Investing in New Zealand

For an investor, happiness is often seeing a great return on an investment; but investing in New Zealand businesses can provide a Kiwi investor much more than just the opportunity to get a great return.

Personal Satisfaction

There’s no denying that backing New Zealand businesses just feels good. For a Kiwi investor, investing in New Zealand can also mean giving back to New Zealand. By backing local projects and businesses, Kiwi investors can see them succeed and be a part of that success by adding your skills and experience if required.

The Benefits to New Zealand

Any money that is invested, will eventually be spent by the investee. By investing in New Zealand opportunities, you ensure that a large portion (if not all) of the money will be spent in New Zealand on people, services and products.

Similarly, investing in New Zealand companies directly benefits their employees. As these businesses grow, they create new employment opportunities. This in turn reduces New Zealand’s unemployment rate, can increase the wage rate as demand for labour increases [1] and deliver a wealth effect.

Supporting the growth and expansion of New Zealand businesses can boost competition and innovation in the industry. Kiwi consumers can benefit from this greater competition, as usually this leads to better value through improved quality, diverse product offerings and a wider range of choice. [2]

Therefore, investing in New Zealand benefits not just the investor, but other New Zealand businesses too.

Closing the Funding Gap

One of the main reasons that many Kiwi businesses struggle to grow, is that they are under-capitalised (they do not have enough money).

In New Zealand, there is very little funding available for start-up businesses to progress onto the next level. New Zealand has a healthy angel investment sector – in 2019 $80 million was invested in early stage companies. However, once those start up businesses start moving into the expansionary stages, the funding available drops. In 2018, only $20 million of domestic venture capital funding was invested into businesses at the expansion stage.[3] This phenomenon is referred to as the ‘funding gap’. Investing in New Zealand businesses injects capital into our economy and helps to ‘close’ this gap.

Social Good

Recently, Sir Owen Glenn provided $100 million to support New Zealand’s small and medium sized businesses. This investment is a step in the right direction for closing New Zealand’s funding gap. It is crucial that these firms, which make up over 97% of all the businesses in New Zealand, have access to funding on favourable terms so they can sustain and increase their rapid growth. ^[4] Sir Owen, in creating this fund, recognises this importance and calls other investors to join him in providing the funds to finance New Zealand’s next generation of productive endeavours. 

Boosting Our Economy

Employment, increased competition and innovation and a wider range of better quality goods and services are all the beneficial effects of having a prosperous economy. At the end of the day, by investing in New Zealand businesses you’re giving back to our economy. The end goal is investors pooling their resources together to create a prosperous, vibrant and sustainable economy. Such investment will give our economy the push it needs to climb back up the world rankings in terms of productivity and GDP per capita.

Furthermore, growth businesses tend to create more jobs than large businesses. Job creation, especially high value job creation, not only increases the governments tax take but can also reduce the social burden carried by the government meaning they can deploy the extra funds into better services and infrastructure.

Investing in New Zealand therefore benefits not only a kiwi investor, but New Zealand as a whole. If you are interested in investing in New Zealand opportunities, please get in touch!

[1] https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/1995/1995dec58-4brash20nov.pdf

[2] https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/1995/1995dec58-4brash20nov.pdf

[3] https://thespinoff.co.nz/business/16-04-2019/closing-the-gap-why-this-budget-may-offer-hope-for-cash-starved-nz-firms/

[4] https://www.myob.com/nz/blog/wellbeing-budget-lacking-business-growth/