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Surging levels of investment forecast for NZ tech exports in 2019

Surging levels of investment forecast for NZ tech exports in 2019

Annual TIN ‘Investor’s Guide to the NZ Technology Sector’, released as part of Techweek, touts fintech, agritech and healthcare as investor ‘hotspots’

NZ now has a generation of under-the-radar software and hardware startups that, with the right domestic capital and overseas market presence, could become global leaders

Chintaka Ranatunga, Global From Day One Fund II,

A surge in angel, venture capital and private equity investment in New Zealand technology companies – particularly from the US – is set to propel Kiwi tech export revenues to record levels in 2019, says a leading NZ tech sector researcher.

Greg Shanahan, managing director of Technology Investment Network (TIN), says this is solidly backed up by data in the fourth annual Investor’s Guide to the New Zealand Technology Sector.

The report, produced jointly by TIN and the Ministry of Business, Innovation and Employment (MBIE), presents a compelling case for investing in New Zealand’s tech sector.

“The Investor’s Guide is an extension of our annual core report, the TIN Report, which shows the tech export sector is growing faster than ever before,” says Shanahan.

“Angel investment in early stage technology companies reached a record level in 2018 at $99.1 million; a 31 per cent increase over the past year, and there was also significant capital investment in technology companies as part of the $1.1 billion in private equity and venture capital funds invested in New Zealand companies in 2018,” he says.

Technology may currently be New Zealand’s third largest export sector, but Shanahan believes that with further sustained growth and support it has the potential to become New Zealand’s leading source of offshore income.

“Revenue from New Zealand’s top 200 tech companies grew 11 per cent last year, with nearly $8 billion generated in offshore revenues,” he says.

“Considering too, that profitability grew three times faster than revenue in 2018, all current indicators suggest that there will continue to be huge interest in Kiwi tech companies in 2019 which will translate into significant investments driving record revenue growth.”

According to the guide, North America continues to be a highly attractive export market for the top 200 NZ tech export companies tracked by TIN, and returns the largest dollar growth of any offshore market. It highlights the NZ tech sector’s diverse global investor base, with US investors particularly impressed by the innovations on offer in New Zealand.

Tech 'hotspots' and 'test beds'

The report, released during Techweek 2019, notes fintech is NZ tech’s fastest growing sector, with companies primarily based in Auckland and Wellington.

The growth in this sector is promoted by business friendly, agile regulatory system that is favourable to innovators and investors (such as the recent reforms allowing crowdfunding and peer-to-peer lending), a long history in fintech by boards and management teams and a highly competitive domestic environment, it states.

Technology may currently be New Zealand’s third largest export sector, but with further sustained growth and support it has the potential to become the country’s leading source of offshore income

Greg Shanahan, TIN

Auckland is the base of a number of ICT companies specialising in global payment technologies, including Invenco, Pushpay, Vend, SmartPay and Payment Express.

Wellington is the base for a diverse range of fintech startups focused on portfolio and account analytics, insurance, and government technology. Their more established examples include Xero and DataTorque.

Two other high-growth sectors are healthcare and agritech, according to the guide.

Auckland is home to established global companies like F&P Healthcare, as well as a range of technical institutions producing top engineering and software talent like Aroa Biosurgery and Douglas Pharmaceuticals.

In the South Island, healthcare innovations include 3D scanning and informatics systems for amputees (ARANZ Medical), power wheelchair controls (Dynamic Controls) and pioneering new spectral molecular imaging, successfully releasing the world's first in-human image colour X-ray (MARS Bioimaging).

Agritech companies across New Zealand are creating innovative solutions to improve the productivity and efficiencies of the country’s important farming, fishing, food, animal welfare, biosecurity, and forestry industries.

The Waikato region, for instance, has  produced globally successful companies such as the Gallagher Group which provides disruptive solutions for animal control, security, and fuel systems and Simcro, which produces animal health pharmaceutical delivery systems, and NDA, a high-tech engineering, manufacturing, and servicing of industrial storage and process vessels for the dairy, food processing, chemical, gas and wine industries.

“New Zealand now has a generation of under-the-radar software and hardware startups that, with the right domestic capital and overseas market presence, could become global leaders generating over a hundred million dollars in export revenue,  creating tens of thousands of high value jobs around the country, and driving digital transformation,” says Chintaka Ranatunga, managing partner of Global From Day One (GD1) Fund II, which invests in emerging global leaders from New Zealand.

The guide says New Zealand is also a beta ‘test bed’ for new technologies.

New Zealand is the first country in the world to trial Eftpos. Facebook and LinkedIn have tested new features in New Zealand before launching these globally.

Google Loon tested its balloon-powered internet delivery system in Canterbury. The system facilitates internet access in remote regions.

Rocket Lab launch tested its Electron Rocket from Mahia Peninsula. It reached orbit and since January 2018 multiple customer payloads have been deployed.

Volvo recently tested its autonomous vehicle in Tauranga, and HMI Technologies ran its driverless shuttle trial at Christchurch Airport, the guide states.

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Tags innovationLinkedInFacebookSmartPayVenddigital disruptionRocket LabTINfintechDXInvencoPushpayTechweek 2019TechWeek19Payment Express.agritech healthcare

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