TLDR:
- New Zealand startups received $163 million in funding in 2023, down 12% from 2022.
- DeepTech was the most popular sector for investors, followed by software.
New Zealand startups faced a decrease in venture capital funding in 2023, with investors backing local startups to the tune of $163 million, a 12% decrease from the previous year. Despite the decline in funding, the number of deals completed increased from 142 in 2022 to 144 in 2023, as reported by Young Company Finance. The latest Startup Investment report highlighted challenges such as high inflation, skills shortages, and reduced corporate and government procurement spending that Kiwi founders had to navigate. The report also noted that DeepTech was the most popular sector for investors, accounting for 38% of total capital funding, followed by the software sector at 30%.
The number of new deals decreased from 46 in 2022 to 40 in 2023, with new deals making up 31% of the total funding. The average amount raised for new startups also declined by 22%, from $1.6 million in 2022 to $1.2 million in 2023. Despite relatively stable investment levels in the first half of 2023, the remainder of the year showed a decrease in investment activity, which was attributed to challenging economic conditions.
Investors’ defensive posture was understandable in the current economic climate, but there were concerns that it could jeopardize the future pipeline of new companies and hinder their growth opportunities. Angel Association New Zealand chair emeritus emphasized the importance of building a healthy pipeline of innovative companies to maximize their positive impact on the economy. The report highlighted the need to maintain momentum in the startup ecosystem despite the challenges faced by Kiwi startups.
