PwC New Zealand | Autumn 2023


Market cools in 2022 but long-term trend remains positive

Startup Investment Magazine October 2021

Welcome to the Autumn 2023 edition of Startup Investment.

"While unsettling, a slowing economy can actually be a good thing for some companies, as it forces businesses to focus on what is important and it means that startups built on strong foundations, with a focus on creating long-term value, will thrive in the long run."

After two years of record deal activity, the market seems to be resetting to pre-pandemic levels with 2022 experiencing a drop in deal volume and capital amount compared to the significant increase that occurred in 2021. Importantly though, the long-term trend is still showing clear growth in startup investment.

While there is a cooling of the market as compared to last year, and an associated need to carefully navigate uncertain economic conditions, the potential for growth and innovation remains high. 

In the second half of 2022, early stage investors invested $118m in startups, matched by an additional $117m of funding from Venture Capitalists (VCs) for a total transaction value of just under $230m. This activity continues to create the companies of the future, driving growth and innovation in the economy.

While unsettling, a slowing economy can actually be a good thing for some companies, as it forces businesses to focus on what is important and it means that startups built on strong foundations, with a focus on creating long-term value, will thrive in the long run.

It is important to remember that we have been here before. During the 2008 Global Financial Crisis (GFC) the funding environment for startups was challenging and impacted many early stage companies.  While this current period is nowhere as extreme, what emerged from the GFC was a new breed of entrepreneur and some incredible companies - such as Xero, Rocket Lab and Lanzatech. 

In this issue we lean into this theme, exploring the contribution of startups founded during the GFC and the innovation that has since generated entire ecosystems and put Aotearoa New Zealand on the world stage. We also explore the next generation of companies to emerge from these ecosystems and look at the contribution they are making to a brighter, more sustainable future. 

Joelle Grace
Partner, PwC Legal

Startup investment trends - what the data shows

The latest Young Company Finance deal data shows that in the second half of 2022 a total of 76 deals were funded by Early Stage Investors with over $112m capital funding provided. An additional $117m of funding was provided by VCs, bringing the total transaction value to just under $230m. However, across the full calendar year, 2022 had an 18% and 28% drop in deal volume and capital amount compared to 2021. It should be noted that 2021 was an exceptional year with abundant capital offshore and onshore. In comparison to 2020, which saw the start of the global pandemic, there was a 31% increase in deal volume and an 18% increase in capital amount which gives a 5-year CAGR (2018 to 2022) 12.4%.

Software remains the most funded sector, receiving 45% of total funding, followed by Deeptech which attracted 34% of total funding. Among Deep Tech verticals, Cleantech received the most funding with 72%, followed by Healthtech 13% and Space Technology 12%.

During the second half of 2022, early stage investors provided $112m of funding for Aotearoa New Zealand startups:

43% Decrease from the same period in 2021 
30% New deal types completed
70% Follow-on deals
  • 74% of deals were syndicated. Across all transactions, 60% of deals were participated by VCs at various stages, 17% of them were investments by offshore VCs.
  • Around 57% of deals had round sizes above $1m, 13% above $5m and 9% above $10m.
Check out our feature articles....

From early promise to resilience: reflecting on Aotearoa New Zealand's startup ecosystem 15 years after the GFC

Fifteen years ago, the state of the startup ecosystem in Aotearoa New Zealand was still in its early stages. Although there were only a small number of startups and investors in 2008, there were already some promising developments in the industry, particularly in the areas of software, biotechnology and clean technology.

The aspirations of startups at the time were generally focused on growth and expansion, with many looking to establish themselves as leaders in their respective fields. This was particularly true for software and technology startups, seen as having the potential to disrupt traditional industries and create new markets.

During this period companies such as Xero, LanzaTech, Rocket Lab, Orion, Vend and 2Degrees were on their way to establishing Aotearoa New Zealand as a hub for innovation and driving economic growth.

From an investor perspective, Aotearoa New Zealand was viewed as a relatively untested market, but one with significant potential. Successful exits, such as the sale of Trade Me to Fairfax Media for $750m in 2006, validated the potential of the ecosystem and put the country on the map.

However, in mid-2007 the events that started the 2008 Global Financial Crisis began to unfold. The impact on Aotearoa New Zealand was swift and severe, with businesses facing significant challenges due to a fall in consumer demand and reduced access to credit. 

Yet, within this period was opportunity. As established companies downsized, there was an increase in talented, experienced workers looking for new opportunities, which provided startups with access to leading professional talent. Meanwhile, while the GFC led to a decline in traditional funding sources, it led to the emergence of new funding sources including crowdfunding, peer-to-peer lending and government grants. And the disruption in many industries created opportunities for innovative solutions. 

Vend, a cloud-based point of sale (POS) software company, was founded in 2010, in the aftermath of the 2008 GFC. At the time, many retailers were struggling with the economic downturn and looking for ways to cut costs and increase efficiency. Vend's software allowed retailers to process transactions, manage inventory, and analyze sales data from a cloud-based platform, reducing the need for expensive on-site servers and software licenses.

