They're young, rich, Silicon Valley idealists who want to change the world from New Zealand. How did the Monahan brothers come to influence our immigration policy - and what's in it for us? In part two of our series, we look at how the Americans convinced Immigration NZ they should be the ones to pick the best entrepreneurial brains to come here.

A Pakeha with tribal tattoos emerging from the rolled-up sleeves of his business shirt takes the stage at the New Frontiers festival in Whitemans Valley near Wellington.

This is Nigel Bickle, head of Immigration NZ.

After a lengthy mihi, he tells the gathered international entrepreneurs how excited he is by their plans.

Immigration NZ head Nigel Bickle gives a Maori greeting at New Frontiers.

Immigration NZ head Nigel Bickle gives a Maori greeting at New Frontiers.

"It's always dangerous in government when you say 'hi, I'm from the government and I'm here to help' but we truly are with you guys," he says. The speech is later posted to Youtube.

It's February 2015 and Bickle is at the festival with some of his staff to pitch New Zealand as an easy, corruption-free place to do business.

The ensuing discussions will eventually lead to the creation of a radical new visa policy that will give the festival hosts, Americans Matthew and Brian Monahan, a big say in who from the start-up world gets to come here.

Bickle has been described as courageous and visionary for taking a punt on the policy, while others accuse him of drinking the Americans' Kool Aid - in other words, falling for their charms.

Certainly, he sung the praises of the Monahans and Yoseph Ayele, the chief executive of their start-up Kiwi Connect, a networking platform for international entrepreneurs and investors, during his presentation.

"I continue to be inspired by what you guys are doing," Bickle said. "I look forward to exploring with you how we might support you in pursuing opportunities in New Zealand."

Bickle explains why Immigration NZ has partnered with the Americans.

The Americans could hardly believe the treatment they were getting.

Explains Matthew Monahan: "We were humbled to be even invited to have a conversation with the government about this stuff, because we'd never been invited by government to talk about anything, ever, in the US."

The genesis of the new visas was the Monahans’ own experience of New Zealand immigration policy.

The brothers bought their first property in Whitemans Valley in 2011 and after selling part of their US online records business for $140m the following year, added forestry and lifestyle blocks, a dairy farm and a church.

Matthew, 33, originally arrived on an entrepreneurial visa.

"It proved to be too complicated....'you have to make money by this date', 'you have to employ this many people', 'you need to spend this much time in these places'," he says.

Matthew Monahan

Matthew Monahan

He switched to an investor visa, where $10m has to be invested over three years and a certain number of days spent in the country. He's close to gaining full New Zealand residency - "but I'm not there yet."

The Monahans and their Ethiopian friend Ayele, who came in on a student visa and studied entrepreneurship at Victoria University before gaining permanent residency, made it clear to Bickle and his staff that immigration policies weren't attractive for technology entrepreneurs, especially those just starting out, as the visas were skewed towards those buying an existing business.

Monahan says Immigration NZ wasn't happy with the way the visas were working either, and wanted to find a different way.

Immigration Minister Michael Woodhouse, centre, at the launch of the Edmund Hillary Fellowship in February, with EHF chief executive Yoseph Ayele and Catlin Powers, founder of a solar energy start-up and fiancee of Brian Monahan.
PHOTO: SUPPLIED

The Americans were also lobbying Government ministers, meeting with then-Economic Development Minister Steven Joyce and Immigration Minister Michael Woodhouse. It worked.

In July 2015, then Prime Minister John Key announced that the Government was looking at developing "global impact visas" to attract innovative entrepreneurs with global networks.

In April 2016, just over a year after Bickle's speech at New Frontiers, Woodhouse announced a four-year pilot scheme starting in 2017, under which a maximum 400 work visas would be given to people selected with assistance from a private partner.

Five months later, the private partner was named as the Edmund Hillary Fellowship (EHF), a new partnership between Kiwi Connect and the Hillary Institute, an international leadership charity founded by Sir Ed himself.

While most business commentators reacted positively, the announcement surprised many in the immigration industry, as the visas had some of the loosest criteria ever seen and it was unheard of for a private provider to be involved in the decision-making process.

Immigration consultant Tuariki Delamere, a former Minister of Immigration and one-time NZ First MP, says he was "quite disgusted".

