Startup accelerator programmes are funded to the tune of millions of dollars a year, but some say new businesses are being ‘suffocated with support’. 

When you enter the Ministry of Awesome’s office, part of the Ara campus in central Christchurch, it certainly looks the part – if the part is “stock image of modern startup office”. There are monitors on modular desks, several big leafy plants and lots of couches. 

CEO Marian Johnson is in her element. It’s Friday afternoon, quiet, but she assures me that on other days lots of people come to use this space. “[Ara] offers this space to us, to give all these startups a home when they can’t afford rent,” Johnson says. She thinks it’s working. “Christchurch has leapt from something like 25 startups four years ago to 200 now.” It’s all part of the Ministry of Awesome’s plan to keep more innovation in the South Island and create jobs, simply by nurturing start-ups. 

But perhaps we should wind back a little bit. What is a startup? “We define it as any business doing innovative things with the potential for high growth,” says Jenny Douché, the founder and startup product manager at Callaghan Innovation, the government’s innovation agency. And what is a startup accelerator? 

“It’s normally about a three-month programme, with a focus on helping businesses to develop markets, make prototypes, test and iterate – and get ready to pitch for capital,” Douché says. In other words, it’s a business course with a slightly unusual funding structure, dressed up in Silicon Valley speak. (Johnson: “the [startup] world is so jargony it’s not even funny.”)

Callaghan Innovation clearly thinks that startup accelerators are valuable; it spent more than $2m supporting startup accelerator and incubator programmes in the last financial year. According to its annual report, 341 customers (what the organisation calls the individuals and businesses it supports) received a service from either an incubator or an accelerator. And that isn’t all the money going into these programmes: Callaghan funds accelerators on a 1:2 ratio, meaning the organisations that actually run these courses have to provide twice as much money themselves. Ministry of Awesome gets some of that money from Christchurch NZ, the local development fund; Creative HQ, the Wellington equivalent, is jointly funded by the city and regional council. There are accelerators focused on agritech and Māori and Pasifika businesses too. Altogether, it amounts to a lot of public, as well as private, money being poured into these services, which are free for the startup founders. 

Supporting founders, testing and iterating, nurturing development, pursuing investment, creating a competitive environment, bringing jobs to New Zealand – it all sounds good. But do accelerators and incubators (which provide similar kinds of support for businesses that have ideas but not a clear product to sell) actually achieve these outcomes? 

That’s harder to tell, according to Rowan Simpson, a veteran investor and watcher of Aotearoa’s startup scene, who has written extensively, and persuasively, about the limitations of accelerators and incubators. Providing office space can be helpful, he points out in one essay – but lack of space to work is rarely what is holding a new company back. “It seems that every town around the country has decided it’s important for them to have a space to host startups. However, if they took the amount they have ‘invested’ so far in incubators and applied it directly as seed capital it could have completely funded a large number of startups.”

Often, Simpson says, New Zealand startups are “suffocated with support”, which means that new ideas are funded less selectively – a good and innovative idea could plausibly receive the same amount of funding and focus as a bad and inefficient one. 

One reason that startup accelerators can be good, proponents say, is that they allow business concepts that were never going to be effective to “fail fast”, so that time and resources aren’t invested in ideas that were never going to succeed. 

That’s certainly the case for some of the businesses the Ministry of Awesome is “accelerating”. When I visited in September this year, I talked to Nicole Gaviria, founder of a company called Lulah, which was manufacturing limited-run activewear for plus-size women, through a contract manufacturer based overseas that she’d found online. Gaviria was bubbling with enthusiasm, talking about how she was fitting in her business with her full-time job and study. “I’ve loved doing the programmes and the learning, but what’s been most valuable is the community,” Gavria said, discussing her plans to expand: more colours, manufacturing at a big enough scale to buy recycled fabric to increase her sustainability. A month later, writing this article, I checked Lulah’s website and it’s closing down. In a statement on Instagram, Gaviria says that “the fashion industry, particularly as a solo entrepreneur, is a tough space to break into.” 

