Elevate NZ Venture Capital Pulse Check 4

This month Elevate hosted our fourth NZ Venture Capital Pulse Check session to provide updates on the fund, as well as share some insight on its approach to selecting fund managers while drawing from the experience of other international LPs.  

To date, Elevate has allocated $223 m of capital, helping enable investments into around 120 companies.

This session was also a chance to hear from NZ’s incubators and managers as they discuss the opportunities and challenges in the local VC market. The following observations were noted:

• Growing investment focus into deep-tech – almost 40% of underlying portfolio companies of Elevate (both in $ and # of companies) are in deep-tech. This highlights growing acknowledgment of potential competitive advantage of New Zealand in this space; increasing investment into deep-tech had been one of the strategic objectives of Elevate.
• Growing collaboration – the managers noted collaboration to execute deals is the default now, citing recent deals where at least three funds formed an investor syndicate. The Elevate team emphasised the need to pull together to ensure that the most promising Kiwi companies have the capital they need to succeed, especially amidst the challenging macro-economic environment.
• Challenges in pipeline – a few funds are observing headwinds in increasing the quality and quantity of the start-up pipeline which some attributed to lower PhD enrolments and unfavourable visa pathways for PhD students. Others cited that this may also be venture-driven as most funds raised around the same time in the last two years and are now focusing on supporting their current portfolio rather than new companies.
• Vital need to promote the VC sector – there is consensus of the need to deliver commercial returns and tell a cohesive story of venture capital’s meaningful role in the future of New Zealand.

We at NZGCP are currently undertaking several initiatives such as;

1. Launching Dealroom, New Zealand' start-up database to streamline data gathering and to efficiently share meaningful insights about the start-up ecosystem and,
2. Developing a learning and development strategy to help enhance investment capability.
3. We are in constant dialogue with the Government to seek continuous support for the VC sector, highlighting its crucial role in innovation and alignment with the Government’s objectives of increasing productivity and sustainably growing Aotearoa's economy.

Portfolio status

Elevate has allocated 81% of investible capital into 9 funds, leaving $50.8 m remaining to commit.

Portfolio breakdown

Breakdown of investments attributable to Elevate, based on % of $ invested:

Venture capital ecosystem growth

Since Elevate inception, VC FUM (funds under management) increased >5x, with ~$980m of private capital catalysed. Of this private capital, ~$530m was towards venture capital funds that Elevate committed to.

Annual venture capital investment increased from $46m in 2019 to $222m in 2022 - most notably in the Series A/B stage.

Comparing today vs 2019:

• Median deal size increased 4x at Series A, 5x at Series B
• # of deals increased 4x for Series A, 3x for Series B

Elevate underlying fund investments

Our funds are turbo-charging New Zealand tech start-ups who are raising record amounts, and forging a path to becoming global leaders in their industries ...

• Dawn Aerospace
• Zenno Astronautics
• Foundry Lab
• Alimetry
• Kitea Health
• Quantifi Photonics
• Auror
• Partly
• Halter
• Mint
• Geo40
• OpenStar Technologies

Thanks to the venture capital fund managers who attended the session ...

• Altered Capital   - Finn Templeton
• Bridgewest  - Kate de Ridder
• Climate VC  -  Rohan MacMahon
• Icehouse Ventures - Robbie Paul
• K1W1  - Damon Crowe
• Motion Capital  - Lachlan Nixon
• Movac  - David Beard
• Nuance  - Mitali Purohit
• NZVC  - Mark Pavlyukovskyy
• Outset Ventures  - Angus Blair
• Pacific Channel  - Dr Sheryl Tan
• Quidnet Ventures - Mark Bregman
• WNT Ventures - MJ Alvarez