An Exploratory Study of Foreign Angel Investor and Venture Capitalist Perceptions on New Zealand’s Deep Technology Investments

Abstract

As a nation, New Zealand’s relatively small domestic market and venture capital network is not self-sufficient to foster the optimal growth of nascent industries such as deep tech, where the pathway to commercialization is timely and costly. Increasing foreign direct investment may be a viable solution to foster New Zealand’s deep tech industry. Currently, there are no studies to date which have investigated foreign angel investor and venture capitalist perceptions on New Zealand’s deep tech investments. Therefore, the aim of this study is to gain an understanding of the perceived strengths and weaknesses specific to New Zealand, which impact the investment decision-making process of foreign investors. This knowledge can then be used by key stakeholders in New Zealand’s deep tech scene, to strategize a way to increase foreign direct investment into New Zealand’s deep tech ventures. Ideally, the study aims to answer the following: What attracts foreign angel investors and venture capitalists to invest in New Zealand’s deep tech ventures in the first place? What is our natural area of competitive advantage that differentiates us from other global dominants? What are our weaknesses, and therefore what actions or strategies do we need to propose to improve the deep tech ecosystem? Who are the key stakeholders in power to implement these changes? These contextualized questions form the crux of this exploratory study. A qualitative approach was adopted, and data was collected through interviewing a total of 9 participants online via video-calling, in the form of semi-structured interviews. Findings demonstrate that proposed actions can be implemented through four key stakeholders: the investee firm itself, the investors, and supporting institutions such as universities and government bodies. Furthermore, two novel contributions were highlighted. Firstly, some aspects of the New Zealand culture were perceived negatively by foreign investors. Secondly, foreign investors themselves were shown to have areas of inadequacies which may alter their perception of promising deep tech investment opportunities. Government bodies in New Zealand can work towards promoting New Zealand’s culture to boost the country’s reputation, whereas angel investors and venture capitalists themselves need to be better educated to order to foster the optimal growth of young deep tech ventures.