Other organisations see accelerators as an opportunity to more clearly identify their direction. Connor Read is an entrepreneur who initially founded Shutl, a micromobility company with an app to hire scooters and bikes. But along with his co-founder Aidan Smith, Read realised that it wasn’t possible for Shutl to compete with massive companies like Lime operating in the same area. Instead, the pair have chosen to focus on an initiative called “Workride”, which helps employers provide ebikes and escooters to their employees while navigating the complexities of the fringe benefit tax on employers’ behalf. “It’s quite a small niche, but we’ve wedged it wide open,” Read explains. Navigating the tax system has been difficult, but going through accelerator programmes has given him useful connections with others. “That horizontal support is amazing.” 

Since the public contributes to funding innovation programmes like startup accelerators, it seems fair for there to be more clarity around what value these provide. To those inside the startup world, it seems like accelerators help. “Given the size of our country, our output is going to be limited in terms of the number of startups,” Johnson says. But maybe that means there can be more focus on what is happening. “You can build something great from here, because this country will allow you to do that.” 

There are certainly lots of problems to solve. “We have to have a higher productivity rate, and higher-value jobs, to transition from a service economy to a knowledge economy, so my grandchildren won’t be living in Australia. And on top of that, climate change!” Johnson says. With the money and time that the government, councils and accelerator providers are putting into this, potential business founders, and the rest of us, will have to keep hoping that accelerators really are an answer.

The Pop-up Globe might be returning to the stage, but not everybody’s happy about it. Sam Brooks talks to some creditors – left in the dark after the company’s liquidation – about its shock 2023 return.

On September 15, the Pop-up Globe announced it would be making an “audacious” return to Auckland, with a remounting of its smash hit production of Twelfth Night. For four years (2016-2020) the company was a phenomenon, presenting 17 productions across New Zealand and Australia, but its temporary closure, after a farewell season set to launch it overseas, ended up being a permanent one when the company was liquidated in 2021.

The return is intended to be the platform from which the company can leap back into regular action and programming. “The first step is simple,” said Tobias Grant, the company’s co-founder in the media release. “Get our team back together, make a Pop-up Globe show, and delight some Pop-up Globe fans in a short season at our home in Auckland. When it is successful, we get to take the next step.”

Although the shows are selling extremely well, having added three performances to its run and almost selling out five shows out of seven, the announcement raised a few eyebrows.

Strangely, the company would not be returning to the pop-up theatre venue on which it literally built its brand. Twelfth Night would instead be performed in Q Theatre’s Rangatira space. Even more strange was the mention of its 2021 liquidation, specifically that when “lockdowns and restrictions” made it impossible for the Pop-up Globe to trade, there was “no option: but to put the group of companies that the Pop-up Globe operated under into liquidation. When lockdowns and restrictions made it impossible to trade, there was no option but to put the group of companies into liquidation. Grant said in the media release for the season’s announcement that “events took an unexpected turn” when liquidator Gareth Hoole, of Ecovis KGA, put co-founder Grant “under instruction to create future trading” for Pop-up Globe. 

A later statement posted by Pop-up Globe on Instagram, in response to multiple commenters asking whether people who had worked for the company would be paid, Hoole said: “The only realistic prospect of returning funds to claimants in the liquidation estates is by utilising the intellectual property, sets and costumes of the Pop-up Globe companies to re-establish the concept and to have performances being staged, thereby creating a revenue stream which will hopefully allow us to be able to make a return to claimants in the liquidation.”

The statement goes on to say that liquidators fully approve and support Grant continuing to trade. (Hoole did not respond to multiple requests from The Spinoff for comment, and according to this season’s publicist, Grant is no longer able to make statements about the companies in liquidation.)

