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New Zealand’s Startups

New Zealand’s hottest tech sectors

Our technology sector is growing at a faster rate than the overall economy, spurred by ambitious young companies in cleantech, software, agritech and aerospace. ‍

Contributor

Rebecca Bellan

Mint Innovation founder Will Barker

New Zealanders’ desire to do good is helping them occupy space on the global stage, reckons Will Barker. 

“The sweet spot that New Zealanders have in general is that altruistic view of the world and the desire to do things that are good for the world,” says the co-founder and CEO of Mint Innovation, the Auckland-based startup on a mission to find a low-carbon, local way to extract precious metals from e-waste. 

Mint, a rising star in New Zealand’s startup ecosystem, is an example of what some say sets Kiwis apart – a sense of purpose and responsibility to our fellow humans; the urge to chase the hardest problem first and make an impact that goes beyond our shores. 

Despite New Zealand’s reputation for tall poppy syndrome, this raison d’etre has helped drive the country’s technology sector to grow at a faster rate than the overall economy. With $11.5 billion in revenue in 2022, per TIN data, technology is clocking in as the country’s second largest export sector. 

A second wave of innovators is emerging out of deep-tech unicorns like Rocket Lab and LanzaTech leading to the next generation of startups, which will shepherd a new era for New Zealand’s economy. 

Funding for startups has slowed from its highs in 2021, but it’s in times of scarcity that Kiwi startups shine. Among the sectors that we think will have the most activity, and snag available funding in the coming years are cleantech, software, agritech and aerospace. 

Mint Innovation recovers valuable metals from waste

Cleantech – Be a tidy Kiwi

The world sees New Zealand as a clean, green country. Whether or not that image maps onto reality, it’s a story Kiwi startups can lean into to secure foreign investment. 

And indeed, this is a fast growing sector, with a few heavy hitters leading the way and clearing space for new entrants, as well as plenty of government support. 

In May this year, New Zealand Green Investment Finance received an additional $300 million in investment capital from the 2023 Budget, bringing its total pool to $700 million. A few months later, Ara Ake, Aotearoa’s future energy centre, scored another $70 million over 10 years from the Ministry of Business Innovation and Employment to help the nation transition to a more sustainable, resilient and equitable energy future. 

There are also a range of VC funds dedicated to cleantech, which can encompass climate-tech, impact-tech and sustainable-tech. For example, Punakaiki Fund manager 2040 Ventures launched a $12 million Climate Venture Capital Fund, and ACC has launched its own $50 million Climate Change Impact Investment Fund. According to PwC data on early-stage funding, cleantech received the most funding of the deep-tech verticals, pulling in about $53 million in the second half of 2022. 

However, Mint Innovation’s Barker says getting offshore investment “is still a bit of a challenge because we are a million miles from all the main markets”. 

“When markets are tight, LPs are much more interested in having hands in and paying close attention to their companies, and New Zealand is in the bottom corner of the world,” he says.. “Having said that, our reputation does mitigate that challenge to some extent.”

In February, Mint closed a $60 million Series C, with backing from Icehouse, K1W1, Movac and Sydney’s Inspire Impact.

Some other companies leading New Zealand’s cleantech scene include: Fabrum, a leader in green hydrogen technology that raised $23 million in February with backing from global investors including London’s AP Ventures, Australia’s Fortescue Future Industries and Japan’s Obayashi Corporation. 

Leaft Foods, which raised $15 million last year to advance its leaf-based protein and has backing from Silicon Valley big shot Khosla Ventures, as well as NBA player Steven Adams, ACC’s Climate Change Impact Fund and Ngāi Tahu Holdings

And finally, Vortex Power Systems, which raised $2 million in 2021 with backing from Pacific Channel and Enterprise Angels and is converting low-grade waste heat into clean electricity.

