Overseas funding for early-stage New Zealand technology companies has hit a record high, with foreign investment tripling in the past year.
Data from the second annual Investor's Guide to the New Zealand Technology Sector showed overseas funding for these companies had jumped from $51 million in the 2015 financial yearto $173m last year - up 239 per cent.
Early-stage companies were defined as those typically in research and development, pre-commercialisation or commercialisation phase.
Greg Shanahan, managing director of the Technology Investment Network (TIN) which produced the report with the Ministry of Business, Innovation and Employment (MBIE), said venture capital and publicly funded investment was a major growth driver for more than half of the fastest growing tech companies.
"This year's guide shows that funding is a critical part of the acceleration in sector revenue growth," Shanahan said.
"Record amounts of money are being raised locally by firms to invest in this space and record amounts of investment are coming from offshore into select companies," he said.
"Early stage investments from offshore investors are typically larger than are commonly seen in New Zealand. As the source of this money broadens, particularly with growing Asian investment, we can expect the trend to continue."
The number of high profile investors has also expanded rapidly with the likes of movie star Ashton Kutcher, Samsung, Vinod Khosla of Khosla Ventures, Viacom chair Shari Redstone and Paypal co-founder Peter Thiel all investing in Kiwi tech companies.
Simon Feiglin, managing partner of global private equity firm Riverside Company, said the focus of New Zealand companies was extremely attractive for investors.
"The thing we really like is that as a small and remote country, New Zealand companies almost from conception think globally, and are structured to achieve that objective," he said.
An increasing number of Kiwi companies were also pursuing overseas funding early on, and choosing to sell a stake of their business rather than the whole company.
Greg Shanahan, managing director of Technology Investment Network (TIN). 26 August 2014 New Zealand Herald Photograph by Brett Phibbs.
Over the past decade more than 50 local tech businesses have been taken over by foreign buyers - including Navman Wireless, Intergen and Fisher & Paykel Appliances.
The report showed the number of tech companies being bought outright was declining with two acquired last year compared with nine in 2013. According to Shanahan this was a reflection of the growing confidence of New Zealand companies in the industry.
The 2016 TIN100 annual report on the tech industry, produced by TIN, showed the 28,749 firms in New Zealand's tech sector contributed $16.2b to national GDP and employed just under 100,000 workers.
Technology was the country's third largest export in 2016, generating $6.9b in overseas revenue.
American business columnist Ashlee Vance said New Zealand's tech sector was well-respected.
"This country of 4.5 million people has started to churn out some awfully polished, extraordinary products," Vance said.
"They're world-class technological achievements - the work of a well-educated, creative people bent on competing on the world stage."
