Kiwi venture capital surges as entrepreneurs chase global scale

“It’s an amazing time to start a business in New Zealand. With the number of breakout success stories now, investors are raising larger funds and both investors and founders have earned the right to lift their ambitions.”

Or Greg Shanahan, managing director of the Technology Investment Network better known as TIN.

“The market’s dynamic, it’s rapidly growing and supporting a rapidly growing tech sector. Early-stage investment levels are at record highs.”

Or Ben Taylor-Bryant of nuclear fusion startup OpenStar.

“The private markets are hot right now.”

Tech capital markets and the entrepreneurs they support are shrugging off the economic doldrums and geopolitical uncertainties that beset others.

Paul again: “My belief is that entrepreneurship is very persistent throughout all times. It actually thrives in uncertainty and it thrives when big problems need to be solved. So the market of entrepreneurs, if you will, is only going to grow in our current context.”

Shanahan: “Chaos and uncertainty are opportunities to displace incumbents.”

Not quite so gung-ho but still describing the market as “buzzing” and getting larger and deeper, is Enterprise Angels chief executive Nina Le Lievre.

She says the economy has resulted in lower investments by some angels in the membership-based network, and more concentrating on their own businesses for now. Meanwhile “rhetoric from the United States “ has dampened the appetite of large offshore venture capital funds’ support for clean tech, which has had a trickle-down effect, she says.

TIN’s Shanahan says the amount of money available for funding tech “continues to rise uninterrupted by broader economic conditions”.

“You’re seeing the size of investments increase and you’re seeing an upward pressure on valuations,” he says. “Historically, there’s been a gap between the valuations you might get in New Zealand versus the United States, where there’s more capital.

“But we’re seeing early-stage valuations going higher and people prepared to put their money into higher-risk ventures.

“As people see that others are making money there’s an increasing amount of FOMO, particularly once a company demonstrates they’re starting to make money.”

While capital markets in New Zealand bemoan the lack of initial public offerings (IPOs) – where a company offers shares to the public for the first time – and would love to see more Xeros and Rocket Labs, it’s a global issue, say observers. But the US is set to end the drought with SpaceX, OpenAI and Anthropic expected to launch IPOs, which would put them among the largest public market debuts in history, potentially dominating the 2026 stock market. Listings in Australia are said to be gaining momentum and here at home, Auckland-based fintech BlackBull Markets is preparing for an IPO and a potential dual listing on the NZX and ASX. Meanwhile, models of funding growth are changing, says Shanahan.

Equity crowdfunding is creating broader access for early-stage funding and debt funding, non-dilutive revenue-based funding on forward revenue contracts is reducing reliance on venture capital funding.

Shanahan points to the BNZ as being particularly active on debt-funding tech and showing “massive growth”.

Bank funding tech

Head of BNZ Technology Industries, Tim Wixon, who started the division, says it’s actually taken 11 years to grow a portfolio that started with a single software company and which now finances more than 1700 tech companies.

Wixon won’t say how much the bank’s overall investment is, but implies it makes BNZ one of the largest funders in the country.

“We only do debt, we don’t do equity per se. Debt has been an education path for the market and equity investors, founders and executive teams and boards of technology companies,” he says.

“It’s called non-dilutive capital, which is what debt is, because the bank lends to a company in return for interest and fees, but doesn’t take ownership.

“If you take on equity investment that is in return for shares generally, so you dilute your ownership.”

Traditionally, banks and tech companies “were a bit like oil and water”, he says.

“Banks have found it really difficult to fund technology companies. They tend to have assets you can’t see, feel and touch. Banks have been more used to bricks and mortar, physical and tangible things.”

Companies tend to be global rather than domestic, and their scalability from New Zealand is also very global, Wixon says. Also, the standards of financial statements and presentation that banks rely on were developed a long time before the internet age, so putting tech companies into traditional banking frameworks has been tricky.

The bank launched a revenue-based financing service in 2021, which allowed for pre-profit funding. The bank funds against an annual recurring revenue line rather than a profit line. Because it received a very positive response, the bank launched another portfolio, called Project Scale-up. This is intended to fund 15 to 20 of the highest growth, highest potential tech companies in New Zealand.

“Literally the portfolio philosophy is to adapt our rules with that capital to the company rather than shoehorn those companies into traditional bank metrics … it’s been really successful,” Wixon says.

He attributes the growth of the bank’s tech portfolio mainly to the growth and success of companies themselves. “Exemplar companies with lots of talent and capital that’s come back into the next generations.

“In some cases you’re on rounds three and four – and that’s the exciting part, looking forward.

“There’s nothing that beats sales with a good gross margin. That’s the best form of funding.”

Crowdfunding is growing again after Covid, says PledgeMe chief executive Anna Guenther.

“We actually see more physical product companies through than tech companies … last year 75% of the funding that came through us went to physical product companies and founders, which might be a statement on tech companies raising money.”

Craigs Investment Partners investment director Mark Lister says there’s no shortage of capital for the tech sector.

