Investment help for mid-range companies

A Government service to help businesses raise capital and accelerate their international growth is turning its focus to the investment needs and opportunities of highly innovative firms and mid-range companies valued at up to $25 million.

Better by Capital was developed following research that revealed some potentially high-growth firms find it difficult to access capital. Under the programme, New Zealand Trade and Enterprise works with companies to develop a tailored plan to identify the work they need to do to prepare for new capital investment.

“The step to becoming an international business can require new capital for expansion, acquisition or joint ventures,” Mr Joyce says.

“Companies valued at less than $25 million often have the greatest need for high-quality growth capital. Companies need access to capital across all stages of the business lifecycle to achieve their growth objectives.”

The Better by Capital programme, which was launched in July 2013, is one of 50 initiatives in the Building Capital Markets of the Government’s Business Growth Agenda. It is run in partnership with New Zealand and international financial institutions, intermediaries, banks and investor networks.

“Capital is vital in allowing businesses to grow, invest, export and create jobs,” Mr Joyce says. “Achieving our overall BGA target of increasing exports to 40 per cent of GDP by 2025 requires an extra $160 billion to $200 billion of new productive capital to flow to our export businesses.

“If we want more jobs and higher incomes, then the New Zealand economy needs a lot more investment, including from overseas investors.”

Mr McClay says: “The Government is taking a range of actions to create high-performing capital markets in New Zealand, focusing on levelling the playing field with overseas competitors by reducing the cost of capital to Kiwis.

“Global demand for innovative products and services is expanding rapidly. However these companies tend to be difficult to fund from traditional capital sources given their low revenue base and shorter proven performance records. This is why we these firms are a priority for us.

“The programme’s other key focus will be seeking investment for companies with an enterprise value of less than $25 million that require growth capital of between $2 million to $10 million – the level of capital that can be harder to source on the domestic market,” Mr McClay says.

Since July, 280 companies have participated in the programme, which is part of a suite of NZTE activity designed to help New Zealand companies prepare for and source investment.

Mr McClay will today speak at Capital Connect 2014, an NZTE/Institute of Finance Professionals-organised event that brings New Zealand’s angel investment, venture capital and private equity community together. The event marks the first anniversary of the Better by Capital Programme: www.nzte.govt.nz/BetterbyCapital