Kiwi startup funding rose nearly 8% to NZ$726 million in 2022

While startup funding globally fell last year, New Zealand venture capital investment was still on the rise, with NZ$726 million poured into 154 deals in 2022, according to the Technology Investment Network (TIN).

The Technology Investment Report, launched in Auckland as part of Techweek 2023, covers funding Pre-Seed to Series C+, tracking record levels of funding over the last two years. It was compiled with support from the ASX, NZ Growth Capital Partners (NZGCP) and BNZ, alongside local VC and angel investment firms.

As global venture funding fell between 32-35% in 2022, funding for NZ tech grew by 8.2% last year, driven by offshore-led investment, which surpassed NZ$400 million, up from $288m in 2021.

Offshore investors led 26 of the 154 deals at an average of NZ$15.5m per raise, accounting for 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.

Deeptech shines

Report author and TIN’s head of research, Alex Dickson, said the rise of local investors was also notable in the past year.

TIN’s Alex Dickson

“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,” he said.

“There’s no shortage of highly eligible tech startups 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.”

Dickson said that while software solutions continue to grab the lion’s share of investment, ldeeptech companies secured nearly a quarter (22%) of the capital raised, totalling NZ$162m.

“With similarly encouraging signs from healthtech ($71m) and cleantech investment ($27m), there’s an air of sophistication about homegrown innovation at present,” he said.

“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.”

Promise for women in tech

Women-led tech raised NZ$3.4 million per deal in 2022, but that’s a little over half of their male-led counterparts, who averaged $5.2m per deal.

And gender imbalance was similarly pronounced with female tech founders or cofounders accounting for just over a quarter (27%) of all capital raises.

But to Aotearoa’s credit, when it comes to established tech, female CEOs lead 16 of the country’s top 200 exporting firms by revenue.

James Pinner, chief investment officer at NZGCP, believes the current economic climate offers enormous opportunity as 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.

Nonetheless, Pinner was pragmatic about what lay ahead for the investment landscape

“The New Zealand venture capital investment space has undoubtedly changed over the last few years,” he said.

“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, said the forecast for Kiwi 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,” he said.

“ 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 2023 Technology Investment Report are available via the TIN website.