With the election looming, the Herald asked the protagonists if there were any policies they would like to see to help lure more KiwiSaver money towards VCs.<\/p>\n
Icehouse Ventures chief executive Robbie Paul says VC firms should prove their own chops, rather than KiwiSaver funds being compelled to invest.<\/p>\n
But he\u2019s also looking jealously across the Tasman, where the equivalent to our KiwiSaver is compulsory and the pool of capital looking for a home is much larger.<\/p>\n
Icehouse Ventures chief executive Robbie Paul says VC funds should compete for KiwiSaver money on merit \u2013 but he’s also eyeing Australia, where the total pool of KiwiSaver-equivalent capital is much larger.<\/p>\n
\u201cI love the political debates about growing KiwiSaver contributions generally, and the aspiration to have more of it go into high-growth local technology companies that can create real value for this country,\u201d Paul said.<\/p>\n
\u201cThat said, I would rather achieve our goal of getting larger cheques from them by delivering value than lobbying government to force their hand.<\/p>\n
\u201cIf New Zealand is moving closer to Australia in how much we save for retirement, there\u2019s also an opportunity to think about how that capital is invested.<\/p>\n
\u201cA bigger KiwiSaver pool gives more New Zealanders the chance to participate in the growth of our best companies, while giving those companies access to more long-term capital from home.\u201d<\/p>\n
Simplicity co-founder and managing director Sam Stubbs wants the next Government to support “side pockets”, where riskier investments in unlisted funds are subject to different rules \u2013 making a venture capital punt less likely to scare the horses. Photo \/ Michael Craig<\/p>\n
The gap between the two systems extends beyond contribution rates, Paul said.<\/p>\n
Australian superannuation funds invest around 16% of their assets in private markets, compared with around 2-3% of KiwiSaver assets in New Zealand, Paul said.<\/p>\n
Venture capital makes up only part of that allocation, but Australia\u2019s largest fund, AustralianSuper, has alone committed more than A$1.5 billion ($1.84b) to Australian venture capital, giving its members exposure to more than 250 start-ups, Paul said.<\/p>\n
National, Labour, New Zealand First and the Opportunity Party have all campaigned on a shift to compulsory KiwiSaver and higher contribution rates that would get New Zealand closer to the 12% minimum for Australia\u2019s compulsory scheme, although with varying focus on employer versus employee contributions (for a Labour-led Government for example, the scheme would be compulsory for employers, with employees gaining more flexibility \u2013 more on each party\u2019s policy here<\/a>).<\/p>\n Sam wants side pockets<\/p>\n But Simplicity managing director Sam Stubbs says there is a concrete step the next Government could take to make VC funds more attractive to KiwiSaver players.<\/p>\n \u201cThey need to allow for \u2018side-pocketing\u2019 of unlisted investments,\u201d Stubbs said.<\/p>\n In fund management, side-pocketing is an administrative practice where a fund manager separates illiquid, hard-to-value or distressed assets from the rest of a fund\u2019s liquid portfolio. The side pocket is untouchable by investors who want to redeem their funds, at least until its assets become tradeable.<\/p>\n \u201cWe allow it here for other investment funds. Until it is extended to KiwiSaver, the amount invested in venture capital will be limited,\u201d Stubbs said.<\/p>\n \u201cAs a regulatory change, it should be a no-brainer.\u201d<\/p>\n Side-pocketing is on the table for phase II of the capital market reforms initiated by former Commerce Minister Andrew Bayly before he exited stage-left last year. It was still embroiled in a submissions process when Parliament rose.<\/p>\n Things have already been waking up.<\/p>\n Simplicity has now invested $85m across various Icehouse Funds, and in June invested $30m<\/a> in Bridgewest Ventures\u2019 first VC fund, which is focused on deep tech and health sciences.<\/p>\n Generate chipped in $40m across Icehouse\u2019s Growth Fund I and II.<\/p>\n Pie Funds put $10m into Growth Fund II and is intending to invest again in Growth Fund III, Icehouse\u2019s Paul says.<\/p>\n And Icehouse\u2019s biggest rival, Movac, landed $40m from Fisher Funds and $20m from Generate for its Growth Fund 6.<\/p>\n Private credit skew<\/p>\n There has been one policy move made by the current Government that has benefited the venture capital sector, the new \u201cgolden visa\u201d scheme introduced in April last year.<\/p>\n But some of the gloss has been taken off by the amount of money that\u2019s gone to non-bank lenders.<\/p>\n Paul said by his count, about $9 out of every $10 is going to private credit.<\/p>\n \u201cFrankly, I\u2019m glad it wasn\u2019t the opposite because it would drive irrational behaviour in the market to have so much capital arrive.\u201d<\/p>\n The balance isn\u2019t quite that extreme, but it\u2019s certainly tilting in the direction indicated by Paul. The latest figures show private credit attracted $842m, or about 70% of all growth category managed fund investment under the revamped Active Investor Plus visa (AIP).<\/p>\n Immigration Minister Erica Stanford recently toughened the rules. Private credit funds now face being stripped of their eligibility for AIP money if they just sit on cash.