Hnry founders James and Claire Fuller

SaaS – An ideal export for an island nation 

Software just makes sense for New Zealand as an export on which to hang its hat. It’s a weightless product that can be instantly shared around the world, all the more so because New Zealand’s access to connectivity has improved substantially over the past few years.

According to a PwC report, software was the most-funded sector in the second half of 2022, receiving 45 percent, or about $103 million, of early-stage funding. Across funding stages, ICT (information communications technologies), which often encompasses SaaS products, was the only primary sector to achieve positive profitability growth this year, with strong performance from heavyweights like PushPay, Xero, Eroad and Straker Translations, according to TIN. 

Those early entrants have walked so today’s SaaS companies can run, sprouting ecosystems that support a range of industries. 

Wellington-based Hnry and Auckland-based EasyCrypto, for example, are quickly becoming household names in New Zealand’s fintech scene. 

Hnry has built an app to help contractors and self-employed people manage their accounts. The startup secured a $35 million Series B in December 2022 – funds Hnry is using to double its headcount. Leading the round was Australia’s AirTree Ventures, with participation from Aussie’s Athletic Ventures, New York’s Left Lane Capital, and our own Icehouse Ventures.  

Hnry co-founder and CEO James Fuller says one of the distinguishing factors of New Zealand’s startup ecosystem is its easy access to top minds. While the country has a bad rep for tall poppy syndrome, Fuller reckons people in the startup community are approachable and willing to help. 

“Not the people who are on the sidelines throwing stones, but the people who are founders, the former founders, the people working in tech startups – they want everyone else to do well because it lifts up the whole sector,” says Fuller. 

This sense of community has helped fuel the success of others in the SaaS space.

EasyCrypto has raised $34 million over two rounds, with backing from GD1, Icehouse and Nuance Capital, as well as Oregon’s Hutt Capital and Seven Peaks Ventures and Jakarta’s GDP Venture. The startup’s goal is to give Kiwis a safe place to buy and sell cryptocurrencies. 

And just grazing the medtech industry is Formus Labs, an Auckland-based startup that’s built a SaaS product for orthopaedic surgery planning. In May, the company got clearance from the US Food and Drug Administration for Formus Hip – a fully automated 3D software for hip replacement preoperative planning. That means Formus Labs, which has only raised $6.3 million in funding so far from majority Kiwi investors, can start selling its product to surgeons and healthcare providers across the US market. 

Other notable new entrants are Auckland-based Tracksuit, an affordable and accessible brand insights tool, and Christchurch-based Partly, a provider of auto parts data infrastructure. Partly was co-founded by ex-Rocket Lab engineer Levi Fawcett and its $37 million raise in December was New Zealand’s largest Series A to date.

Halter CEO Craig Piggott

Agritech – Capitalising on our farming roots

Agritech has plenty of overlap with cleantech in New Zealand, where farmers are working on ways to maximise output while minimising environmental costs. 

One of the top agritech companies in New Zealand today is Halter, the startup that’s built something akin to Fitbit for cows. The company’s collars are placed on cows to monitor their health and behavior and virtually fence and remotely shift them. Halter is also founded by an ex-Rocket Lab engineer, and the startup this year raised $85 million from a mix of US, Australian and Kiwi investors, including Bessemer Venture Partners, DCVC, Icehouse and Blackbird. 

Craig Piggott, founder and CEO of Halter, says he’s seeing increasing interest in agriculture as a sector. 

“People are starting to put together how critical it is to society,” he says. “Agriculture is half our habitable land mass, and farmers are the custodians of our land. If we can give farmers the tools to be more stable and more efficient, the impact is going to be massive.”

Piggott says the best way to attract both top tech talent and world-class investors is to chase hard problems. 

“You need to have a significant enough problem to solve. That’s the point of difference for most startups – the opportunity for growth and the opportunity to actually achieve something.” – Craig Piggott

On the other side of the spectrum are companies like BioLumic, a Palmerston North-based startup with offices in the US, which uses UV technology to deliver ultraviolet light to seeds and seedlings, triggering the biological mechanisms that increase plant growth, vigour and yields. As the impact of climate change causes more extreme weather events that affect growing systems globally, such technology could be a saving grace.  

