LanzaTech decamps to the US

News that Lanzatech is pulling most of its staff out of NZ should reanimate debate over R&D grants, and the strings that are attached - or not.

The company was founded in 2005 with NZ angel investment money and NZ government grants, and established pilot plant at the Glenbrook Steel Mill south of Auckland, where it takes waste carbon from places like the gases from steel mill chimneys and converts it into fuels and green chemicals.

Over the years, it's received more than $14 million in grants from various NZ government agencies - as well as private NZ investors, notably Sir Stephen Tindall's K1W1.

A series of capital raising rounds has seen more offshore money pour in each time privately-held Lanzatech issues more shares.

A $60 million funding round on March 26 cemented foreign investor control. 

Companies Office filings show the Silicon Valley-based Khosla with a 35% holding in Lanzatech, with Mitsui the next largest shareholder with a 7.12% stake after its $US20 million investment - implying Lanzatech has a total private equity value of around $280 million. (K1W1 holds 4.4%.)

Its CEO, Jennifer Holmgren, is based in Chicago and the company has a range of multinational investors, plus offices in NZ, the US, China and India.

And this week came the news that Skokie, Illinois (20km north of Chicago) is to become Lanzatech's new corporate headquarters, and R&D centre.

As part of the move, 30 employees based in Parnell would be shifted to the new head office, leaving about 20 people still working for LanzaTech in New Zealand, the company said.

The lure: the state government of Illinois agreed to tax credits of $US1.1 million over the next 10 years.

Something is broken here.

The government is pouring more than half a billion dollars over the next four years into startups and NZ-based R&D through NZVIF and Callaghan Innovation - most of them tech-based.

Yet in the recent past, tech company after technology company has been sold offshore.

Some recipients of millions in government grants, such as Xero and Orion Health, are still headquarted here, employing hundreds each, and have CEOs who are passionate about NZ and show no signs of selling up or moving out. And those who sell technology companies often plough money back into fresh startups (though in the case of Sonar6, bankrolled in part by Sam Morgan, that in turn was sold offshore).

But the general trend is that a company reaches a certain size, then - bam - it's snapped up, usually by Americans.

What is to be done?

ckeall@nbr.co.nz

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