HEATING UP STARTUPS

• Published date: 21 August 2021
• Publication title: Hawkes Bay Today

The pair want tax breaks for employee share ownership (esop) programmes as a “quick win” to help divert more funds from housing to business growth; a change to the Investor Visa scheme to exclude a holder from funnelling their $10 million into government bonds or housing; and they want their own sector to do better on diversity.

“The challenge for the New Zealand economy is, of course, that we have a capital gains-free part of the economy in the housing sector, and productive capital that goes into businesses — whether it’s your own business or whether you’re investing in someone else’s business — doesn’t get the same rewards,” says Downs, who last year took over from long-time Icehouse head Andy Hamilton.

“Now that’s a really big topic, but employee share options is one part of it that actually could be fixed relatively easily without disrupting the rest of the system. So it feels like a quick win.”

Lennox adds, “many people invest in startups where very little cash is being generated by the business [in its early days]. The opportunity with esops would be to give people tax breaks on the income earned from the capital and value they create with those startups.”

Immigration is another area where The Icehouse’s new managers want change. But with the argument over more visas for tech staff already well canvassed, the group is focusing its energy on another element.

“New Zealand has some settings around getting investment into the country through the investor-migrant model. There’s been a bit of news about it lately,” Downs says — referring to the recent revelation that billionaire Google co-founder Larry Page holds NZ residency through our Investor Visa programme.

That programme allows an applicant, and their family, to skip most of the usual requirements about days spent in NZ, English language proficiency, age and other criteria if they pledge to invest at least $10 million over a minimum of four years. The Investor Visa also has a $3m tier, with much less generous conditions.

The Government did not detail how Page spent his $10m, but in his case there is definitely startup action involved. A company backed by the Google billionaire is developing a pilotless flying taxi at a site outside Christchurch. But The Icehouse would like to make that the rule, rather than the exception.

“What we’d love to see is that capital being deployed into really productive systems and assets like businesses and companies, not in government bonds or housing,” Downs says.

“So...