Defence Minister Judith Collins (who also holds the Technology portfolio) said on September 6 that New Zealand has accepted an invitation to join the US-led Operation Olympic Defender which aims to deter threats in space from hostile countries and space debris – similar territory to the military space accord that NZ signed with Five Eyes partners in February 2022 under the previous government.
And although there was nothing on par with last year’s call by one element that it was “time to damage property” at Rocket Lab’s Launch Complex 1 on the Mahia Penninsula, one subset of the protestors did call for Rocket Lab to “disband its Māhia Peninsula base, rescind their lease and give land use back to the Māori owners”.
Summit organiser responds
“Like many technologies – for example phones, internet and even electricity – aerospace-related-services are a utility that can be utilised in times of conflict,” summit organisers said in a statement.
Earth-imaging satellites are also used to fight climate change and uncover illegal fishing. Aerospace is a $1.7 billion-plus industry that employs 12,000 Kiwis.
“We acknowledge protestors’ questions around aerospace-enabled technologies being utilised for military purposes, but we do not believe aiming to disrupt the sector’s opportunity to meet is a helpful or responsible approach,” the organisers said.
NZ ‘allergic’ to dual-use investments
Had they made it inside – amid photo ID checks and bag searches – the protestors might have actually liked some of what they heard.
Namely, that local venture capital players are averse to inventing in firms with technology that has possible military application.
A panel on aerospace startups and venture capital was told one of the reasons it is tricky to raise investment in the sector was that nearly all of the local VC funds have received backing from Crown agency NZ Growth Capital Partners, which is against investing in firms that created dual-use technologies (NZGCP could not be immediately reached for comment).
“Silicon Valley VCs are happy with defence and dual-use investing. New Zealand is behind, in my opinion. We’re still allergic to anything that could be considered used by the Navy or Army or Air Force – whether it’s got 1080 on it or it’s got guns on it,” said panellist Sam Vye, cofounder and CEO of Tauranga-based startup Syos Aerospace, a maker of heavy-lifting helicopter drones.
“We couldn’t raise from New Zealand VCs because every single group – well, most groups – couldn’t invest in dual-use technology because it was against their investment criteria and ESG [environmental, social and governance] policies so hence we went down the high-net-worth individual route.”
Vye’s four-year-old firm got backing from investors including Trade Me founder Sam Morgan and motorsport legend Kent Baigent.
He told attendees its revenue had gone from $500,000 to $5 million to an anticipated $55m this year and “triple digits” in 2025.
He would not say if any of Syos’s customers across NZ, Australia, the UK, US and elsewhere were in defence, but he did encourage the audience to pursue possible funding and business opportunities in Five Eyes countries.
And he added: “We love humans and hate possums. As a company, we’re very cognisant of where our vehicles end up, in terms of application or customer – customer because of MFAT export requirements.
“Application is a serious one that needs to be considered and each company needs to get what their policy is really straight before they go to the customer. Because if it is defence, they will say ‘hey, what can we stick on it?’ and we know that that question is coming.”
Aukus Pillar 2 status seen helping NZ aerospace
Attendees were told that defence investment could offer a boost for aerospace startups because it was non-dilutive (that is military agencies offer grants without demanding shares) and could lead to defence contracts with “inelastic” pricing.
But with NZ outside the fold of some military partnerships, accessing money from US government agencies like Darpa – the Defence Advanced Research Projects Agency, an early Rocket Lab backer – required majority ownership by an American firm or a US partner (Rocket Lab had Silicon Valley venture capital funds that saw its incorporation shift to the US, and Lockheed Martin as an early investor).
“Aukus Pillar 2 membership would materially improve prospects for a number of startups, but also help sustain the advanced manufacturing sector that we’ve got in New Zealand and that Rocket Lab helped bootstrap – but we’re in danger of having our lunch eaten by Australia,” said Angus Blair, a partner with Auckland VC firm Outset Partners.
Our government is considering whether to join Pillar 2, which involves the sharing of advanced, non-nuclear technologies.
Rakon’s defence business grows
“In FY24 our space and defence segment continued to grow, reaching its highest-ever revenue level up 27% to $36.8m, and is set to maintain this trajectory buoyed by recent space contract wins,” Rakon said in its 2024 annual report.
The company turns quartz crystals into radio frequency control systems that help telecommunications gear, satellites, missile guidance systems and emergency beacons maintain the same “heartbeat” as other electronics.
Rakon said in a statement: “Rakon does not design or manufacture weapons. We do not supply products to Israel for weapons, and we are not aware of our products being incorporated into weapons which are provided to Israel.
“Crystal oscillators are very common commercial electronic components. Rakon’s products are used in a wide range of applications in many different industries and market sectors including telecommunications, space and defence and positioning. For our customers in the defence sector, product applications can include radar, communications, positioning and navigation.
“Our Trade Compliance Policy conforms with New Zealand government regulations and sets out customer due diligence requirements for customers involved in the defence sector. Rakon policy also states we will not sell products which could be used in weapons of mass destruction (or their means of delivery), or in cluster munitions or for terrorist activity.”
Rocket Lab’s stance
Rocket Lab could not immediately be reached for comment, but founder and CEO Sir Peter Beck has long used the dual-use argument.
And while his firm has long been a customer of various defence and surveillance agencies, including a massive US$515m contract with the US military’s Space Development agency – and received a US$23.35m grant from the US Air Force’s Space Force wing toward its larger Neutron rocket due to launch next year – Beck says it only supports research rather than operational defence technology.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