<\/p>\n \u201cI really hope that we don\u2019t see a scenario where these [AIP] investors essentially lent New Zealand money, got back their principal interest, and a visa,\u201d Paul said.<\/p>\n \u201cBut again, this needs to be a merits-based process to get more money into venture, not a policy-based one.\u201d<\/p>\n Pepping up Elevate<\/p>\n In 2020, the then Labour-led Government created the Elevate fund, managed by the Crown\u2019s New Zealand Growth Capital Partners (NZGCP), to co-invest in VC funds. It was bankrolled to the tune of $300m, with $270m contributed by the New Zealand Superannuation Fund.<\/p>\n In Budget 2025, the National-led Government topped up the fund with another $100m (the Startup Council had wanted $500m).<\/p>\n In Budget 2026, there was nothing for Elevate, but NZGCP did get $10m for a new \u201cfund of funds\u201d<\/a> to invest in \u201cselected emerging and first-time fund managers who invest in start-up companies\u201d.<\/p>\n In the current campaign, Labour has pledged to draw $50m per year from the Super Fund<\/a> and put it into Elevate.<\/p>\n Outset Ventures general partner Angus Blair told the Herald he backed the policy. Paul, as ever, leans towards laissez-faire.<\/p>\n The NZ Super Fund has been active in venture capital recently, regardless. It put $35m into Movac\u2019s Growth Fund 7 (which notably also drew indirect Crown backing in the form of a $50m contribution from the Government Superannuation Fund Authority, the Government\u2019s Super Fund for civil servants including MPs, police, the New Zealand Defence Force and general state servants).<\/p>\n Growth Fund III\u2019s first three investments<\/p>\n Growth Fund III, which has been open for six months, will invest in 20 late-stage companies growing globally, Paul says.<\/p>\n It has already put funds into three (all follow-on investments): Halter<\/a> and Calocurb<\/a>, both based in Auckland, plus Singapore-based Supabase<\/a>, founded by New Zealander Paul Copplestone, which has made a splash in Silicon Valley with its \u201cback-end\u201d platform for AI developers that helps to enable \u201cvibe coding\u201d.<\/p>\n Paul said 70% of the $180m for Growth Fund III has come from investors in Fund I and Fund II.<\/p>\n Growth Fund I and II backed companies including Halter, Hnry, Tracksuit, Crimson, Tradify, First AML, Sharesies, Dawn Aerospace, Partly, Substack, Ivo and Wayve. <\/p>\n The $110m Growth Fund I<\/a> is currently tracking at 1.78x total value to capital paid-in (TVPI), while the $122m Fund II<\/a> has a TVPI of 1.23x (see more stats on each here<\/a>).<\/p>\n But by its very nature, venture capital is high risk. Most start-ups fail. The industry\u2019s modus operandi is to make many investments, on the basis that a handful of hits \u2013 the Halters and Crimsons can outweigh those who tread water or drown.<\/p>\n Paul earlier said Icehouse Ventures has had 43 failures to date across its various funds \u2013 defined as having less than $1 returned for each $1 invested. There was another yesterday as clean tech firm Hydroxsys was placed in liquidation. Icehouse had a 4% stake in the water filtration start-up.<\/p>\n Chris Keall is an Auckland-based member of the Herald\u2019s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer. He has recently written about Movac\u2019s Growth Fund 7<\/a> raise, Calocurb\u2019s $27m raise as it rides the GLP-1<\/a> boom and expands in the US, Halter\u2019s revenue jump<\/a>, Ng\u0101i Tahu recruiting Movac<\/a> to scout and manage its direct investments and the Icehouse-backed Fuel50 selling offshore in a $72m deal<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"With the election looming, the Herald asked the protagonists if there were any policies they would like to…\n","protected":false},"author":2,"featured_media":635834,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[104723,2246,86207,138,1288,6965,5903,71,295,3499,90907,107140,78,296,137609,76369,702,6964,19136,1132,111,139,69,90,9617,311691,16485,77383,8229,61,12806,14301,4524,49632,6923],"class_list":["post-635833","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-180m","tag-2246","tag-50m","tag-business","tag-capital","tag-contributions","tag-election","tag-from","tag-fund","tag-growth","tag-icehouse","tag-iii","tag-in","tag-into","tag-invested","tag-invests","tag-it","tag-kiwisaver","tag-largest","tag-million","tag-new-zealand","tag-newzealand","tag-nz","tag-on","tag-player","tag-protagonists","tag-pushing","tag-simplicity","tag-they","tag-to","tag-venture","tag-ventures","tag-want","tag-weigh","tag-what"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/635833","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=635833"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/635833\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/635834"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=635833"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=635833"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=635833"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Crimson chair Sir John Key and chief executive Jamie Beaton. The education firm is one of Icehouse’s largest holdings. <\/p>\n
Halter is Icehouse Ventures’ biggest single punt, with $105m invested from various funds.<\/p>\n
Companies in the Icehouse Ventures’ $110m Growth Fund I stable, with size proportionate to the amount invested.<\/p>\n
Companies in the Icehouse Ventures’ $120m Growth Fund II stable, with size proportionate to the amount invested.<\/p>\n