Founder Incubators

The Factory

open this image in new window:

Manawatū’s entrepreneurial highway

At a glance

  • One of the country’s longest-running business incubators, The Factory, sits at the heart of the Manawatū’s innovation ecosystem.

  • The Factory’s innovate programme has injected $5.2 million into ventures, and seen 1,600 people mentored and upskilled.

  • The Factory is active in schools and runs Manawatu’s Young Enterprise programme.

  • The Factory’s Manawatū Investment Group (MIG) facilitates investment in promising local startups.

On any given weekday, The Lounge cafe in Palmerston North is alive with the sound of cappuccinos being made and startup business plans taking shape.

Located in The Factory, a tech incubator and co-working space on the FoodHQ campus at Massey University, the cafe has become a natural gathering place for the Manawatū’s entrepreneurs and business people.

“You come in for a coffee, and rub elbows with the CTO of Fonterra or the Vice-Chancellor of Massey University. It gives you the ability to swap stories, or even pitch your next big venture,” says Dave Craig, a keen basketballer, seasoned startup advisor and the CEO of The Factory.

“It’s become the entrepreneurial hub of the Manawatū,” he adds.

Since its funding in 2003, The Factory has hosted some of the most successful innovative businesses to emerge from the Manawatu with its business incubator and various business programmes.

The incubator has also injected funding to help startups take their first steps towards generating revenue and, through its extensive networks, helped alumni of The Factory to raise around $50 million in capital.

Initially, says Craig, the founders spending time in The Factory largely came from Massey University. 

“We could walk the halls of Massey, and talk to scientists publishing incredible technology,” says Craig, who’s been with The Factory for nearly a decade. 

As The Factory grew, it began to draw farmers and established business people, students from local polytechnic UCOL, and founders from all over the region and the country keen to leverage its expertise in commercialising agricultural and food technology. 

Craig describes what founders experience at The Factory as being like learning to fly a plane.

“With us, you learn the theory, why a plane stays in the air. Then we graduate you to Sprout, which is the accelerator incubator which sits here at The Factory as well,” he says. 

“Sprout puts you in the pilot chair, shows you all the gauges and teaches you how to fly. Then, we have a funding mechanism to help you purchase the plane.”

Sprout recently spun out of The Factory as a fully-fledged business incubator, the only incubator in New Zealand focused on agritech. With around 60% of ventures coming through The Factory having an agritech or food focus, many of them do find their way to Sprout, where they often raise significant capital, in conjunction with Sprout’s backer, investment company Finistere Ventures. 

Tailored to local needs

A key initiative of The Factory in the last decade has been its Innovate accelerator programme, which sees funding given to a group of entrepreneurs each year as they develop their ideas into full-fledged business plans over a three month period. 

Innovate gives founders an opportunity to learn all the skills essential to building a viable business, in a pressure cooker situation.

Craig likes to work with founders who are “passionate, a bit stubborn, even, but willing to learn and change”.

Innovate has now supported more than 1,600 entrepreneurs with $5.2 million in funding. 

“What you see with Innovate is the founder who walked in with no slide deck and no prototype, 10 weeks later pitching in front of a crowd of 250 people with a polished presentation, a prototype and a fully fleshed-out business model, looking for investment,” says Craig.

The final Innovate showcase is a major event on the city’s calendar, as people region-wide come to see the new batch of graduates. The Factory also works in schools supporting talent at the earliest stage. Recently it put 650 school children through a 10-week design-thinking and problem-solving programme.

The Factory manages the Young Enterprise scheme in the Manawatū and its agritech hackathons enable industry partners like Gallagher Group and Fonterra to spot young talent. Three 15-year-olds won this year’s hackathon, using Google Glass and designing software to detect flaws in fruit, a solution aimed squarely at our horticulture industry. 

The Factory kicked off the Startup Weekend movement in regional New Zealand.

“Startup Weekend used to be about finding the next big tech idea,” Craig says. 

“Where it failed in the early stages was our lack of understanding that this programme is fundamentally educational – upskilling people with some lean methodology tools so that when they strike gold, they know what to do next. Once we realised the power of Startup Weekend, it became a pivotal programme in our wheelhouse at The Factory.”

Connecting up the centre belt

At the other end of the process, The Factory works to secure capital for its startups. It owns and runs the Manawatū Investment Group (MIG), an angel investment vehicle that lets funders diversify their risk by investing in a portfolio of businesses. 

Collaboration is essential to the success of The Factory, which works with incubators and investment groups around the country and which has taken its Innovate programmes to Taranaki, Whanganui and the Hawkes Bay.

“We’re now looking to join up that pathway from coast to coast in our part of the world, what we call the centre belt,” says Craig. 

“We might lead a deal and Icehouse Ventures gets involved and vice versa, particularly if it's agritech related and in our wheelhouse. It’s very collaborative and a really nice thing to watch.”

One of The Factory’s biggest success stories, Biolumic, uses ultraviolet light to grow seeds and seedlings and increase plant yield. Over an eight-year association with The Factory, Biolumic developed the skills and capital to go global.

“After successful investment rounds, Biolumic is on a very positive path forward, looking to change the face of agritech worldwide,” says Craig. 

“Biolumic is still based in our offices today, its plant trials take place just down the road.  And, Jason, the founder and his team are some of our  biggest champions.” 

Eighteen years on, The Factory’s mission remains as vital as ever.

“I truly believe that regional New Zealand powers the rest of the country,” says Craig. 

“I’m from Los Angeles, which is BIG! What I’ve seen in regional New Zealand and what The Factory has helped establish is a powerful regional mentor network that helps each other flourish.  It’s what is necessary to scale people and business. I truly believe we can change the DNA of this country.” 

Callaghan Innovation provides funding to a national network of founder incubators and accelerators that help early-stage, high-growth startups build sustainable businesses.

Updated: 27 January 2022