Tuariki Delamere

Tuariki Delamere

"You have these business policies where people have to meet certain rigid conditions, yet all of a sudden out of the blue comes this thing called global impact visas where the government has decided to allow a bunch of foreigners to hand out visas."

That's not true - INZ will still issue the visas, but the fact remains that EHF will be putting the names in front of officials for approval.

The system works like this: EHF selects applicants from around the world for its three-year fellowships, and if they meet health and character requirements and have at least $36,000 to support themselves and their immediate families, they will get work visas.

EHF will be responsible for supporting them and connecting them to the business and innovation community, and at the end of three years, they can apply for permanent residence. A small number of local fellows will take part in the EHF programme alongside the foreign participants.

There are no age limits, qualification requirements or need for a business plan.

Documents we obtained under the Official Information Act show the type of people INZ wants to attract: younger entrepreneurs in the early stage of their "wealth cycle" with a greater appetite for risk.

Open the OIA documents
Document 1Document 2

The documents reveal that EHF will be paid $4m over the four years to cover costs, with the anticipation that the programme will become self-funding.

(EHF charges an $850 application fee for international entrepreneurs, and $3000 for investors.)

INZ officials identified risks with the programme, including being "flooded" with non-genuine applications, "rent seeking behaviour" by the private partner – manipulating public policy to increase profits – and selecting people who don't succeed in the New Zealand environment.

These could be mitigated by a robust application system, oversight of the provider's fees and selection process and close monitoring, the officials advised.

The officials said that if 10 per cent of participants created a "high impact venture", 80 per cent contributed to local innovation through investment or skills and 10 per cent failed and left New Zealand, "that would be a comparatively great success rate".

Although only a small number of visa holders were likely to be "big winners, potentially the next TradeMe or Xero", the others in the cohort should be allowed to stay on in New Zealand because they could still "add value".

It's clear from the documents that Kiwi Connect was the preferred provider from the start, having presented INZ with a "well developed proposal for an industry partnership" even before any public announcements.

There was talk of partnering directly with Kiwi Connect without going through an official process, but the contract was put out to tender. Only one other party tendered, which INZ refuses to name for reasons of commercial sensitivity.

Immigration NZ refuse to say who else tendered for the contract.

Immigration NZ refuse to say who else tendered for the contract.

Katy Armstrong, a Hamilton immigration advisor who has met the Monahans and their team, supports what they are doing and says New Zealand needs the global impact visas.

"It breaks away from the model where we were just looking very in the square, at people with business plans and not really looking at the people themselves."

But she has some concerns.

"What happens if someone goes a bit AWOL or doesn't do what they're meant to be doing?

"Will residence be given away too easily to people who may skip off or not come good?"

Armstrong is surprised that Immigration NZ is putting $4m into the programme.

"It's a lot of money isn't it, to put in a bunch of young hippies - we're calling it the hippie policy," she says, laughing.

"I did say to Nigel Bickle...'had he gone a bit new age?'"

At his office at the Ministry of Business, Innovation and Employment in Wellington, Bickle - sporting woven wrist bands - laughs at the suggestion.

"Look if I'm being completely honest it's not a world, as a career public servant, that I'm familiar with," he says.

Bonfire and guitars at the New Frontiers festival.

Bonfire and guitars at the New Frontiers festival.

"You rocket out to Whitemans Valley...what strikes you out there is they are a bunch of guys who live their values...whose mission statements for their companies is to make the world a more beautiful place - 'meet my chief engineer of happiness'.

"You're kind of going 'oh my God what's all this about?' At one level you can apply labels - 'crikey is this some new age hippie sort of commune'...I try to keep an open mind."

Bickle admits the global impact visas are "pretty radical”.

“The reality is we're doing some innovating and experimenting at the high end of the New Zealand economy.

"I kind of get that one of the risks is … this idea of 'is this just American people being able to run their vested interests and bring their own mates in?'

"I don't think we've designed it to do that. Be really clear, what we're not outsourcing is what will always be the government's sovereign right and role – to issue visas."

It’s only 400 visas over four years, Bickle says, out of more than 200,000 total work visas issued each year. So the upsides are greater than the potential downsides.

"The best case scenario is that we get high demand from quality individuals around the world...that is going to advance New Zealand's economy and help build our innovation."

Kristian Slack, a Palmerston North-based intellectual property consultant, is dubious.

