27 May, 2021 – Generator, Auckland
TIN couldn’t have timed the launch of its fifth Investor’s Guide to the New Zealand Technology Sector more perfectly, with outstanding results from TIN companies Fisher & Paykel Healthcare and Pacific Edge, and a major funding deal for Dawn Aerospace, announced the same day.
Around 120 people attended TIN’s event for Techweek 2021 to hear from a panel of industry experts on the topic of ‘Sustaining Global Ambitions for Tech Success’, one of the key themes of the Investor’s Guide.
The Guide, which draws largely on public and private company data from the annual TIN Report, 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.
This year’s Guide showed that record levels of early stage and venture capital 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. This is despite the widespread impact of COVID-19 which started having global effects in the first quarter of last year.
Notably, the launch event was the first in-person gathering TIN has held in nearly 18 months, since COVID-19 restrictions forced most events to be shifted online through most of 2020. Naturally, the effect of the pandemic on New Zealand’s tech sector was a key point of reflection for the panellists.
“Last year, COVID-19 played a huge role in the ecosystem,” said Andy Hill, Auckland director of economic strategy at MBIE, one of the sponsors of the Guide.
“It sped up the adoption of technology and highlighted our growing reliance on tech. In addition, the significant growth in start-ups demonstrated that they were an important tool to showcase the strength and breadth of the tech industry,” said Andy.
The panel discussion that followed noted the many and significant ways innovative New Zealand tech companies have drawn investor attention and expanded, while also questioning whether our tech companies are sufficiently equipped to deal with the influx of investment.
Panellists included Vaughan Fergusson, founder of Vend; Shaun Maloney, Executive Chair of Seequent; Bridget Unsworth, Operations Manager of the NZ Angel Association; Samantha Wong, a partner at Blackbird Ventures; Vignesh Kumar of VC firm Global from Day 1; Marcus Henderson, Investment Director for NZ Growth Capital Partners (NZGCP): and Max Cunningham, Executive GM of Listings and Issuer Services at ASX.
“It’s been a 12-year journey,” Vaughan Fergusson said of the rise of Vend which was acquired by NYSE-listed Lightspeed earlier this year for US$350m. “It represents a huge chunk of money going back into the ecosystem, which is great news for our country.
“Venture Capital funds can be more active in the ecosystem with the proceeds, and balanced against that are new founder investors and staff who cashed out their options.”
In his former role as chief executive of Seequent, Shaun Maloney managed the company’s strategy, risk and return to growth from a small start-up business in 2010 to an award-winning global brand. In March 2021, Bentley Systems announced it had entered into an agreement to purchase Seequent for US$1.05B, making it Christchurch’s first unicorn tech company.
Shaun said he believed right from the start that Seequent could be a billion-dollar company, and listed the three components of that success as strategy; the ability to execute on that strategy; and company culture.
“History will always record you as a dreamer, a visionary, or deluded,” he said. “You need to be a visionary from day one, but you can’t achieve those visions on your own.”
“If you’re only investing with people who have already proved they can do it, then you risk missing the next wave of talent. It’s exciting to spot the up and coming in the market.” ”Samantha Wong - General Partner, Blackbird VenturesForeign investors play a significant role in early-stage activity, according to Bridget Unsworth, operations director at Angel Association. She said angel investment was valued at $20m in 2006, and had increased nearly eightfold to $157m in 2020, with both the total amount invested and the total follow-on representing record amounts.
“There’s more money going into less deals, and there’s more portfolio rationalisation and more money going into high-growth potential. Foreign investment is hugely important in terms of connections into networks offshore,” said Bridget.
“However, the challenge is to ensure that the connection comes with the capability to collaborate. Venture Capital investment, both domestic and international, is hugely positive and the angel community is trying to engage earlier with investment opportunities and networks.”
Samantha Wong is general partner at Blackbird Ventures, an early-stage technology venturecapital fund originally operating only in Australia. The company raised an inaugural $60m for its New Zealand fund and opened an office in Auckland in 2020.
She said there are now 105 VCs in Australia, up from under 20 five years ago - and she said they’re all interested in investing in Kiwi companies.
“If you’re only investing with people who have already proved they can do it, then you risk missing the next wave of talent. It’s exciting to spot the up and coming in the market.
“We need to learn more from each other,” she said. “Knowledge, experience and networks are key.”
Vignesh Kumar leads Global from Day 1’s Hardware, Deep Tech and Health Tech investments, and after many years based overseas, he returned to New Zealand just before the COVID-19 pandemic hit.
“When I first left New Zealand eight years ago the early-stage ecosystem was a bit pedestrian, and exciting opportunities were scarce. But it’s now getting easier to raise funds and grow companies and I’m pleasantly surprised by the uptake.
“Still, talent recruitment and retention remains an issue. The challenge for experienced individuals to stay in this country is that they need to see clarity around the opportunities that are here, and how you execute on the vision presented in those opportunities.”
This was a view shared by Vaughan Fergusson.
“There’s a huge wave of capital looking for investment but these investors are gravitating to the bright lights of mature companies and forgetting about the grass roots. It’s crucial to make sure that the next generation early stage is funded and mentored,” Vaughan said.
Marcus Henderson is an investment director at New Zealand Growth Capital Partners, one of the sponsors of this year’s Investor’s Guide. He has extensive experience of investing in and successfully scaling numerous high-growth ventures, from start-up through to exit, and believes there’s a lot more space for qualified investors in New Zealand.
“We’re also investing into a range of market development partnerships and initiatives to support the continued growth of NZ tech by helping to upskill market participants, attract more talent to the local ecosystem, foster greater networking and promote increased diversity in the space,” ”Marcus Henderson - Investment Director, NZGCP
NZGCP’s main initiatives to support this growth are the Aspire Seed Fund and Elevate VC Fund of Funds, which invest directly into high growth NZ start-up tech companies and VC funds respectively.
“We’re also investing into a range of market development partnerships and initiatives to support the continued growth of NZ tech by helping to upskill market participants, attract more talent to the local ecosystem, foster greater networking and promote increased diversity in the space,” Marcus added.
“I’m excited about the growth of the local tech ecosystem and some significant successful exits in the last 12 months,” Marcus said. “It’s really important that we work even harder now to continue this trend because there’s huge potential for the local tech ecosystem to grow to greater heights and build a lot more local success stories.”
This was echoed by Max Cunningham from ASX, another sponsor of the Investor’s Guide. ASX started pursuing New Zealand listings about seven years ago and opened an office in Auckland in 2019. It’s now the biggest marketplace in the world for NZ IPOs, capital raises and turnover.
“I’ve never been more optimistic about the pipeline from New Zealand,” he said. “I’m supremely optimistic about the opportunities.”
TIN thanks its sponsors: Ministry of Business, Innovation and Employment (MBIE), Australian Securities Exchange (ASX), Auckland Unlimited, and NZ Growth Capital Partners (NZGCP) for their support of the Guide.
For the topline data points from the 2021 Investor’s Guide, see the press release here.
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