“Private capital, KiwiSaver capital, individual investors, private equity and venture capital firms, angel groups – there are so many interested investors these days.

“Ten to 20 years ago, people were very focused on low-risk, dividend-paying, high income investments, stability. Today investors are very much willing to embrace international businesses, growth businesses, technology businesses.”

He attributes the change to younger investors.

“Gone are the days when people saved up to buy a couple rental properties. The investor appetite has really changed. With KiwiSaver so big now and with a growing private equity landscape and more venture capital funds, there is no shortage of investment capital looking for exciting investments.”

KiwiSaver kicker

Icehouse’s Paul says one of the contributors to making the market “so deep and vibrant” today is KiwiSaver. The retirement savings scheme to date has around $143 billion in total funds under management. (Australia’s equivalent has A$4.5 trillion but had a 20-plus years head start.)

While some market players are calling on KiwiSaver fund managers to hurry up and invest in private equity, particularly venture capital, Paul’s firm has $100 million from KiwiSaver specialists.

In May, it revealed a $40m first close for its Growth Fund 111, with fund manager Generate KiwiSaver showing up large in the mix of early investors. The final close is set for the end of this year, with a target to raise $150m to invest in 20 to 30 early stage companies – those beyond the seed stage and into Series A to D raises – over the next 10 years.

Generate already had $50m in other Icehouse funds. With the compounding daily growth of KiwiSaver and its fund managers from contributions, the percentage they can allocate to private markets and high-growth, illiquid assets will also grow, Paul says.

“It’s a one-way train and it’s going to make a hugely positive impact on the local ecosystem.”

As it stands, a managed KiwiSaver fund with a billion dollars or two can only employ a very small percentage in unlisted, high-growth private equity venture capital. But as they grow, they start to have those resources and infrastructure to do so, Paul says.

“The way I explain it is, Generate KiwiSaver put $20m into our second growth fund in 2023. If I go back to them in five more years, based on their growth and based on predictable allocation increases, I should ask them for $400m.”

The second reason for the huge change and vibrancy in the tech capital market is the rise and rise of angels and “super angels”, Paul says. Fifteen to 20 years ago, there were less than a handful of wealthy angels – think Sir Stephen Tindall – funding start-ups.

“Now there are hundreds of entrepreneurs and businesspeople who’ve built some wealth and are ploughing it back into the start-up world. Everybody knows that Sir Peter Beck generated a lot of wealth and, as a result, has been investing in companies.

“What people don’t know is that there are dozens and dozens of entrepreneurs who’ve generated single-digit millions and their first inclination with that capital is not to renovate or retire but to invest in the next generation of entrepreneurs.”

Paul is hopeful Icehouse will achieve its latest growth fund target of $150m and says KiwiSaver will play an important part in that.

“But so will the rest of the ecosystem, including individual high-net worth investors, community trusts, foundations, and so on. “But I think it points to a direction of travel. Like, $150m is great but really we should be deploying a billion dollars a year into Kiwi technology companies.

“That’s not a sensational number. That’s just saying out of every capital raise done by a Kiwi tech entrepreneur, what percentage is Icehouse or even a New Zealand venture capitalist? The answer is single or low-double digits.

“We should be aiming for much more of the capital that the greatest Kiwi companies need to be coming from Icehouse Ventures and other New Zealand-backed venture capital firms.”

Paul explains: “In 2021, we raised $110m. We invested that in 32 companies including Halter, Crimson Education, Dawn Aerospace and Tracksuit and so on. Now the question is, between 2021 and 2025, how much did those companies raise in aggregate? The answer is $1.25b. So we were 10%.”

Icehouse, said to be the country’s most active venture capital firm, participating in nearly half investment start-ups, has recently been investing in more New Zealand start-ups and scale-ups based overseas, including Substack, Nuro and Wayve. It says most venture capital investors would struggle to access these firms but “New Zealand has the greatest alumni network in the world”.

Another reason for the market buoyancy is that Kiwi entrepreneurs are breeding new entrepreneurs, says Phoebe Harrop Meadows of Australia-based Blackbird Ventures, which has invested $455m in 43 New Zealand companies, including some founded overseas by Kiwis.

One example is agritech superstar Halter, founded by Craig Piggott, who worked for Rocket Lab.

Icehouse has put $105m into Halter over funding rounds, starting with $500,0000 seeding capital. Harrop Meadows says the New Zealand tech ecosystem is gathering speed as more companies are founded and scale-up to success.

“They spin out new founders who have their own ideas and want to go on that same journey. So the number of companies getting international funding is growing basically as a result of the strength of growth of our start-up ecosystem.

“More people are starting companies. Until about 2018 or 2019 in New Zealand it was quite difficult to get venture funding locally. There weren’t many options and it wasn’t particularly competitive in the sense of the offers you got, the valuations or the terms weren’t particularly appealing. The shifts in capital availability and the market standards have meant more people are pursuing the founder path.

“There’s more qualified talent because more people have the chance to work in other tech companies or get exposure to the idea of starting a tech company.”

