Over the last several years, the digital startup ecosystem in New Zealand, a country with a population of 5 million people in the South Pacific, has shifted. While significant international firms like Xero, Rocket Lab, LanzaTech, and Seequent have brought attention to New Zealand’s startup ecosystem, the country has long lacked venture funding. As a country whose economy is based mostly on agricultural exports, New Zealand’s startup culture has traditionally relied on investment from a network of high-net-worth individuals and family offices who acquired their fortunes in real estate or farming.
The New Zealand government established Elevate, a $300 million fund of funds initiative that has provided millions to local VCs to invest in the startup sector to cover the early-stage funding gap, in March of last year. At the same time, global investors have been flocking to the little country, which has a reputation for developing excellent businesses. Founders and venture capitalists in New Zealand are hoping that the increased financing from a variety of sources signals that technology will be the country’s next great sector. That is if the current trend of increased early-stage funding continues.
We spoke with two founders (Peter Beck of Rocket Lab and Cecilia Robinson of Au Pair Link, My Food Bag, and Tend) as well as two investors (Phoebe Harrop, principal at Blackbird Ventures, and Robbie Paul, CEO of Icehouse Ventures) to get the inside scoop on the best advice for New Zealand entrepreneurs looking to break into the market. Here is what we discovered.
Consider the larger picture and believe in yourself. New Zealanders have a tendency to be introspective, failing to think broad and internationally from the start, according to Beck. This is partly because New Zealanders grow up in a society where “tall poppy syndrome” exists, in which those who have achieved any level of success are mocked, chopped down, or undermined.
As a reason, few individuals aspire to be tall poppies. Use the Kiwi card to your advantage. New Zealand is well the world community. “Building a company is really unpleasant and requires a lot of labor,” Beck told TechCrunch. “Why would you spend your time starting a small business?” Let us create a large corporation. So go after the major issues.” Do not be too modest if you want to psych yourself up to take on those enormous challenges. New Zealand routinely outperforms its peers in terms of producing excellent entrepreneurs and innovative businesses, according to Paul.
Paul told TechCrunch, “Believe in yourself and believe you can win on a worldwide scale.” “While starting on a rock at the bottom of the planet has its drawbacks, it also has its benefits.” “Remember that an investor’s money is the least important thing they can offer you,” Beck remarked. “As you consider how and where you want to grow your firm, make sure you enlist the support of investors to get you there.” People get starry-eyed by the check and don’t take the time to think about whether or not this individual is strategic to them.”
Beck was quite cautious about the investors he brought in when he was creating Rocket Lab, claiming that the distinguishing element between investors is not their wealth, but who they could call. For example, Khosla Ventures invested in Rocket Lab’s Series around, which opened the way for another prominent VC, Bessemer Venture Partners, to invest in a Series B round, according to Beck. The Series C was led by DCVC, but by the time Rocket Lab got around to its Series D, Bessemer had paved the way for Greenspring, a Bessemer limited partner (LP). Sovereign wealth funds, which are where the truly big checks come from, were Greenspring’s LPs in the company’s E round.
“As your firm grows, there are more and greater pools of cash you can go after, and if all you have is John from Pakuranga, John doesn’t have the phone number or credibility with sovereign wealth funds,” Beck explained. “It’s all about putting up the firm so that when you need to raise more money, you can go to that venture capitalists LPs, and then that LP’s LPs, and eventually you’ll wind up with sovereign wealth funds or others who can sign a $100 million check with no difficulty. It’s a smooth road there, and where it becomes problematic is when there isn’t one or when it’s shortened, and the challenge in New Zealand is that, while there are some higher-quality venture capital companies there, where are their links with limited partners?”
