NZVCA urges government action to build Venture Capital

NZVCA urges government action to build Venture Capital for young innovative firms



NZVCA urges government action to build Venture Capital for young innovative firms



NZVCA wants to see a more nimble and flexible approach from government towards the New Zealand Venture Investment Fund’s ‘VIF’ programme.



NZVCA Chair Kerry McIntosh said investors are continually exploring new ways to fund projects and grow companies, but government requirements over the VIF programme means NZVIF’s investment rules lack flexibility and can be unattractive for private investors.



“The rules need to match market realities. NZVIF needs to be given greater dexterity around matching ratios, fund size and flexibility for international investors.



“NZVCA also wants to see the barriers to venture capital investment addressed where government has influence, such as the Wealthy Migrant programme, superannuation funds schemes - including NZ Super and KiwSaver - and possible tax incentives to encourage investors in fast growing companies.”



Mr McIntosh said a high priority for the government should be support of existing infrastructure including the market development work of NZVIF and NZTE. He urged greater effort to involve the private capital industry in policy design and building international connections to enhance the pools of talent and capital needed to grow international and export capable companies from New Zealand.



“A New Zealand venture capital market has developed over the last nine years, assisted by the NZVIF programme, but it is still in an emergent state. Over this period, this market has invested in excess of $500 million in venture businesses, with these businesses now earning $250 million in annual revenues (mostly from exports), employing over 1,000 people, and having revenues per employee of $250,000 (versus a NZ average of $140,000).



“This is a very good start to a healthy public/private partnership, but only the beginning of what is possible. We would like to see the government commit to the VIF programme for 10 years.”



The New Zealand Private Equity and Venture Capital Association (NZVCA) released its recommendations today to urge Government to change policy to ensure the venture capital market survived in the short term and that it was fit for purpose in the long term.



“Venture capital funds are key capital providers to young innovative firms. Venture capital helps these businesses grow through early stages until they are able to access more traditional debt or equity sources.



“The primary engines of growth in developed economies involve innovation and its successful commercialisation. Government and industry have invested in the New Zealand venture capital industry and we cannot afford to let the investment wither away. If that happened, we foresee the government of the day once again trying to kick-start a venture capital market. The NZVCA considers this an undesirable outcome and potential waste of resources that could be averted by careful policy re-orientation now,” Mr McIntosh said.

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