Last year, BioLumic raised a $13.5 million Series B, with backing from investors across the world including Israel’s Our Crowd, San Francisco’s Finistere Ventures, Amsterdam’s Rabo Ventures and Toronto’s RIV Capital. 

CarbonCrop also solves another problem with which New Zealanders are familiar – helping landholders get paid for restoring forests. Last year, the Nelson-based company raised a $3.4 million seed round from WNT Ventures to advance its tech that uses remote sensing, machine learning and automation to evaluate land remotely and assess its carbon credit potential. 

Dawn Aerospace CEO Stefan Powell

Aerospace, but make it green

New Zealand’s aerospace scene is bound to get a boost in the upcoming years, with the government recently announcing consultation on a national space sector strategy. It also announced a $15.7 million boost to the aerospace industry, with $3 million earmarked to trial uncrewed aircraft and $3.7 million towards regulating new technology.

But what really put New Zealand on the map for aerospace tech was Rocket Lab – the company that’s democratising sustainable space launches and is now trading publicly on the Nasdaq. Today, a handful of companies have emerged to take advantage of New Zealand’s clear skies, favourable aerospace regulations, minimal air traffic and bright minds. Many of them are working on solving hyper-specific problems, but with a focus on doing it sustainably.

Christchurch-based Dawn Aerospace, for example, manufactures satellite propulsion systems with lower greenhouse gas potential and nontoxic materials. The startup is also building an uncrewed suborbital spaceplane that can carry over 1 ton or deliver a 250kg satellite to low Earth orbit. Dawn raised a $20 million Series A in December from Movac, GD1 and Icehouse, but we’re expecting the company to start attracting global investment soon.

Dawn Aerospace CEO Stefan Powell says great ideas come out in crisis times.

“ I’ve definitely heard of investors being very active right now because they say valuations are back to reasonable, heaps of good ideas are bubbling out, and now’s the time to invest in those early stage companies.” – Stefan Powell

Other promising early-stage aerospace startups that are ripe for fresh investment include Auckland-based Zenno Astronautics, which is building a fuel-free satellite propulsion system that uses magnets powered by solar panels. The startup raised a $10.5 million seed round from a range of Kiwi investors, including NZGCP, in August 2022 and is probably due for a Series A round. Also hailing from Tāmaki Makaurau is Astrix Astronautics, which develops power-efficient, inflatable solar arrays for satellites and has backing from Peter Beck, Outset Ventures, K1W1 and Icehouse.

Kea Aerospace, another Christchurch company, is sending solar-powered uncrewed aircraft into space to give observation and telecommunications access to businesses at a fraction of the current cost. The company last raised an undisclosed amount in 2021, and is in the middle of another raise, according to founder Mark Rocket. 

Playing to our strengths – Number 8 wire mentality

New Zealand’s peak inflation is likely behind us, but there are still tough times ahead for the economy, which may have ripple effects in the tech sector. Funding rounds may not be as plentiful as they have been the past couple of years, but this is where New Zealand startups can play to their strengths. That Number 8 wire mentality is about doing less with more, and New Zealand’s tech sector has shown that periods of crises tend to result in great innovation. 

Now is the time to keep building, particularly in the sectors that are important to New Zealand investors and attractive to foreign funds. 

Contributor

Rebecca Bellan

Rebecca Bellan is a journalist from New York who covers startups, technology and business. She writes about transportation for TechCrunch, reporting on everything from autonomous vehicles and battery development to gig work and micromobility. Before joining TechCrunch, Rebecca covered urbanism, culture, policy and travel. Her work has been featured in Bloomberg, The Daily Beast, i-D, The Atlantic, City Monitor and more.

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