The creative technology sector; a world of potential

What’s in a name?

At the intersection of the technology and creative industries, an emerging sector is flourishing. At BNZ we have been watching this space for some time. Recently we decided to take a significant step towards realising its potential by defining it and giving it a name. That may sound simple, or trivial, but it’s a big step – inside and outside BNZ.

The use of the term CreativeTech in the New Zealand context has been met with a resoundingly positive response from a number of leading industry folks. This is because the fragmentation within the CreativeTech sector has the potential to undermine its significance and scale. If we can better describe it, communicate it, and track it, then we can drive considerable support for it, including the capital and connections needed for it to thrive. We’ve invested at a leadership level and appointed a Head of CreativeTech Business within BNZ to focus on supporting its growth in New Zealand.

Our working definition of CreativeTech is those tech businesses in – and related to – the creative economy. They include, but are not limited to; gaming, education, design, media, virtual and augmented reality, metaverse, animation, film and music.

Epic ventures

Picture a Venn diagram of the technology and creative industries, the unique value and growth of that specific intersection is (as yet) uncharted. But as both circles independently balloon, it’s without question that the cross over will too. The technology sector contributes $17 billion¹, and the arts and creative sector contributes $14.9 billion² to New Zealand’s GDP.

While it’s a challenging and competitive landscape, CreativeTech businesses all share the advantage of a strong creative legacy in New Zealand. We are well respected around the world and as a nation we have an extraordinary history in creative, arts and storytelling. This is in no small part because it is intrinsic to te ao Māori.

In the CreativeTech space locally there are a handful of large companies (such as Wētā Digital) and then a long tail of smaller and medium ones. The trick to achieving the true potential of this sector will be in supporting the smaller and medium ones to obtain relative scale. The kind of scale that makes them attractive, stable partners/suppliers for international markets.

Scaling up is tough, but this sector is uniquely equipped to do just that.  In every other industry there are a subset of pioneers at the innovation edge, but in this industry, there is only the innovative edge. When being a pioneer is ‘table stakes’, the resource requirements are significant but the growth potential is, frankly, remarkable. We’ve seen an increasing number of high potential CreativeTech businesses scaling well, as well as a few big sales.

The art of backing

At BNZ, we’re keen to back this sector, and to do that we have to go pretty deep into understanding these businesses and the context in which they operate. Going deep requires specialist expertise, and this is why we have recently announced Olivia Donaldson as Head of CreativeTech Business. Olivia’s role is to support the growth of the CreativeTech industry in New Zealand through non-dilutive financing, expertise and networks. Investing in specialist knowledge and expertise among unique verticals, at a leadership level, is a key part of how we support New Zealand’s growth sectors (see also Watch these spaces, BNZ triples down on tech sector, Stacking up: BNZ steps up support for the FinTech and PayTech sectors and The greater good: capital and connections to accelerate the Climate and CleanTech sector)

Key suggestions for CreativeTech businesses to obtain growth funding (including from a bank):

• Clearly outline the capability of the team and its ability to design, adjust and execute on plans. The character and capability of the founders, board and advisors is a key
• Have a clear understanding of who your target customers are, why they value your product/service, and how much they are willing to pay for that value.
• Be able to articulate your revenue model and have a rationale for that approach.
• Track lead indicators to provide some relative predictability around forecasted revenue. A well-articulated understanding of risk and predictability is more likely to attract growth funding.
• Demonstrate a strong understanding of the market context in which you operate (e.g. competitive landscape, substitutes, importance of speed to scale, industry trends, market maturity, to name a few considerations).
• Be clear about the asset that you’re building (outside of key people), how you own or control that asset and the key elements that derive and protect its value.

Finally, I warmly encourage anyone in the sector to connect with me and our new Head of CreativeTech Business, Olivia Donaldson. We believe CreativeTech businesses have real potential to share the limelight with the highest performing sectors of New Zealand’s economy. We are passionate about helping this sector to scale up and step out on the world stage in every way we can, including working as a hub to bring people, ideas, resources and funding together.

This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser.
No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article. Any opinions in this article are not necessarily shared by BNZ or anyone else. References to third party websites are provided for your convenience only. BNZ accepts no responsibility for the availability or content of such websites.

Any views expressed in this article are the personal views of Timothy Wixon and do not necessarily represent the views of BNZ, or its related entities. This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact BNZ or your financial adviser. Neither BNZ nor any person involved in this article accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.