Harrop Meadows says it’s never been more possible to start a global-reach tech company because of the technology now available.

“Customers are more willing to buy from you no matter where you are in the world.”

Going offshore for capital is almost a requirement if a founder’s ambition is to build a public company. And it’s not just about bigger money. Global investors provide connections, networks and brand recognition opportunities.

Harrop Meadows says the challenge for New Zealand’s tech capital markets is not having a strong investor base among institutions, unlike Australia’s.

“So it’s not institutional investors stepping in, it is probable that many of the gains from amazing companies like Halter will go overseas because most of the investment into them is from overseas investors.”

Carl Blanchard, Forsyth Barr managing director capital markets, says the rules say institutional investors and brokers recommending a stock need supporting research.

For smaller companies like tech firms, that’s hard to secure, he says.

“And when it’s direct broker engagement, they tend to pick more liquid opportunities. So there are a number of hurdles.

“People have talked about mandating smaller size stocks as part of a portfolio. But that’s not a path I’d want to head down.

“But perhaps there are some interventions that could happen. Certainly I think the stock exchange could make it easier for smaller entities to be able to list through the listing rules.”

CASE STUDY: OpenStar chases Series A round

Replicating the power of the sun with fusion energy technology that most people thought was still 20 years away needs a special kind of capital backer.

Ben Taylor-Bryant, OpenStar Technologies’ vice-president investor relations, says yes, capital is available to the Kiwi pre-revenue clean energy startup but “appropriate” capital is another thing.

“Fusion sits in a specific category: high technical complexity and transformational potential. The investors who genuinely understand that profile and have the conviction to back it are a smaller, more deliberate group.”

Founder and leader physicist Dr Ratu Mataira is on the road overseas now for a Series A raise. The New Zealand Government has invested $35m to advance fusion energy research and Taylor-Bryant says OpenStar has raised around US$30m ($50m) in total since Mataira started a quest to be a solution leader to global energy demand.

That’s funded a world-class team of 70, a bespoke experimental facility in Wellington and the company’s February world-first – confining a plasma around a levitated, high-temperature, superconducting magnet, demonstrating the core technology underpinning its commercial pathway.

Its third machine will be built by 2030 and will generate OpenStar’s first commercial revenue, with a full power plant due in the mid-2030s.

That pathway will require multiple rounds of institutional funding over the next five to eight years, says Taylor-Bryant. The size of funding calls will grow as the machines grow.

The US is the primary focus right now but OpenStar is also active in Australia, the UK, Europe, Asia and the Middle East.

“Fusion is a global conversation – the investors who understand the opportunity tend to be concentrated in markets with deep technology investment cultures or strong energy resilience mandates,” he says.

Most of OpenStar’s capital needs will have to come from offshore. “Not because New Zealand lacks sophisticated investors, but because the cheque sizes required at Series A and beyond are large relative to the domestic market,” Taylor-Bryant says.

“Ultimately, we’re building a global business and that requires global partners.”

CASE STUDY: Tracksuit hits $50m revenue, plans next scale-up

Now in 25 markets with offices in Auckland, Sydney, New York and London, this 5-year-old brand-tracking technology company “bootstrapped” its first two years, funding itself from customer revenue.

Co-founder and CEO Connor Archbold says this was so “we were able to focus and spend all our time really obsessing over what our customers wanted.

“Actually, we sold the concept of Tracksuit before any product existed, in order to fund hiring the team to build it. It took us 30 days to build what they call the MVP, the minimum viable product. We were very focused on creating something that was needed enough by someone to pay for it from day one.”

Tracksuit says it democratises access to brand tracking – translating brand metrics into business insights that help marketers prove – and justify – the return on investment of brand-building.

Today its 200 staff track 15,000-plus brands for more than 1000 customers. Its growth was 102% year on year as at the end of Q1 2026, and annual recurring revenue reached US$30m ($50m) in under five years. It’s yet to be profitable.

Two years after its 2021 founding, Tracksuit raised $7.5m seed funding, led by Blackbird Ventures, enabling the company to hire enough staff to launch in Australia.

“We had Icehouse Ventures participate in that and it was really important to bring New Zealand investors in early, because we’re really motivated by creating outsize returns in New Zealand for early investors and to help the ecosystem,” says Archbold, who had offshore start-up experience.

Some global angel investors participated.

Further capital raising rounds followed – the most recent for $42m – as Tracksuit’s staff team and revenue grew. These were led by Silicon Valley venture capitalists but early Kiwi investors also participated.

“Once you get to a certain size … and to make the leap from being a New Zealand and Australian company to one with customers and partners globally, it’s really helpful to have global investors who’ve been there and done that on the path to hyperscale,” Archbold says.

“Their experience, their networks, they can help you hire people globally … they’ve invested in hundreds of businesses that have done that path before.

“The ecosystem in New Zealand is in amazing shape and the investors are phenomenal. If it were just a question of money, I don’t think you’d really have to go overseas.”