The Spinoff spoke to five creditors, secured and unsecured, who are owed fees for work delivered, that range from hundreds of dollars to close to $10,000. Secured creditors, typically banks, have a written contract entitling them to specific assets in the event of default or insolvency. When a company goes under, secured creditors get paid out what liquidators can recover first, and unsecured creditors are left to share the remnants (if any).

“Audacious” is a fitting word for the Pop-up Globe’s return, given that none of these creditors found out about it before the general public did.

At the time of its liquidation, co-founders Miles Gregory and Tobias Grant said the theatre had been “immediately crushed” by the pandemic. Gregory is no longer with the company, but briefly endorsed its return in an interview with RNZ promoting his new venture, HyperCinema. David Lawrence, previously associate director of the company, steps into Gregory’s role as artistic director, and also the director of Twelfth Night.

As reported by Adam Goodall on The Spinoff back in 2021, the truth behind the company’s fall was more complicated. The initial seasons were unqualified commercial successes, allowing the company to expand beyond its Auckland base to Sydney, Melbourne and Perth. After the dissolution of an agreement with Live Nation, with whom the company had a long-standing relationship as its Australian promoter, Pop-Up Globe was left with more than $2.3m in liabilities across several companies. That article, which the founders did not provide comment for, also mentions cashflow problems that preceded the pandemic.

In May of that same year, Anne Gibson at the NZ Herald reported that creditors (secured, preferential and unsecured) were owed $1.03m, and the company’s assets were just $309k, leaving the company more than $727k in debt. Ecovis KGA was appointed as the liquidators, and they hold the Pop-up Globe licence to this day. 

The creditors ranged from Inland Revenue to APRA New Zealand, to businesses operating across New Zealand, to independent contractors and small business owners. Before liquidation, in September 2020, a creditor compromise was proposed by Pop-up Globe, detailing a plan in which the company would return to presenting work in September 2021, and in the meantime Gregory and Grant would create a new company named Illyria Ventures, focussing on “web-based entertainment and educational products” in addition to licensing the Pop-up Globe’s 17 productions, all in the service of repaying creditors across three years of operations.

This proposal did not go ahead, and the several companies that the Pop-up Globe operated under, including Pop-up Globe Melbourne and the Pop-up Globe Foundation, were placed into liquidation. Since then, there has been no news from the Pop-up Globe.

That is, until three weeks ago.

Michelle Lafferty, the director of Elephant Publicity, an arts PR and communications agency, is one of the creditors from the 2021 liquidation of the Pop-up Globe, and one of five creditors The Spinoff spoke to for this piece. When she was contracted to do publicity for the farewell season of the show in 2020, she asked someone who had previously been employed by them about their experience. They advised her to get her fee paid up front. “I took that advice, and got three quarters of my fee up front,” she says. “The final fee payment was a lot to me at the time, especially given that we were looking down the barrel of Covid cancellations.”

When she went in to complete her last week of work, it was amidst the first round of Covid cancellations, mere weeks before the proper level four lockdown. She asked the company’s representatives, “If I do this work for you this week, will you pay me?” They confirmed to her that they would.

“I sent the invoice and never got paid.”

Throughout the lockdown, she emailed the company at least three times, asking for a payment plan. Each month, they would come back to her, reassuring her that they would have a payment plan by a certain date. “They never ever supplied a payment plan.” Her contact person was Grant, who she knew to be in charge of the money at the time. Another creditor, Bailey, who is using a pseudonym for privacy, also negotiated a payment plan with the company which was never adhered to.

Small businesses were hit hard by Covid-19, but Lafferty recalls that the arts industry was “really good” about it. “People either paid you your full fee, or for works that had been scheduled to go on during lockdown, people would pay me 50% of the agreed fee, which was more than generous.”

“Pop-up Globe was the only company I finished a job for who hadn’t paid me,” says Lafferty. Another creditor that The Spinoff spoke to, who runs a nationwide business with scores of clients, confirms that the Pop-up Globe was the only entity that did not pay them for their work during Covid-19.

