The Tyranny of Distance

September 4, 2008 – 11:51 am

Jenny Morel is raising a $100M NZ VC fund. That’s good news, in that NZ needs smart angels and VCs. I’ve had a number of NZ friends making the rounds of US venture capital firms and angels looking for investors, and the message has always been “not while you’re in NZ”. Of course, it’s rarely stated quite so bluntly (VCs never want to close the door!), but it’s always quite clear that it’s much harder to invest in something that’s on the other side of the world than something you can drop in on regularly.

That’s a hard message for we net heads to hear. We’re used to saying that the Internet can help us overcome the tyranny of distance, the fact that we’re four million people on a small island in a big ocean far far away from the rest of the world. We’re learning that if we can’t find investment in NZ, then we are immediately on the back foot because of our distance from capital.

And it’s not only investment, it’s bizdev as well. It’s a cliche that sales are built on relationships, but it’s true. If you build a great product, you’ve still got to get it in the hands of customers. This means understanding the market so you know where they look, it means knowing what they’re looking for and what they make buying decisions on, it means knowing where to advertise, it means meeting and being trusted by the distribution partners who’ll get your products into the hands of customers. Not all of these apply for virtual products, but every startup founder I’ve ever met has said that getting people to use the product was harder than building it. And most of these things are so much easier if you’re in the same country as your customers.

So what to do? I’m not sure. I still think it’s possible to use the net to beat distance, but it needs more NZ investment and a lot more of the hard-earned experience that the NZ entrepreneur community is just beginning to get. And we need to share the lessons from that experience as far and as fast as possible. I guess that’s something I’ll work on for Kiwi Foo Camp 2009.

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