Innovative Kiwi tech businesses will find it easier to raise capital thanks to a new funding option unveiled today by Bank of New Zealand (BNZ).
Contracted Receivables Financing provides Kiwi high-tech manufacturing, high-tech infrastructure, software-enabled hardware, and biotechnology businesses with access to debt capital based on a percentage of revenues from eligible signed contracts, rather than a profit only measure.
“Tech sector start-ups and scale-ups often require significant capital to grow, and we’ve been working hard to provide New Zealand’s tech industries with earlier access to capital to fund growth and expansion, and to help the industry grow as a whole,” says BNZ Head of Technology Industries Tim Wixon.
BNZ will initially focus on financing businesses in the Climate and CleanTech and Aerospace sectors before extending the offering to additional sectors over time.
“Finding funding can be particularly difficult for New Zealand’s earlier stage tech innovators as investment capital isn’t always as readily available here as it is overseas. This means that just to keep growing, entrepreneurs often need to sell more equity in their businesses sooner than they’d like,” Wixon says.
“That’s where we can help, by giving these businesses the support they need while allowing founders to retain ownership and keep control over their vision.”
“We’re passionate about Kiwi tech at BNZ and excited to launch this funding model to help support the nation’s trailblazers and foster a vibrant homegrown tech ecosystem.”
In addition to helping solve the undercapitalisation of Kiwi tech start-ups, Contracted Receivables Financing could also provide wider benefits by helping to keep more of the profits, employment and skills generated by the high-tech industry in New Zealand.
The Technology Investment Network’s (TIN) latest industry report shows New Zealand’s top 200 tech exporters generated over $15 billion in revenue in 2022, with the tech sector second only to dairy for export earnings. This growth supported the creation of 6,148 new Kiwi tech jobs – a year-on-year increase of 10.9 percent.
BNZ’s new offering complements its other innovative finance solutions to support Kiwi tech companies: Revenue Based Financing for software as a service (SaaS) businesses, and Project Scale Up, which provides high-potential and high-growth technology businesses with access to non-dilutive capital and expert support.
Contracted Receivables Financing will be available from 1 April 2023.