NZ Super backs local tech ventures via VC fund
The New Zealand Super Fund (NZ Super) is extending its commitment to venture capital-hungry technology companies via its latest allocation to New Zealand VC fund firm Movac.
The super fund is looking to invest in fast-growing, established local technology companies with the potential to scale to more than NZ$100 million ($62.2 million) in revenue. It will commit 50% of the first-close fund target of NZ$100 million, with scope to increase that to NZ$70 million commitment, depending on Movac’s fund raising.
The Movac Growth 6 Fund is targeting between NZ$100 million and NZ$150 million, Mark Vivian, general partner at Movac told AsianInvestor. It intends to invest in between eight and 12 companies, and expects the bulk of the fund to be deployed over the next five years.
“We're looking to invest in businesses that have at least NZ$2m in revenue. Examples of companies that we have invested in via our previous funds that fit this criterion are payments company Vend, Timely (appointment software), Unleashed Software (inventory management), Tradify (job management software), Open (carbon benchmarking), Auror (loss prevention software) and TracPlus (tracking & communication platform),” Vivian said.
“Movac is an experienced technology investor with good access to deal flow and a track record of successful exits,” said Del Hart, head of external investment and partnerships for the Guardians of New Zealand Superannuation, the manager of the NZ Super Fund.
NZ Super has been the largest investor in Movac’s funds IV ($50 million) and V ($70 million) and the two entities have developed an open and constructive relationship over several years working together, according to Hart.
Like all big funds that have the potential to dominate the investment landscape in their home market, the NZ Super fund must guard against accusations that it is not investing enough at home. Hart said this investment activity highlights the fund's commitment to identifying commercially attractive opportunities in New Zealand.
Along with mandates with other local investment managers, the Movac deal represents an efficient way for the fund to gain access to growth opportunities in small- and medium-sized New Zealand businesses, said Hart.
“This investment will help support local technology businesses that are high growth, typically internationally focused and will benefit from the management expertise and connections that come from an experienced and successful fund manager like Movac."
Vivian said the New Zealand technology sector has proven its ability to produce internationally competitive companies of value and scale.
“According to the Technology Investment Network's latest report, New Zealand’s tech sector is growing nine times faster than the rest of economy and has generated $11.5 billion in export earnings, second only to the dairy industry.”
As well as its investment in a variety of sustainable and carbon-reduction initiatives, NZ Super has backed other tech-related ventures. In December 2021, a consortium made up of NZ Super, Pioneer Capital and UK private equity firm White Cloud Capital bought into fertility treatment provider Fertility Associates, a provider of reproductive support, diagnostic services and fertility treatments in New Zealand and Malaysia.
It has also invested in the VC secondaries market this year, having appointed Stepstone as an external manager in 2021.