Venture Debt - New Zealand | Statista Market Forecast

The country in New Zealand is projected to reach a Total Capital Raised in the Venture Debt market market of US$14.60m in 2024.
Traditional Venture Debt, with a projected market volume of US$11.38m in 2024, dominates the market.
In global comparison, the United States is expected to generate the most Capital Raised, amounting to US$22.4bn in 2024.
In New Zealand, Venture Debt is gaining traction as a strategic capital-raising option for startups looking to fuel their growth and expansion.

Definition:

The Venture Debt market refers to a form of equity and debt financing combination, which is used to finance early stage and growth stage capital-backed companies. Besides equity funding rounds, business can seek venture debt that minimizes ownership dilution and governance requirements to increase the cash runway to reach the next milestone or even provide a cushion for delays.

Structure:

The market consists of two segments:
- The Traditional Venture Debt market refers to a form of debt financing that is often provided to venture-backed companies to either buy new equipment, meet a deficiency of short-term capital, or support expansion plans.
- The Growth Venture Debt market refers to a form of debt financing that is often structured with warrants or options, which provides a rapid development stage in which businesses can support their long-term oriented growth plans.
The market data comprises of the amount of capital raised, number of deals, and average deal size.

Key players in this market are companies such as Wells Fargo and Hercules Capital.

Use the info button next to the boxes for more information on the data displayed.

Venture Capital
Venture Debt funds are sponsors by governments

The Venture Debt market in New Zealand has been experiencing significant growth in recent years.

Customer preferences: New Zealand entrepreneurs and startups have shown a strong preference for venture debt as a financing option. This preference can be attributed to several factors. Firstly, venture debt offers entrepreneurs the opportunity to raise capital without diluting their ownership stake. This is particularly attractive for early-stage startups that are looking to preserve equity. Secondly, venture debt provides a flexible and non-dilutive source of capital that can be used to fund growth initiatives, such as product development or market expansion. Lastly, venture debt is often seen as a complement to equity financing, allowing startups to extend their runway and achieve key milestones before raising additional equity capital.

Trends in the market: The Venture Debt market in New Zealand has been growing rapidly, driven by several key trends. Firstly, there has been an increase in the number of startups and entrepreneurial activity in the country. This has created a greater demand for alternative financing options, such as venture debt. Secondly, there has been a shift in investor sentiment towards venture debt. Investors are increasingly recognizing the potential returns and lower risk profile associated with venture debt compared to equity investments. As a result, there has been a greater availability of venture debt capital in the market. Lastly, there has been an increase in the number of venture debt providers in New Zealand. This has led to increased competition and innovation in the market, driving down costs and improving terms for borrowers.

Local special circumstances: New Zealand's small and tight-knit startup ecosystem has created a unique set of circumstances for the Venture Debt market. Firstly, the size of the market means that venture debt providers have a limited pool of potential borrowers to choose from. This has led to a focus on early-stage startups that have the potential for rapid growth. Additionally, the close-knit nature of the ecosystem means that venture debt providers often have a deep understanding of the local market and can provide tailored financing solutions to meet the specific needs of New Zealand startups.

Underlying macroeconomic factors: Several macroeconomic factors have contributed to the growth of the Venture Debt market in New Zealand. Firstly, the country's strong economic growth has created a favorable environment for startups and entrepreneurial activity. This has attracted both local and international investors to the market, increasing the availability of venture debt capital. Secondly, low interest rates have made venture debt an attractive financing option for both borrowers and lenders. Borrowers can access capital at relatively low costs, while lenders can generate attractive returns on their investments. Lastly, the government's support for innovation and entrepreneurship has also played a role in the growth of the Venture Debt market. Initiatives such as the New Zealand Venture Investment Fund have provided additional capital and support for startups, making venture debt an even more viable option for entrepreneurs.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only some of the VC-backed companies develop into successful and highly profitable businesses. In 2020, the leading venture capital backed company worldwide was the Manbang Group, which based in Nanjing, China.