Investment by US companies is very useful to local startups not only for the money but for its networking power. 'These [U.S. investors] can introduce you to people like Bill Gates,' said Blackham.

At present, in seven 'grey list' countries ' Australia, Britain, the US, Japan, Canada, Norway and Germany ' New Zealanders pay tax only on the dividends from their overseas shares and not on the capital gains.

In other countries, Kiwi investors pay tax on the capital gains, realized and unrealized, on the shares in the overseas company and on any dividends.

Finance Minister Michael Cullen proposes to scrap the grey list and apply the same taxation of capital gains, to all overseas investments.

Blackham said his approach has met with a very quick response from the 'powers that be' and he is hopeful that the legislation will be more appropriately tuned by the time it is drafted.