Fri. Jan 21st, 2022

As a remote control Island nation in the middle of the South Pacific, New Zealand is experiencing the excitement of a burgeoning startup scene. The country has historically suffered from a lack of capital, but recent investment by the government and foreign investors has significantly increased access to early stage venture capital financing. Now certain industries are emerging as potential areas where New Zealand can win in the tech space.

Deep tech, medtech/biotech, climate technology, and crypto and blockchain are all areas that investors say are either actively investing in or looking for signs of scaling up.

Note: All monetary amounts are shown in New Zealand dollars unless otherwise noted.

Deep technology

New Zealand has the right mix of deep tech-focused capital and resources, strong technical schools and big success stories that help create technologically advanced, globally scalable startups.

In the first half of this year, total investment in the early stage sector in New Zealand increased by 78% from the first half of 2020, of which 42% went directly to deep tech startups, PwC said. Much of that funding came from New Zealand Growth Capital Partners (NZGCP), a government agency created to create a vibrant early-stage environment in New Zealand, through its Elevate fund of funds program that provides capital to New Zealand Zealand VCs investing in Series A and B rounds.

Last October, Elevate allocated $20 million to a fund managed by deep-tech VC firm Pacific Channel. More recently, Elevate committed $17 million to Nuance Connected Capital’s fund focused on deep technology innovations, as well as $45 million to GD1’s Fund 3, which focuses on both deep tech and connected hardware, enterprise software and health technology.

New Zealanders are really good founders. … There’s something about just growing up on a farm or, you know, playing beer in the lakes and rivers; New Zealand is just very resourceful. Blockchain NZ Chairman Bryan Ventura

Then there are groups, such as Outset Ventures, formerly LevelTwo, that aim to help seed and pre-seed deep-tech startups get started. Outset is home to New Zealand’s only two deep-tech unicorns, Rocket Lab and LanzaTech, both of which have spawned numerous other deep-tech companies. Outset continues to be a resource for early stage startups that need not only money, but connections to larger companies and access to workshops and labs. Last year, Outset and Icehouse Ventures, a VC firm, teamed up to raise a $12 million fund, launched in April, for early-stage science and technology startups. Outset CEO Imche Fourie said the company has already made 40 investments from that fund.

Notable New Zealand deep tech companies include Foundry Lab, a startup that makes microwaveable metal castings quickly and cheaply; Soul Machines, a platform that creates lifelike digital avatars that autonomously animate, react to interactions and interpret facial expressions, with personalities that evolve over time; and Dennisson Technologies, a wearables company that develops soft exosuits with 4D material technology to actively help people with reduced mobility due to physical or neurological disabilities.

The most Kiwi of deep-tech startups, though, is Halter — a company that grew out of Rocket Lab and produces solar-powered smart cow collars that allow farmers to shift remotely and virtually shield and monitor cows to optimize grazing time. Founder Craig Piggott grew up on a dairy farm and saw his parents struggle with the relentless work. After studying engineering at Auckland University of Technology and working at Rocket Lab, Piggott combined his experience to come up with a slightly wacky and ambitious hardware and software game. Rocket Lab founder Peter Beck, who backed Halter, told BestFitnessBands that he believes it will be a globally scalable multi-billion dollar company.

The epitome of New Zealand’s deep tech scene is the $1.75 billion space industry. Rocket Lab, now an American company after a SPAC merger, has put New Zealand on the map as a place of minimal air traffic, clear skies and favorable aviation regulations. As a result, companies are forming that can send payloads into space or provide services to existing space companies.

For example, Zenno Astronautics, which was backed by the company, is developing a fuel-free satellite propulsion system that uses magnets powered by solar panels. Dawn Aerospace is working on a remotely piloted plane that can take off like a normal plane, drop a satellite payload and be back home in 15 minutes. And Astrix Autonautics, a startup founded by three students from Auckland University, is being tested by Rocket Lab to see if they can double the power-to-weight ratios of today’s solar panels.

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