Global Uncertainty Stimulates Investment In High-growth And Early Stage Kiwi Technology Firms
TIN’s new ‘Investor’s Guide to the NZ Technology Sector’ reinforces the compelling case for international investment in Kiwi tech innovations
Record levels of early stage, venture capital and private equity investment in New Zealand technology companies, coupled with a strong performance in the public markets in the face of the global pandemic, has elevated confidence in the country’s technology investment ecosystem.
Data published today in the fifth Investor’s Guide to the New Zealand Technology Sector, produced by Technology Investment Network (TIN), with support from the Ministry of Business, Innovation and Employment (MBIE), the Australian Securities Exchange (ASX), Auckland Unlimited, and NZ Growth Capital Partners (NZGCP), shows that record amounts of capital has been invested in tech companies in the past year.
Officially launched in Auckland at an event as part of Techweek 2021, TIN’s Investor’s Guide showcases New Zealand’s diverse range of high growth technology companies, innovation capabilities and supportive regulatory framework, presenting a compelling case for investment in New Zealand’s technology sector. The Guide draws largely on public and private company data from the annual TIN Report, the most recent being published in November 2020, along with additional research.
“The Investor’s Guide is an extension of our annual core report, the TIN Report, which showed that the NZ tech sector is growing by nearly a billion dollars every year and is a thriving export industry for New Zealand,” said TIN managing director and founder Greg Shanahan.
Last year’s TIN Report demonstrated strong growth for New Zealand tech companies with total TIN200 revenue up 8.3% on 20191, even as the impact of COVID-19 started having global effects in the first quarter of the year.
Other notable findings in the Investor’s Guide include:
- Venture Capital investment in New Zealand companies increased to $127m in 2020 from $112m in 20192; a healthy sign for the New Zealand investment landscape, given the uncertainty of 2020.
- The number of venture capital deals doubled from 46 in 2019 to 92 in 20202, reinforcing the promising opportunities New Zealand companies present to investors.
- Early stage investment increased 48% in the past 12 months, with a record $160m invested in tech start-ups by angels and venture funds3
- Significant capital investment of $2.4B in NZ companies in 2020; a 111% increase in the past 12 months2
- Auckland once again dominated the number of early stage deals for 2020. The $119m early stage capital raised in Auckland last year – over $63m more than in 2019 – was 75% of the New Zealand total3.
“As more capital becomes available on the global marketplace, the New Zealand technology industry is gaining increasing credibility,” added Mr Shanahan. “This is both as COVID-19 accelerates innovation across the wider industry, and as our strong technology ecosystem and innovative ‘can-do’ culture provides compelling reasons for people to invest.
“Over the past three years, we’ve seen a massive escalation in investment in Kiwi tech companies, from millions to tens of millions, and now M&A activity in the billions,” Mr Shanahan added. “There’s never been a period over the past 20 years where we’ve seen such a proliferation of billion-dollar and above valuations for companies in terms of acquisitions, mergers or capital raises.”
According to the Investor’s Guide, Europe is a highly attractive export market for the top 200 NZ tech export companies tracked by TIN, returning the largest dollar growth of any offshore market at $274m1.
North America has the highest sustained growth of any export region with a 5-year CAGR of 16.1%1, and from the 11 TIN companies acquired in 2020, eight were acquired by North American companies.
Due to a combination of pent-up demand from COVID-19 and the many promising technology companies based in New Zealand, acquisition activity has continued strongly in 2021. As an example, Seequent and Vend were both purchased by North American companies for NZ$1.46B and NZ$455m, respectively.
Despite the logistical problems created by COVID-19, the strong acquisition activity is a positive indicator of the pipeline of investible tech companies in New Zealand, and this pipeline is growing every year with increasing diversity across sectors and stages, according to the Investor’s Guide.
Copies of The Investor’s Guide to the New Zealand Technology Sector are free and available in digital format via the TIN website, where hard copies may also be requested. It can also be accessed through the MBIE website.
The 2021 TIN Report will be published in October.