More investment was poured into New Zealand startups than ever before in 2017, with NZ$86 million ($81.7 million) invested into 111 companies.
The figures were revealed in the latest Young Company Finance Index, published by PwC New Zealand, the Angel Association of New Zealand (AANZ) and the government-backed New Zealand Venture Investment Fund (NZVIF), which found that while the number of deals was just one below 2016, the total amount invested had increased by NZ$18 million.
Anand Reddy, partner at PwC New Zealand, said the investment levels are almost three times what New Zealand was seeing five years ago.
“We’ve seen success stories like exits from TradeMe that created a whole new generation of angel investors. Now, with other high-profile exits like Power by Proxi, we’re going to see an even stronger network of skills and financing for early-stage companies,” he said.
Almost 54 percent of investment went to companies working in the software and services space, with tech hardware and equipment the second biggest sector with 17 percent of investment, and the pharmaceuticals, biotechnology, and life sciences space in third.
Eighty-six deals were worth less than $1 million, with 25 worth $1 million or more, up from 18 in 2016.
According to the report, $49 million in funding came from angel investment networks, with AANZ chair John O’Hara saying the strength of New Zealand’s angel investment networks is growing every day: there are now more than 650 angel investors split across 12 networks.
The amount of funding coming from angels also highlights what O’Hara called a “thin VC industry”, with NZVIF CEO Richard Dellabarca saying New Zealand must “address the paucity of domestic venture capital”.
“As we see an increase in the volume of quality companies in the pipeline, the ownership of our promising high growth companies is shifting offshore in the absence of a local institutional investor market,” he said.
Among the startups raising big – listed as raising NZ$2.5 million or more – were Ask Nicely, Career Engagement Group, and Nyriad.
One of the biggest venture capital firms in the country is Movac, which in late 2016 announced it had raised NZ$105 million for its Fund 4, with $75 million coming from institutional investors including Ngāi Tahu Holdings, as well as leading family offices, community trusts, and private investors.
The Fund, which was first expected to be sized between $80 million and $100 million, also received a commitment of $20 million from the NZVIF.