Company founders' willingness to sell out to a new owner or to take on major new shareholders has been vital to the creation of New Zealand businesses that have created around $34 billion of value in the last 15 years, says a new report from Callaghan Innovation.

Drawing on public records of capital-raising and takeovers involving high-growth New Zealand companies, the "Growing the Pie" report challenges perceptions that foreign ownership has been bad for New Zealand-founded companies and suggests the country is finally developing a more sophisticated entrepreneurial culture.

"We have come a long way since the sale of Navman 15 years ago and we are starting to see an explosion in entrepreneurialism in Aotearoa," said Callaghan chief executive Vic Crone.

Recycling the funds earned in a sale into new businesses is key to this emerging culture, she claimed, saying Callaghan's trawl through recent New Zealand corporate history had identified "at least nine businesses worth more than $1b each".


Among the star "unicorns" — tech companies that create more than US$1b in value — are A2 Milk, cloud accounting software developer Xero, synthetic bio-fuels innovator Lanzatech, and space company RocketLab.

Others are far less well-known or owe their Kiwi connection to the involvement of serial investors such as Guy and Susie Haddleton, who helped fund New York Stock Exchange-listed Anaplan, a planning software business valued at around $7b.

Some, like Xero, owe their capital-raising success to international investors and have shifted their sharemarket listing to the ASX or other, larger securities exchanges. Others, such as the $3b-plus London-based, New Zealand-founded financial services business, FNZ, have only ever relied on private equity.

Another eight technology businesses are estimated to be worth more than $500 million each and include NZX-listed, globally focused cinema booking firm Vista International ($820m) and the US 'faith sector'-based fundraising platform Pushpay ($900m).

Another 20 New Zealand firms are worth more than $100m across a variety of sectors.

These range from companies started at New Zealand universities, such as NZX-listed cancer diagnostics firm Pacific Edge ($150m) and PowerbyProxi, a wireless battery charging firm sold to Apple last year for more than $100m.

Also on the list are home-delivered meal provider My Food Bag, which the Callaghan report says was valued at $120m when part-sold in 2016 to Auckland private equity fund, Waterman Capital, and two Wellington-based entertainment tech companies, 90 Seconds and 8i, both valued at more than $200m.

"What most of these businesses have in common is they are helping to grow the innovation system in New Zealand," said Crone.


The report includes insights from some of New Zealand's best-known entrepreneurs and investors, including Warehouse Group founder Sir Stephen Tindall, Xero founder Rod Drury, My Food Bag founder Cecilia Robinson, and Lanzatech founder Sean Simpson. All have similar messages about the increasing evidence that New Zealand's most ambitious firms focus from the start on growing global businesses, but with warnings that the home market can be a hard place to find investors with big enough visions and balance sheets.

"There's not the propensity here to pick up $20m in one whack, so sometimes overseas people are invited in," said Tindall.

While all felt the old adage, that Kiwi business owners don't aspire to more than the combination of "bach, boat and BMW", was becoming outdated, the "tyranny of distance" remains a major obstacle to running a global business from New Zealand.

"The travel is really, really hard and it wrecks you for days," said Drury, who had this response to critics who accuse New Zealand business owners of selling too early: they "should go and build their own businesses and then they can comment". Even when owners sold out early in a company's life, "you tend to invest in a bunch of other companies", he said.

Lanzatech's Simpson says shifting the company from Auckland to Illinois was a commercial necessity, reflecting the relative cost of doing business, proximity to projects of scale, and the difficulty of attracting key technical staff to New Zealand and the country's regulatory barriers to using genetically modified organisms — a key element in Lanzatech's bio-fuel production.

By comparison, New Zealand's geographic isolation was a fundamental advantage to RocketLab, which used to share offices on the same floor of a Parnell building in Auckland before either company grew large.

On the other hand, "the thing we said would happen with Lanzatech — that a bunch of companies would start up from the people who didn't come with us to the US — has happened", said Simpson.

Simpson said Kiwis need to get comfortable with the idea that "some kids leave home" because there are better opportunities elsewhere.