Ag tech and life sciences strongest sectors in NZ start-up ecosystem: report

A collaborative ecosystem and government support are two reasons to move a start-up to New Zealand, says Start-up Genome report.

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Agricultural tech and life sciences are highlighted as the leading areas for New Zealand start-ups, according to a global report that includes data on 1.3 million companies worldwide and covers more than 250 ecosystems. The New Zealand Ministry of Business, Innovation and Employment is part of its international network.

The Global Start Up Report 2020 notes that New Zealand has more than 90 ag tech start-ups and cites successful venture capital raising from Palmerston North company BioLumic and Auckland-based Revolution Fibres, as well as the country’s selection as the first partner state for Farm 2050, as evidence of the sector’s strengths.

Life sciences is also highlighted as a growing sector, with revenues of $3 billion. (The report uses US dollars, but figures are converted to New Zealand dollars in this article.) “The sector is increasingly delivering effective solutions to big health problems including through deep-tech start-ups such as HeartLab, a deep learning-based solution for echocardiography,” the report said.

In addition, the report cites Biomatters, a provider of DNA data analysis tools worldwide, which was acquired by US company GraphPad in 2019, and the involvement life science technology incubator Brandon Capital in research discoveries.

The New Zealand ecosystem valuation—calculated as the value of exits and start-up valuations over 2017, 2018 and the first half of 2019—is $2.3 billion. This compares to the global average of $16.3 billion. Drilling further in the numbers, the median seed round in tech start-ups over the same time period in the New Zealand ecosystem was $832,000—a little ahead of the global average $768,000.

Meanwhile the average salary for a software engineer in New Zealand is, according to the report, $76,000, compared to the global average of $65,000. This figure is calculated using data from Glassdoor, and Payscale, as well as local sources.

Highlights of the local ecosystem are the collaborative start-up ecosystem. This is due to New Zealand having the highest per-capita ratio of angel investors in the world—according to the report, there are 1,000 angels in a nation of 5 million. It also mentions the Scale Up NZ platform, a Callaghan Innovation initiative which provides an online hub for businesses, investors, incubators, multinationals and other collaborators.

Callahan Innovation Chief Executive Vic Crone says that New Zealand start-ups are “increasing targeting overseas market and nailing unique, but significant, global niches. … Critical focus points for our ecosystem are building more active and diverse partnerships and boosting deep tech commercialisation.”

In addition, the report notes the funding support provided by the New Zealand government, which includes a refundable 15% R&D tax credit for pre-profit start-ups and the $300 million Elevate NZ Venture Fund, which is expected to make its first allocations this year.

The government’s COVID-19 support package—which includes the wage subsidy scheme, the $4.1 billion Business Finance Guarantee Scheme and the $99 million loan scheme to support R&D firms—is cited in the report.

New Zealand’s start-up ecosystem is rated as being in the ‘activation phase’, which the report characterises as being an ecosystem where there is little start-up experience and low start-up output of around 1,000 or fewer start-ups. The country is ranked between 31 and 40 in the list of the top 100 emerging ecosystems, between Rhineland in Germany and Oslo in Norway.

Copyright © 2020 IDG Communications, Inc.

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