the European-based examples, investment was for extended timelines and broad application by the start-ups, allowing the businesses to focus on innovation and development. The reduced (or often absent) requirement of co-investment meant that many applicants were under 35 (or even 25) years old, because the innovation ecosystem had been made accessible to them even if they didn’t have personal or professional means of gaining initial investment.

 - In New Zealand, it’s common for businesses to apply for co-funded grant after co-funded grant, across different government agencies, each having different restrictions, expectations, and reporting requirements (often taking many months to review and process). These grants are on set-cycles, often overlap or require minimum of annual reviews to keep a pipeline open (R&D grants such as the SFFF fund, vs Non-R&D grants such as Callaghan Arohia Trailblazer grant).

Earlier-career entrepreneurs who don’t have the saving balance or developed networks are excluded from the ecosystem, as 40-60% co-funding is required even on early-stage grants.

This means EU entrepreneurship is more accessible, agile, and rapid.

These economic differences were apparent across the ecosystem, not just the start-up funding. In New Zealand, a start-up evaluator is a voluntary position conducted at your own cost (though generally through industry partnerships seeking to gain a first peek at applicants).

In Europe, a multi-country accelerator hub has been established and co-ordinated by an impressive organisation EIT Food, whereby diverse evaluators are paid per application reviewed, supported by government and international co-funding (via the European Union).

At the other end of the acceleration pipeline, investors in Europe have significant incentive to support start-ups with their cash too, benefiting from up to 50% tax relief or up to 25% rebates on qualifying spending and business investments.

The highlight - economic benefits aren't limited to the start-ups, but the network of judges, advisors, and investors too - enhancing the whole ecosystem.

However, while this all appears to shine a bright light of positivity on Paris, there are some perks to the Palmerston North approach too.

Quality & collaboration (where NZ’s tight-belt innovation thrives)

I was surprised to see several start-ups which I’d scored in the bottom quartile in Europe (due to lack of any intellectual property, understanding of their own value chain, and a validated business model) had already been awarded from EUR€100,000 up to EUR€500,000. Though there were some exceptional applications, I had been expecting a higher overall quality from a population of 750 million.

New Zealand’s 5 million manages to push out numerous entrepreneurs who know they need to compete for every dollar, and as a result, the depth of detail in preparation for an accelerator, in strategic positioning of a business, and in planning for the future was generally a higher quality.

Showcasing that New Zealand has a small but deep talent pool of well-rounded and practical entrepreneurs.

Start-ups from New Zealand also had a much stronger tendency to seek collaborative relationships with organisations from right across the value chain. This interest in collaboration helped to fill knowledge, technical, or value-chain gaps for entrepreneurs, allowing them to focus on their core value proposition and competitive advantage.

Whereas European applicants generally made assumptions that any gaps would be future problems to be solved, and that this would be done internally through more funding and expansion rather than leveraging relationships and existing market expertise.

New Zealand start-ups seek-out and act on collaboration, rather than only talking about it, or ignoring business model gaps.

More recently the New Zealand start-up ecosystem has been accused as lacking the drive to strive for global scale and success, in comparison to their EU and US counterparts. I haven’t at all observed a distinction in the level of ambition between NZ and EU entrepreneurs, and expect this is a stereotype perpetuated more on the practical stumbling blocks that occur. It’s easy for a NZ business to enter a domestic supermarket chain, but difficult to get across most international borders. Whereas a European business can expand across international EU borders with more ease than a NZ business can expand between the North and South Island!

 Ambition is everywhere, the key to unlocking this ambition is delivering an empowering environment.

In conclusion, the best of both worlds?

Increasing expectations, incentivising collaboration, and asking tough questions could all benefit start-ups in Europe who are looking to leverage their investments and increase their chances of scale and success.

Taking larger and longer investment bets on committed young entrepreneurs, encouraging international capital, and increasing incentives for innovation investment to facilitate a greater domestic venture capital market would all help to boost the level of entrepreneurship from New Zealand.

And creating international innovation networks that transcend these geographic borders and allow European and New Zealand entrepreneurs to access, visit, and learn from each other’s ecosystems could perhaps bring the greatest value of all – creating a true connection across those 18,929.6 kms.