The Global Startup Ecosystem Report 2023

How a Diverse Range of Tech Startups Is Flourishing in New Zealand

“Kiwi founders are ambitious, not just to build successful companies, but in their striving for a greater purpose.”

New Zealand, long known for its idyllic beauty and high living standards, is increasingly becoming known as a hub for high-potential tech startup creation. Founders here are passionate about the startup community’s collaborative environment, where fellow entrepreneurs, no matter how far along their journey, are willing to talk and impart wisdom to the next generation. They also praise a culture that emphasizes a holistic approach to success that truly incorporates social and environmental good — reflecting honored Māori principles.

With a population just over 5 million, New Zealand boasts more than 2,400 startups: a density exceeding many regional peers. While most of these startups are based in Auckland, regional ecosystems also exist elsewhere, including the capital Wellington, as well as Christchurch, which has mounted an incredible comeback from a devastating 2011 earthquake, typifying the resilient Kiwi attitude. The city now hosts nearly 200 startups, including a sizable aerospace community led by Dawn Aerospace.

In 2022, Startup Genome and the New Zealand Ministry of Business, Innovation, and Employment conducted an in-depth analysis of the country’s entrepreneurial climate for early-stage technology startups, using a combination of global datasets and 178 founder surveys. The assessment determined the ecosystem’s stage of development, created benchmarks against peer and top global ecosystems, and examined both the gaps and strengths to be capitalized on.

Funding Leads the Way

Startup ecosystems can’t succeed without adequate funding. Fortunately, New Zealand has experienced a significant increase in this area in recent years. Between 2020 and H1 2022, the amount of early-stage funding raised by Kiwi startups almost doubled compared to the previous 36-month period.

Part of this funding increase was led by an infusion of capital from overseas investors looking to get a foothold in this emerging ecosystem. In late 2019, Blackbird, Australia’s largest VC firm, introduced an early-stage New Zealand fund which has about $44 million under management as of year-end 2022. Other VCs took a more targeted approach. Finistere Ventures, a Silicon Valley VC, launched a NZ$40 million ($25 million) fund focused on Agtech & New Food startups in partnership with New Zealand Growth Capital Partners (NZGCP).

New Zealand VCs were also able to take advantage of this sudden global investor interest. For example, Icehouse, one of the earliest Kiwi VCs, launched its Sustainable Tech Fund in June 2021 in partnership with SDG Impact Japan.

The New Zealand government also stepped up its commitment to domestic startups. In March 2020, NZGCP launched its Elevate fund-of-funds with NZ$300 million ($186 million) from the New Zealand government, committing NZ$196 million ($121 million)​​ so far into eight Kiwi VCs. Cumulatively, this recent mix of overseas investment and private-public domestic support should help close Series A and B funding gaps that had previously constrained startups.

A Diverse Range of Startups

New Zealand has produced startups in a variety of sectors, with strengths emerging in AI & BD, Industry 4.0, Cleantech, and Agtech & New Food. The country’s commitment to innovative research across several disciplines, led by its Crown Research Institutes and universities, generates exciting Deep Tech possibilities.

Brian Ward, founder and CEO of Aroa Biosurgery, which exited in 2020 with an IPO, praised New Zealand’s talented researchers and university graduates as essential in growing his wound-treatment startup. He also expressed enthusiasm for the next generation of Kiwi startups, which have much better access to domestic funding sources compared to when he started in 2008.

This new availability of local funding has enabled companies such as Foundry Lab, a digital metal casting startup, and Alimetry, a gastric disorders monitoring startup, to raise recent rounds from primarily local funders. These examples can only encourage future founders to stay local when growing their business.

Kiwi startups focused on Deep Tech can also take advantage of numerous grant and loan programs, such as Callaghan Innovation Agency’s New to R&D Grant, which offers up to NZ$400,000 ($250,000) for research opportunities, or through the many incubators and accelerators now available. The Sprout Agritech accelerator, for example, invests NZ$1 million ($630,000) in Agtech & New Food startups — a sector where New Zealand is a global leader. Successful recent graduates include Scentian Bio, which makes devices that mimic insect odorant receptors, and MenuAid, an AI-enabled meal-planning startup.

A Culture of Looking Beyond the Bottom Line

Kiwi founders are ambitious, not just to build successful companies, but in their striving for a greater purpose. Over 90% of those interviewed stated that they wanted to change the world with their startup, a much higher number than the peer average. Part of this comes from the country’s natural beauty, which inspires Kiwis to consider environmental stewardship, but it is also a reflection of the commitment to incorporating Māori principles of community betterment.

While much work remains to be done to achieve equity, Kiwi startup stakeholders recognize the need to engage the Māori community. At 17% of the New Zealand population, only 5% of Kiwi founders are of Māori heritage. However, several programs have been created with the aim of encouraging Māori entrepreneurship. Kōkiri, an entrepreneurship and startup accelerator exclusively for Maori participants, has held two cohorts and helped launch Barrett Dynamics, a solar energy startup. NGEN Room, a digital media training program, focuses on helping young, primarily-Māori individuals to gain skills for the next generation of digital jobs, or to become entrepreneurs in this space.

Kiwi founders are also becoming increasingly diverse along other lines. The number of New Zealand founders who immigrated to the nation (28%) is higher than in most ecosystems, and is higher than the country’s overall immigrant population (23%). The rate of female founders in New Zealand, at 26%, is one of the higher rates globally, and much higher than the 16% female founder rate the previous time Startup Genome surveyed New Zealand founders, in 2017. Female founders have credited an evolving culture and the emergence of informal meetups with other female founders as factors in this growth. As more startups led by women succeed — such as Thematic, a Y Combinator-backed SaaS company, or Sharsies, an investment platform that has raised more than $50 million — female startup participation in New Zealand should continue to rise.

A Bright Future for Kiwi Startups

Between the recent increase in funding, high quality of life, and supportive founder culture, the New Zealand startup ecosystem is well-positioned to continue its development. This is particularly true as the world seeks innovative solutions to increasingly complex environmental and food sustainability problems. New Zealand’s strengths can lead the way.