New Zealand’s strong pipeline of fast-growing tech companies is creating more investment opportunities for foreign venture capital firms and private investors, according to the third annual Investor’s Guide to the New Zealand Technology Sector.
The report, published by the Ministry of Business, Innovation and Employment (MBIE) and the Technology Investment Network (TIN), shows that the tech sector continues to show strong and sustained growth each year, earning significant international revenue.
“Last financial year to March 2018, New Zealand tech companies received around $41 million in foreign investment,” says TIN managing director Greg Shanahan. “This followed an extraordinarily strong prior financial year when a number of very large investments were made, including Rocket Lab’s capital raise of over NZ$100million.
“The number of US backers continues to grow, underscoring the emerging confidence in New Zealand tech companies.”
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“An increasing number of our companies are pursuing offshore investment early on, as foreign funders are often prepared to invest larger early stage amounts than is commonly seen in New Zealand,” says Shanahan.
TIN managing director Greg Shanahan at the launch of the TIN100 report in Auckland (Photo by Divina Paredes)
High-performing technology firms are not just an urban phenomenon – they exist throughout New Zealand
Last year, a total of $876 million were raised by funds for New Zealand private equity and venture capital investment.
Capital amounts raised over the past two years have been the highest on record. Two-thirds of the fastest growing technology companies tracked by TIN are either VC-backed or publicly funded.
In 2017, nearly $87 million in funds were received from New Zealand-based angel investors, and an additional $25 million from domestic crowdfunding (online offers to retail investors.)
The past five years has seen a marked increase in the number of offshore investments being made in New Zealand technology companies.
During this period,3 62 unique international investors have invested in New Zealand technology companies tracked by TIN. Of those, 56 per cent were based in North America.
The report notes revenue from New Zealand’s top 200 tech companies grew nearly 8 per cent last year, with more than $7 billion generated in offshore revenues.
This growth is being supported by a steady increase in local funding, with the combined value of angel and crowdfunding investments in all New Zealand early-stage companies rising at an annual growth rate of 18 per cent over the past four years.
“High-performing technology firms are not just an urban phenomenon – they exist throughout New Zealand,” says Shanahan.
“Tech revenue growth was evident across every region in 2017. A well-established ecosystem supports this growth, evidenced by the strong stable of Regional Development Agencies throughout the country, along with world-leading tertiary institutions, government policy and strong local investment networks in place.”