"You could have anybody coming in and saying 'I've got an idea and I'm calling myself an entrepreneur'. There's no real measure of what the outcomes are, or anyone saying what was the overall economic benefit?"

Slack doesn't think looking offshore is necessarily the answer, either.

"Do we not have the ideas here and the people already? I suggest we do. These ideas don't come from start-ups, they come from people who have a problem [to solve]."

Innovation is a risky area, he says.

"It takes 3000 raw ideas for every commercial success. Just throwing more money at it isn't going to help."

A source who knows the Monahans doesn't think assimilation is their goal, rather they want to surround themselves with like-minded people.

"And now they can influence immigration directly! What would the reaction be if they were Chinese and they had their own arrangement with INZ?'

Nanogirl believes the programme could deliver the next Steve Jobs.
PHOTO: ANDY JACKSON/FAIRFAX NZ

Plenty of others see the benefits. Science educator Michelle Dickinson, known as Nanogirl, says government policies are inherently low risk so it's great that Immigration NZ has worked with the Monahans, who she says are smart and passionate.

"At a time when the world seems to be going crazy, helping some smart, successful people move to New Zealand to set up businesses that not only employ New Zealanders but also make an impact around the world seems like something to take a risk on," she says.

She believes the EHF programme "has the potential to host and nurture the next Bill Gates or Steve Jobs".

Mike O'Donnell

Mike O'Donnell

Tech investor Mike O'Donnell, formerly of TradeMe, says the government "couldn't identify entrepreneurs if they fell over them" and he describes the outsourcing of the search as "courageous".

"Nigel Bickle is obviously taking on some risk but I think he's doing so in an informed way."

The way Monahan describes it, the EHF application process sounds like a mix of venture-capital pitching session, job interview and Harvard entrance interview, during which applicants must pitch an entrepreneurial idea that will have "positive global impact".

EHF has been set up as a limited liability company, wholly owned by the institute, and will be run as a non-profit, although it has failed in attempts to gain charitable status. It employs four full-time staff, three contractors and one intern.

Checks and balances include conflict of interest registries, double-blind applicant reviews and an independent panel to review the list of successful applicants before it goes to INZ.

Not everything has been plain sailing. A New Zealand employee of Kiwi Connect left suddenly a couple of months ago, and there were rumours she was let go for questioning candidate selection.

Neither she, nor Ayele, would discuss the circumstances.

"She left the team, as different people do, but it would be inappropriate to talk about an employee," Ayele says.

Meanwhile, back in Whitemans Valley, Ayele and his team have been hunkering down, poring over the 311 applications from 53 countries that came in for the first EHF intake.
Several of the applications came from people who've already attended New Frontiers.

Proposals include using virtual-reality to improve education access; growing kelp to reduce carbon in the ocean; and research into legal innovations that might arise from the recent granting of "person" status to the Whanganui River.

The $4m available over the next four years will be spent on advertising and marketing, websites and supporting the fellows once they start arriving later this year, Ayele says. He collects a salary, which he won't divulge.

"A programme like this is going to be quite costly in terms of attracting the highest calibre start-up teams and investors from around the world. We need to find alternative streams of income to make it long-term sustainable."

We interviewed Matthew and Ayele in Whitemans Valley last week, on one of Matthew’s whistlestop trips to New Zealand.

Matthew Monahan and Yoseph Ayele at home in Whitemans Valley.

Matthew Monahan and Yoseph Ayele at home in Whitemans Valley.

He’s still spending a lot of his time in Silicon Valley, where Inflection is now focusing on internet security.

He’s happy to show us around his property, especially the geodome of which he’s especially proud.

He was heading back to California for Brian’s wedding - Brian plans to bring his new bride, Catlin Powers, founder of a solar energy start-up, back to Whitemans Valley soon.

“We’ve been migrating our lives to New Zealand and we’re now down to the final bits,” Matthew says.

“I’m down to a bed, desk and blender in the States.”

He expects to travel the world on EHF business, hunting for the best innovators to attract Down Under.

“Probably the best summation is the kaupapa set by Nigel [Bickle] at the outset,” he says. “Go get the world’s best people New Zealand needs to prosper.”

Written and researched by
Tony Wall and Adam Dudding

Visuals
Ross Giblin

Layout and design
Aaron Wood

Interactive map
John Harford

Editor
John Hartevelt