Clumsy teenage years bring change, growth, and challenges
New Zealand, one country of nearly 5 million people has historically ended up under the radar of risk capitalism. A geographically isolated country with a “don’t worry!” Culture and a commodities-based economy has failed to attract Aotearoa to investors in the Asia-Pacific region, especially when they have larger markets in China and Southeast Asia in their sights.
Today, investors see New Zealand as a country with a track record of building businesses with global exits in SaaS, healthcare technology and deep tech. Notable companies and exits like XeroPushpay, Aroa biosurgery, country, consequence, holster and Missile laboratory put local startups on the map, but the scene is still immature and needs constant alignment before it becomes a globally competitive ecosystem. However, the signs are all pointing to technology being New Zealand’s next export industry as long as everyone is pushing in the same direction.
“New Zealand startups have been crying out for capital for a long time,” said Imche Fourie, co-founder and CEO of Outset Ventures, an Auckland deep-tech incubator that invests in seed and pre-seed science and engineering companies. . “That has changed so much in recent years, also because the government is taking more initiatives to attract international capital. It’s ridiculous how much money is currently flowing into the country. “
Despite the pandemic, venture and early stage investments are reaching record levels in New Zealand. In 2020, VC investment was NZD 127.2 million ($ 86 million), up from NZD 112.2 ($ 76 million) in 2019, due to a nearly doubling in transactions from 46 in 2019 to 92 in 2020. According to Crunchbase, money raised by New Zealand Startups grew by 30%, from about $ 1 billion to $ 1.3 billion, from the first quarter of 2020 to the fourth quarter of 2021. In addition, investors made up 56%, or NZD 109 million ( $ 79 million) more follow-up capital than ever before, demonstrating a commitment to helping startups through to the end, according to a PwC analysis.
New Zealand investors say most of the money comes from either international (mostly US or Australian) VCs or the government. In March last year, the New Zealand government approved the Elevate NZ Venture Fund, a NZD 300 million ($ 203 million) fund of funds program investing in VC firms to fill the Series A and B capital shortfalls for high growth New Zealand tech companies.
I don’t think it is reasonable to expect the next Microsoft to be headquartered in New Zealand. But the next Microsoft could have offices here and it could still be founded by Kiwi. Rocketlab CEO Peter Beck
The fresh capital signals a change in both the economy and the way the country thinks about diversifying its exports and strengthening GDP at a time when the cost of living is quickly becoming unacceptable for many kiwis.
House prices in New Zealand are among the most priceless among the OECD countries and a active supermarket duopoly Kiwis have the fourth highest per capita expenditure on food worldwide. Not to mention the banking and electricity oligopolies that rule the country. Collectively, you have a society that you are prepared for Wealth inequalities.
For a country with limited resources and dependent on trade, developing thriving technology exports might not only be a good idea – it can be a necessity to survive.
“In New Zealand we have long had a strategic focus on moving away from raw material exports like wood, wool, milk powder and adding more value to what we export,” Phoebe Harrop, Associate at Blackbird Ventures, a New Zealand and Australia – based VC, said TechCrunch. “Technology startups are the culmination of this strategy. And that’s what we should be good at because we have a really good education system and we have this unusual cultural dynamic where people go out and spend time abroad in Silicon Valley, London, Amsterdam, Berlin, getting world class experience and then usually going home want to return and do something here. “
