What start-ups need from politicians

Opinion: The date for New Zealand’s next general election is set, marking the start of a long campaign in which economic direction will be repeatedly debated. Across parties and platforms, certain themes recur with striking consistency: productivity, wages, and innovation-led growth.

Yet one part of that economy, central to all three, remains largely absent from political debate: the firms expected to create it.

In New Zealand, many potential startups never form because the risks are high and the pathways uncertain. Evidence suggests this is more than anecdotal. An assessment of the New Zealand startup ecosystem undertaken by Startup Genome found that the country has roughly 2,400 startups, well below what international benchmarks would predict for an economy of its size. On comparative measures, New Zealand produces substantially fewer high-growth firms per capita than similar countries.

For those startups that do emerge, scaling is difficult. The same analysis shows that New Zealand startups tend to raise less capital, take longer to secure follow-on funding, and experience higher attrition between funding stages than their peers in stronger ecosystems. Constraints around specialised skills, patient capital, and distance from major markets compound as firms grow. Those that gain traction often face a stark choice: sell early, relocate offshore, or accept slower growth in a small and distant market.

Consequences emerge gradually. Future jobs do not materialise. New industries fail to anchor locally. Capability, tax revenue, and influence are lost before they ever have a chance to compound. These outcomes rarely feature prominently in election campaigns, even though they shape long-term prosperity more than most short-term policy debates.

Why startups struggle to be heard

Startups are not simply small businesses. They are firms designed to grow rapidly by commercialising new ideas and building new markets. When they succeed, they generate high-productivity employment and new export pathways. When they fail to scale, the costs are delayed rather than immediate, but they are borne by the wider economy.

Despite this, startups are structurally weak as a political constituency. Most are young, pre-profit, and thinly staffed. Founders focus on customers, staff, and cash flow, not electoral cycles. Their constraints are also diffuse. Skills, immigration, employee ownership, capital markets, regulation, and procurement all matter, often at the same time.

This makes sustained collective engagement difficult. There is rarely a single policy lever to mobilise around. Incentives vary by sector and stage, and engagement tends to be episodic. In electoral politics, that combination usually results in polite consultation followed by limited influence.

Established firms don’t face these challenges. They employ large numbers, pay significant taxes, and are well organised. This reflects how democratic systems naturally weigh present interests more heavily than future ones.

What Europe has shown

Earlier this month, at the World Economic Forum in Davos, European Commission President Ursula von der Leyen used the global stage to endorse plans for a new pan-European company framework aimed at startups and scale-ups.

The initiative, widely referred to as EU Inc., proposes a so-called 28th regime. It would sit alongside national company laws and offer innovative firms an optional EU-wide legal form, allowing them to operate across member states without having to navigate fragmented legal and equity rules as they grow.

The proposal was framed explicitly as a competitiveness issue, responding to Europe’s difficulty retaining high-growth firms amid US competition.

Importantly, EU Inc. did not emerge solely from within the European Commission. It followed several years of coordinated advocacy by founders, investors, and startup organisations across Europe. That advocacy included open letters and petitions signed by thousands, calling for a single EU-wide company regime for high-growth firms. The argument was consistent and deliberate: Europe was not short of ideas or talent, but short of institutional infrastructure that allowed young firms to scale.

Europe’s scale, legal complexity, and supranational governance make it very different from New Zealand. The initiative is not a template to be copied. But it illustrates something transferable. Future-oriented firms were able to organise, frame their constraints as systemic rather than sectoral, and insert those issues into the political agenda.

What New Zealand startups need

New Zealand’s startups face a similar representation problem, intensified by distance and market size.

They need predictable access to scarce skills through immigration settings that are consistent and navigable for young firms and education pathways that deliberately build scale-up capability rather than just entry-level supply.

They need employee ownership settings that are simple to implement, predictable in their tax treatment, and credible to both employees and international hires, so equity can function as a genuine retention and commitment mechanism.

And they need capital and regulatory settings that reward patient investment over short-term exits, support longer growth horizons, and allow firms to stay, scale, and reinvest locally rather than being pushed toward early sale or offshore relocation.

These are public goods, but startups tend to encounter their absence first, long before the wider economy feels the effects.

The election challenge

Elections inevitably focus attention on present conditions. But they also create moments when political agendas are more fluid and new perspectives can gain traction.

This campaign will include substantial discussion of innovation and growth.

Startups do not become politically salient by waiting to mature. By the time firms are large enough to command attention, the rules that shape their development are often already set. Where representation exists, it is built earlier.

Europe’s experience suggests that when the future economy develops an organised voice, policy debates can extend beyond what already exists to what might yet be built.

The question for this election is whether the economy we want to create can be heard alongside the one we already have.