Private Investors Key To NZ’s Future
Private investors are the key to New Zealand’s venture capital future according to the New Zealand Private Capital Association.
Speaking at an end of year review, NZ Private Capital executive director Colin McKinnon says: ` I am excited about the prospects for the venture capital industry. The New Zealand private capital market has strength in both private equity and angel investing. For several years we have talked about the “Gap” in venture capital in this country. Now we have real prospect of filling some of that gap and private investors are the key.
‘We estimate that there is between $1.2 billion and $2.7 billion of dry powder available for New Zealand private equity and venture capital investment over the next few years.’
Mr McKinnon notes that New Zealand is ranked the 8th most attractive market for private equity globally (out of 125 countries), comparable to European markets such as Germany, Switzerland, Denmark and Norway.
Between 2010 and 2019 New Zealand based fund managers raised in excess of $3.0 billion in over two dozen private equity and venture capital funds. The five most active private capital firms have raised three or more funds (on average) and have more than 20 years’ investment experience.
Since 2016 total fund raising has typically exceeded $300 million per year through multiple funds raised, providing adequate scale for an institutional investor seeking to deploy capital.
He comments: ‘We are now at a place to accelerate the ambitions of venture fund managers. There are healthy signs of new funds with prospects, both domestic first-time funds and international funds with NZ market commitments the funds raised in the last 12 months by Blackbird Ventures, Movac and Pacific Channel are exciting developments.’
The deepening of the New Zealand private equity market over the last ten years is also illustrated by an increase in the number and types of limited partners investing in private equity and venture capital funds.