The Government’s new $300 million venture capital fund – announced in last year’s Budget – is now open for business as the Elevate NZ Venture Fund.
Finance Minister Grant Robertson says lifting New Zealand’s productivity requires well-functioning capital markets enabling more high-potential technology companies to raise funds and grow.
“Early-stage technology companies often struggle to access capital which has limited them from achieving their potential and increased their reliance on offshore capital.
“We need fast-growing firms operating in a healthy, well-capitalised start-up environment where New Zealand ownership can connect to the global market place with the benefits contributing to our prosperity.
“The new fund will capitalise on the foundation set by R&D and Seed investments, to support building an early stage investment environment. Our aim is that, over time, private sector funds will take over the role, as we develop deeper capital markets in New Zealand,” Grant Robertson said.
Associate Finance Minister David Parker said the fund will be managed by the New Zealand Growth Capital Partners (formerly New Zealand Venture Investment Fund), on behalf of the Guardians of the New Zealand Superannuation Fund (the Guardians), who will oversee and monitor the performance of Elevate NZ.
“New Zealand Growth Capital Partners will run a fund-of-funds model, appointing private fund managers who will raise private capital to supplement the Government’s investment. The private venture capital funds will then invest in New Zealand’s most promising technology companies.
“The Guardians’ significant expertise has helped develop the structure for Elevate NZ.
“We have tasked the Guardians and New Zealand Growth Capital Partners with the goal of generating appropriate risk-adjusted returns which matches the private market’s commercial approach and will, over time, will be returned to the Government.”
Phil Twyford says the new funds will increase Series A and B investments generally in the range of $1m to $10m needed by these expanding companies to grow. The investments are expected to be made into New Zealand businesses over the next 10 to 15 years.
“We also hope to see the level of completely private Series A and B investment rise in the coming years.
“New Zealand has averaged around one new unicorn a year – a technology company with a market valuation of a billion dollars-plus – through the likes of Xero, Lanzatech and Rocket Lab. As more capital becomes available, we want to see more of these new companies emerging.”