NZ Tech Investment Reaches Record High As Kiwi Start-ups Woo Offshore VCs
AUCKLAND, May 22, 2023 – A total of $726m was invested in New Zealand tech companies across 154 early and later-stage deals in 2022, up 8.2% on the previous year despite a global funding crunch, according to the Technology Investment Report released today.
Data published in the inaugural Technology Investment Report, produced by Technology Investment Network (TIN), with support from the Australian Securities Exchange (ASX), NZ Growth Capital Partners (NZGCP) and BNZ, alongside local VC and angel firms, shows that record amounts of capital has been invested in New Zealand tech companies over the past two years, driven by their unique, innovative products and solutions.
Officially launched in Auckland as part of Techweek 2023, TIN’sTechnology Investment Report observes tech investment in New Zealand from Pre-Seed to Series C+ capital raises, covering deal value, industry sectors, and participants by firm, founders gender and geographical origin, and serving as an in-depth guide to those seeking investment.
New Zealand tech-investment figures stand out against global trends
Total global venture funding fell between 32-35% in 2022, according to the report, but funding into New Zealand tech grew by 8.2% over the same period, driven by offshore-led investment, which tipped $400m, up from $288m in 2021.
Twenty-six of the 154 deals recorded in 2022 were led by offshore investors, at an average of $15.5m per raise, capturing 55% of total capital raised in 2022. Another $268m was injected into local tech companies by onshore investors across 102 deals, with undisclosed private investors contributing a further $59m across the remaining 26 deals.
Early-stage start-ups are finding purchase, while Deeptech continues to shine
“Historically, access to capital has been the challenge for Kiwi tech companies, but the quantum of investment we are now seeing suggests there has never been a more exciting time to be part of the ecosystem,” said TIN’s Head of Research, Alex Dickson, author of the report.
“There’s no shortage of highly eligible tech start-ups in New Zealand, and thanks to a now vibrant domestic funding circuit, many can and do find purchase at the early stages. That said, our investment pool still remains shallow compared to other small, advanced economies – the likes of Finland, Ireland and Estonia.
“As always, Kiwis need to work harder to attract the long arms and deep pockets of foreign investors. 2022 shows that even a small number of offshore-backed deals can really turn the dial for the ecosystem as a whole.”
“While software solutions continue to grab the lion’s share of investment, local Deeptech companies secured nearly a quarter of early and later stage capital raised (22% or $162m),” Mr Dickson added.
“With similarly encouraging signs from Healthtech ($71m) and Cleantech investment ($27m), there’s an air of sophistication about homegrown innovation at present. So long as capital continues to meet our world-class engineering talent, and those success stories are exported, there’s no reason New Zealand can’t compete and win at the cutting edge of tech.”
Promising signs for women in tech, but parity is off in the distance
On average, female-led tech raised $3.4m per deal in 2022, 52% less than their male-led counterparts who averaged $5.2m per deal. In terms of deal participation, the gender imbalance was similarly pronounced with female tech founders or co-founders accounting for more than a quarter (27%) of all capital raises. However, this compares favourably to established tech, where female CEOs lead 16 of the country’s 200 top exporting firms by revenue.
Time is right for technology investment growth, despite challenges ahead
James Pinner, Chief Investment Officer at NZGCP, said that crises tend to result in the greatest periods of innovation.
“Now is the time to create and build the next generation of innovative New Zealand technologies and the country has deep enough domestic capital pools to support this,” he said.
He was pragmatic about what lay ahead for the investment landscape, saying, “The New Zealand venture capital investment space has undoubtedly changed over the last few years.
“As we have also seen globally, the amount of capital available for investment increased significantly through to 2022 but this appears to have been the peak and we are almost certainly in for a much tougher few years ahead.”
Blair Harrison, head of New Zealand listings at ASX, added that the forecast for New Zealand technology companies continued to look bright, driven by investor appetite from Australia, New Zealand and further afield.
“New Zealand tech companies are well respected globally, renowned for their innovation and highly skilled and integrous management. The pipeline of technology companies preparing to list on ASX remains strong and we expect to see New Zealand tech continue to thrive on ASX over the next few years.”
Digital copies of the 2023Technology Investment Report are available via the TINwebsite.