Like Vend, many of the companies that emerged from the GFC have continued to thrive and can provide insights for the startups and their investors of today. 

A journey towards a $1b future

Aotearoa New Zealand's startup ecosystem has come a long way in the past 15 years, with entrepreneurs and investors working together to create innovative businesses that have created jobs and developed cutting-edge technology. In this article we take stock of how far we've come and consider the aspirations we should have for the next 15 years if we are to reach our goal of a $1b startup space. 

One of the keys to reaching this goal is to focus on the strong sectors of our startup ecosystem. Fintech, Cleantech, and Aerospace are particularly strong sectors, each with unique strengths and opportunities for growth. Here we explore the sectors and the companies that are shaping them.

Transforming the financial landscape

From online payment systems to peer-to-peer lending platforms, Fintech startups are using technology to disrupt traditional financial models and provide consumers with more accessible, convenient and affordable services.

According to the  2022 NZ Fintech Insights Report, Fintech is one of the country’s fastest-growing tech export sectors, with global revenues of nearly $2b and a five-year compound annual revenue growth of 32%. 

The sector’s growth has been driven by a number of factors, including a supportive regulatory environment, access to capital  and a highly skilled workforce. The New Zealand government has actively promoted the growth of the Fintech industry with initiatives such as the Fintech Innovation Lab, which provides funding and mentoring to startups.

Paving the way for a sustainable future

At a time when the world is grappling with the challenge of decarbonising the global economy, a new generation of cleantech innovation is poised to play a key role in accelerating the transition to net zero. 

Aotearoa New Zealand firms have built a strong reputation for world class IP addressing global market opportunities and challenges, combined with a maturity that can be quickly scaled into global markets. Our ‘can do’ attitude helps to push through roadblocks to develop truly unique IP, which is highly attractive to investors. 

There are strengths we can play to and continue to build on. Aotearoa New Zealand has an international reputation for farming and food production, and is well known for efficiency and innovation, with strong potential to be a leader in low-emissions agriculture.

We’ve also produced a number of successes, backed by good partnerships with universities - such as the MacDiarmid Institute’s partnerships with Avertana, Mint Innovation and Aquafortus - and innovative models such as KiwiNet. Now in its 10th year, KiwiNet is unique in the world, being the only place where public research organisations voluntarily join forces and pool funding to get research discoveries investor ready. 

However, the importance of the ecosystem and seed funding for startups cannot be underestimated, particularly for deep technology startups that may need up to a decade of research and development before products are available for commercialisation. It’s what makes incubators and funders such as Outset Ventures so valuable, with a commercial laboratory and workshop facilities, a six-month pre-incubation ‘Launch Lab’ programme, and a $10m deep tech fund raised with Icehouse Ventures that will back 20-30 ventures over the next three years.

Poised for multi-billion dollar growth by 2030

Aotearoa New Zealand's aerospace sector is a burgeoning industry with immense potential for growth. In 2019 the estimated contribution of the space sector was $1.69b (around $600b globally) and is expected to be a multi-billion sector by 2030. The country's unique geographical location and strategic partnerships with leading international space organisations make it an attractive destination for aerospace innovation and research. Furthermore, the government's commitment to supporting this sector is evident through various initiatives, including the establishment of the New Zealand Space Agency, the development of a space strategy, and the provision of funding for space-related research and development. The startup ecosystem in Aotearoa New Zealand's aerospace industry is thriving, with companies pioneering groundbreaking technologies, including small satellite launch systems, hybrid rocket engines, and earth observation data analytics. Currently the aerospaces sector has the foundations of a highly skilled workforce, well-connected research system and sale, and enabling policy and regulatory environment.

We appreciate the following investors who contributed their H2 2022 data: Alt Ventures, Angel HQ, Angel Investors Marlborough, Arc Angels, Blackbird Ventures, Brandon Capital, Canterbury Angels, Cure Kids Ventures, Enterprise Angels, Finistere Ventures, Flying Kiwi Angels, GD1 Fund, Hillfarrance VC, Icehouse Ventures, Impact Enterprise Fund, Launch Taranaki, Mainland Angels, Matu Fund, MIG Angels, Movac, Nelson Angels, NZGCP, Nuance Capital, Otago Angels, Outset Ventures, Pacific Channel, Punakaiki Fund, Quidnet Ventures, Snowball Effect, Sprout Agritech, UniServices and WNT Ventures.

How PwC can help

PwC is dedicated to helping startups with great ideas make their way in the world. We provide support through tailored financial reporting, tax advisory and compliance, legal advice and support, structuring, strategic advisory services as well as networking opportunities. We collaborate with others in the local ecosystem including NZTE, AANZ, NZGCP, KiwiNet, and other New Zealand VC funds. Alongside publishing StartUp Investment NZ, we are sponsors of KiwiNet Awards and the NZ Hi Tech Awards.

Please get in contact using the details below if you’d like to know more.


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Anand Reddy

Partner, Private Business Leader, Auckland, PwC New Zealand

+64 27 592 1394


Joelle Grace

Partner, Corporate and Commercial, Canterbury, PwC Legal

+64 210 396 521


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