Both Lafferty and Bailey ended up being personally out of pocket due to their work with the Pop-up Globe, essentially paying to work for the company. Lafferty paid her staff who worked on the farewell season out of her own pocket, while Bailey’s expenses didn’t cover the work that they delivered throughout their contract.

A lack of correspondence is a sticking point with all five creditors that The Spinoff spoke to. All creditors got an email at the same time, regarding the compromise proposed in September 2020. The compromise, which The Spinoff reported at least 25 creditors agreed to, was especially hard to swallow for Lafferty. “My nose was so out of joint by then,” she says. “The only reason they contacted me is they wanted something from me, not because they cared about paying me.”

One creditor The Spinoff spoke to recalls having to specifically request a copy of the first liquidator’s report. All four creditors spoken to have had no correspondence from the liquidator or any representatives of the Pop-up Globe since May 2021, including up to the announcement of the company’s “audacious” return on September 15 of this year.

Another creditor, a freelance artist speaking under anonymity, had no idea the company was returning until The Spinoff contacted them. “They’ve certainly not been in touch with me,” they said. “I know that the circumstances around it were impossible to plan for but it was pretty upsetting at the time as there was no effort from anyone at the Pop-up Globe to let us know what was going on.”

“I truly hope they intend on paying people back.”

It wasn’t just the fact that the company was coming back, it was the language of the release that upset and put some creditors on edge.

“When I saw the comms that they had put out, celebrating that the Pop-up Globe is back, I felt that it was a slap in the face to the people that were out of pocket,” says Lafferty. “There is an uncomfortability for anybody who didn’t get paid that this was a problem before Covid hit, and then to be told it’s all about Covid, and you run a small company, where you’ve dealt with those impacts, it feels like you’ve been blindsided and mistreated.”

After a Facebook post Lafferty made on her personal page expressing her feelings about the announcement, she received a communication from Grant from a third party, saying that “he heard [her]” and this season was something that he was “instructed” to do by the liquidator, mirroring language in the press release. “Whether he was instructed or not, he should have given a heads up to people that he’d burned”, she says. “That’s only common decency.”

“I emailed the liquidator who came back to me and said that he had sanctioned the Q Theatre season and in no way was this activity nefarious,” she says. The Spinoff has viewed this correspondence. The liquidator, Gareth Hoole, also says it is likely that there may be “some benefit” for creditors. Lafferty notes it was the most prompt communication she has received throughout the ordeal.

The creditors spoken to are split on the hope of whether they will benefit from this at all. Bailey and Lafferty expect no further communication from the liquidator or the Pop-up Globe, while the creditor who runs a nationwide business suggested that any proposal would be met with “healthy skepticism” and assumed the involved parties had lost their number. That creditor wishes them the best of luck.

Another creditor, an independent contractor running a small business, just hopes that people are paid what they’re owed, and that the Pop-up Globe takes accountability. “It’s quite frustrating to see the public celebrate the return of Pop-up Globe without any understanding of how poorly people were treated and left in the dark,” they say.

Nobody The Spinoff spoke to holds any ill will for the employees of the Pop-up Globe this season, the ones who will be personally delivering Twelfth Night, line for line, prop by prop. One of the things that Bailey has found hard to reconcile, however, is how many of their colleagues and the theatre-going public believe the narrative that Covid “crushed” the company. 

“I don’t have the energy to tell them what was really going on, that I wasn’t being paid properly long before Covid was on the scene,” they say. “Many of us extended a huge amount of goodwill towards Pop Up Globe during these times because we believed in the vision and understood that making theatre can be bloody hard. It doesn’t feel that goodwill has been honoured in the way this has played out.”

Lafferty puts it more bluntly: “The reason you work in the arts is because you feel you can make a cultural difference. To not be treated well – which is to be paid, or be communicated about being paid – is despicable. Good business people will have clear communication and let you know, all the way along, if there’s an issue. That never happened.”