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NZ Hi-Tech Down The Gurgler? 5 August 2002 Edition
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New Zealand investors have never been known for their willingness to risk their cash by taking a punt on hi-tech ventures and some say that's a good thing.

It was a willingness to take ridiculous risks on the overstated and ill-conceived plans of hi-tech entrepreneurs that got the US economy into so much trouble when the dot-com bubble burst in 2000 -- so maybe our investors are just smarter, right?

Whether it's due to investor conservatism or just plain fear of losing their money, one thing's for sure -- there are still plenty of Kiwi hi-tech companies starving for lack of funds.

Is their plight solely due to the ultra-conservative nature of NZ investors or do they have themselves to blame for the lack of VC wallets queuing at their doors?

One such local company starving for funding is IndraNet.

Initially touted as a company which had a devilishly cunning plan that would allow intelligent wireless networks to automatically perform load-sharing, rebalancing and automated re-routing, IndraNet has all but run out of money -- despite starting off with a very healthy $7 million in the bank.

You'd think at a time when "wireless" was the buzzword of the day, a company with a product like IndraNet's would have no trouble attracting local and foreign investment. Alas, this doesn't seem to be the case.

About a year and a half ago I strongly queried whether IndraNet might not be going off the rails by branching out into the world of zero-emission vehicles. It is beginning to look as if my warnings might have been pretty accurate.

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I suspect that things aren't going to get much better for IndraNet, at least in the short term. The company still needs to decide whether it's in the wireless technology business or transport business. Let's face it, there are no synergies between the two areas of its operations and, given the fiscal constraints they're now facing, they can't afford to do both.

IT Capital is another local hi-tech investment company suffering at the hands of a bear market and disinterested investors.

There are now a couple of savvy (some would say "lucky") locals driving this business but its future profitability remains to be proven.

It would appear that despite having investments in a number of hi-tech startups, to all intents and purposes, all of ITC's eggs are really in one basket -- that of Deep Video Imaging.

Now maybe I'm just thick -- but I'm finding it very difficult to visualise exactly when/where this multi-layer LCD display technology will offer an invaluable benefit over existing display technologies.

The Deep Video Imaging website offers little explanation as to when you'd use one of these displays and a multi-layer LCD isn't 3D in the same way as a hologram or stereo-vision setup is -- so what's going to make this a financial success?

It strikes me that the problem with hi-tech investment in New Zealand is that in far too many cases, investors seem to be repeatedly giving their money to the people with the slickest presentations, the most grandiose promises, the most outrageous projected returns and the least commercial or technical merit.

Too many bright people with vastly superior ideas are being smothered into obscurity thanks to the ill-conceived and poorly managed attempts of those touting far less deserving concepts but are simply better salesmen.

Do you know of some clever piece of locally conceived technology that is waiting for investment? Send me information and I'll publish a list of those which appear to be most credible and have most likelihood of commercial success. Maybe there are some *smart* investors out there reading Aardvark who can help.

Have your say.

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