Local tech companies continue to excel in NZ and overseas.
Given its fast-increasing role in driving economic growth, the New Zealand tech sector could soon be the country’s largest export and offshore revenue generating industry, a senior BNZ technology banking expert believes.
Tim Wixon, BNZ’s Head of Technology Industries, says by anyone’s measure, tech is a large and important industry for New Zealand, not least because of the export and offshore revenue generation opportunities it provides.
“There are many highly innovative tech business models, many of which have had a lot of success globally and, in particular, in Australia and the United States in recent years and which are progressively doing so in other countries around the world,” he says. “The employment opportunities for New Zealanders across a wide range of disciplines is an exciting flow-on.”
BNZ is a key player in supporting local emerging tech companies - it currently finances around 1200 – helping them with debt financing, sound boarding, risk assessment, networks and capital planning. BNZ has established a leadership team specialising in tech industries who can offer thought leadership as well as financial and industry expertise. It also has a network of tech-focused bankers who help with daily banking needs of all scale of tech businesses.
Wixon says New Zealand’s tech sector businesses have been highly successful internationally but offshore interested parties really want to know that “we know our stuff. What is important to them is a strong offering in terms of technology and service, rather than simply being from New Zealand.”
He says despite the tight economic conditions, many New Zealand tech companies, particularly those who are profit-focused, are performing well and he expects they will continue to do so in 2024 and beyond. “We have seen an increasing number of tech businesses looking for pathways to profitability given the tighter investment markets globally.”
The 2023 Technology Investment Network report released in November bears this out. It shows an 11.8 per cent year-on-year growth for the top 200 New Zealand tech export companies on the back of strong performances in the North American and European markets.
According to the report, 77 per cent of the sector’s revenue – $13.2 billion – was earned offshore, making it New Zealand’s second largest export earner for the third consecutive year. Meanwhile the number of companies with revenue of over $50m has more than doubled in 10 years (65 in 2023, up from 33 in 2013).
“Some of our scaling tech businesses are also looking to grow offshore revenue through the acquisition of businesses overseas, something I hope we see more of, in contrast to only seeking to be acquired. This can give tech businesses not only fresh sources of revenue, but access new markets, new technology and the skills of the people working in these companies.”
Because the sector plays such a key role in New Zealand’s economy, Wixon says one philosophical question is commonly asked: whether to support the growth of “frontier” firms that remain in New Zealand or encourage the development of build-and-sell businesses.
He believes the answer is both. “While I’d like to see us helping companies stay in New Zealand who have the potential to grow and provide future jobs for our kids and future generations, we shouldn’t shy away from the fact that businesses often need to scale offshore to grow, and many may well be sold. If the right buyer comes along at a given time, selling might be the best decision for a business, otherwise they may well find the acquirer competing with them in their market.
“Also, selling is not usually the end. We tend to find that, when tech businesses sell, the founders, staff and investors become experienced mentors, founders, staff and investors for other tech companies in New Zealand – great for the continued growth of the industry.”
He says with interest rates up and valuations down, the economy is having an impact on the sector. “Sales cycles are definitely affected as people sit on buying decisions for longer and, in this climate, it’s harder to raise equity.”
“But the best performing tech companies are still attracting equity,” he says. “There is a lot of money around and more venture funds (equity and debt) available than ever before despite what is happening with the economy. I expect those companies who are growing well now will continue the momentum developed over the last 12 to 18 months.”
“We support all tech businesses whether it be those in software, ICT (information communication technology), high-tech infrastructure, high-tech manufacturing or biotechnology,” Wixon says. “Whether that’s through debt capital, daily banking and payments needs, networks or sound boarding.”
BNZ’s customers, who range from what Wixon calls “top of the town to the grassroots”, are supported through their full business cycle through its full service banking offering.
Wixon says BNZ offers a wide range of services including working capital and non-dilutive term debt solutions, support with payments and PayTech, foreign exchange, deposits and cash management, and revenue-based financing for Software as a Service (SaaS) businesses in the growth phase. It also brings a focused approach to financing for a select portfolio of New Zealand’s highest growth business and those with the highest potential for scale-up.
It has financing solutions available for Climate & CleanTech businesses and EmergingTech business that are past “proof of concept and have material contracts in place.”
Wixon says BNZ’s team of dedicated leaders have expertise in specific areas of the tech industry including Climate & CleanTech, FinTech, PayTech and Emerging Payments, EmergingTech, CreativeTech & Digital Media, Health & BioTech and AgriTech.
For more information: bnz.co.nz/business-banking/partners/technology-industry
This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article. Any opinions in this article are not necessarily shared by BNZ or anyone else.