Economy Tracking Q&A: Lovina McMurchy, Venture Capitalist
Every week Things asks New Zealand business and community leaders how they think the economy is doing and what they think are the biggest challenges.
Lovina McMurchy is a partner in the Auckland office of New Zealand-based venture capital firm Movac, having spent 20 years as a technology executive in the United States for Starbucks, Microsoft and Amazon. She sits on the Board of Directors of Pushpay and is Edmund Hillary Fellow.
McMurchy said New Zealand needs to embrace innovation in tools, technologies and ways to improve its standard of living.
“Our slowness in adopting technology widely has resulted in New Zealand going from one of the most productive countries in the OECD 50 years ago to one of the least productive countries in the world today. OECD. “
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How do you think New Zealand’s economy is doing right now?
Our economy has shown remarkable resilience during the time of Covid and we can see the light at the end of the tunnel as businesses open and borders loosen over the next year.
I am worried about increases in inflation and interest rates. Compared to other places in the world, most mortgages are held very short term and I wonder how easily homeowners will be able to absorb higher rates as they renew.
It’s definitely a time in history where, despite the headlines about how we do overall, people experience it very differently depending on their position on the property ladder and their skill types.
What are you most concerned about at the moment?
There are so many great New Zealand companies out there right now. They have better access to capital than ever and the founders are more ambitious than ever. The biggest obstacle to this ambition is the inability to hire qualified technicians.
Despite the success of the tech sector and high wages, we are not attracting enough New Zealanders to tech companies and the border closures have been brutal for an industry that normally hires 20 percent of its workers from overseas.
The founders are adjusting by offshoring work, but this is difficult and does not really help New Zealand create more well-paying jobs locally.
What did the last year teach us about the New Zealand economy?
He showed us how jobs and capital are becoming globalized. This brings positive and negative points.
In the past, venture capital firms in Silicon Valley preferred to fund companies within a 20-minute drive of their offices. This has made it difficult for New Zealand companies to raise capital from US investors. Once people switched to remote working through Zoom, the mindset became “who cares if you are in Austin, Atlanta, or Auckland”.
All of a sudden, American investors were ready to fund companies in New Zealand without coming here or meeting the founders in person. This opened up new reserves of capital for the founders of Kiwi.
On the flip side, this same remote-first mentality has also meant that US-based companies are also willing to hire our engineers and products for their roles, which has made it much more difficult for local businesses. competition for talent.
So founders enjoy higher valuations thanks to greater access to finance, but they feel the pinch when they hire. Global markets have arrived on our shores.
Are you optimistic or pessimistic about the economy this year and why?
New Zealand is lucky in many ways. We have strong growth, low debt and decent funding for our future health care and pension obligations.
More fundamentally, we have a vibrant democracy, strong institutions, and independence around food and some of our energy production. People like to complain, but it’s a lot to like.
I think we’ll have tough times ahead, but the fundamentals make me optimistic.
What’s the biggest challenge New Zealand faces?
The future will be technology driven, and we will continue to see a disproportionate amount of jobs and wealth created by technological innovation. It won’t just be something that happens in “tech companies”, but more of a diffusion of technology in all kinds of businesses: agriculture, logistics, retail, manufacturing.
In both developed and developing countries, people see technology as their way out of poverty. In New Zealand, we are producing fewer computer science graduates than we were five years ago.
Our slowness to broadly adopt technology was the root of New Zealand’s transition from one of the most productive countries in the OECD 50 years ago to one of the least productive today. of the OECD.
Simply put, it means that we are working harder, but our standard of living is declining. Reinvigorating our Kiwi dream is very much linked to a wide adoption of innovation in tools, technologies and better ways of doing things.