It has been another incredible year of deal activity for the team at Kindrik Partners. For the first time, we closed more than 100 deals in a calendar year – 116 deals to be exact across our New Zealand and Southeast Asia offices, up from 92 in 2018.
Once again the Southeast Asia team has shown tremendous growth, with 74 closed deals (c.f. 47 in 2018). New Zealand was steady with 42 deals closed (c.f. 45 in 2018).
In total, we were involved in closing nearly half a billion dollars of capital raising. Or $470m to be more accurate (c.f. $337m in 2018). Of this, our Southeast Asia clients took the lion’s share with $328m with the remaining $114m going to NZ companies.
The average NZ raise size was $3.4m, but the median was much lower at $832,000. Soul Machine’s massive Series B raise which closed in December caused the big gap between the average and median raise sizes.
The average raise in Southeast Asia was $4.3m, with a median raise of $1.6m. Again, a few hero raises such as Indonesian healthtech Alodokter’s US$33m series C really pushed the average well above the median raise.
While we enjoy the excitement that goes with these big headline grabbing deals, our team takes huge satisfaction from the speed and (low) cost at which we can turn out and close a high volume of pre-seed, seed and Series A investment deals (which are still the life blood of startup financing).
The average pre-money valuation for equity transactions in NZ was $18m with a median of $5m, compared to $48.7m and $7.5m for Southeast Asian equity tranasctions. Like the average and median raise sizes, the average pre-monies in both markets are distorted by a few hero deals.
Equity (shares) was the most common investment instrument in both New Zealand and Singapore.
As in previous years, most pre-seed investment transactions and a majority of non-institutional seed rounds in Southeast Asia were made using convertible notes. The KISS note being the most common type of note used. In all, 22 of our Southeast Asian transactions were convertible notes.
Convertible notes were more common in New Zealand this year, both for seed investments but also for raising bridging investment between Series A and Series B. We helped complete 12 New Zealand note deals. For the first time, our percentage of local note deals (28.5%) matched the % of Southeast Asia note deals (29%).
We also helped New Zealand and Southeast Asian companies close a handful of venture debt deals. We think we will see more of these deals in coming years, as some later stage companies in both markets will see this as an attractive alternative to equity dilution.
(Interested in learning more about venture debt? Read our venture series profile on Partners for Growth)
In New Zealand, the Government’s new Venture Capital Fund (VCF) will inject $300m of new money into the local tech investment scene. The VCF is a fund of funds which will invest into existing and new series A and Series B focussed VCs (for more detail see our blog on the original Venture Capital Bill). This, plus the increasing interest of Australian VCs in the NZ market, as well as the increase in the annual investment ceiling for NZVIF’s seed co-investment fund should see a meaningful lift in NZ capital raising numbers.
Though it’s too early to see what impact COVID-19 will have on capital raising in Southeast Asia, we’ve had anecdotal evidence that business travel has dampened in the region. Although the region remains active, numbers may fall below what we saw last year as overseas investors delay travel to the region, and investors and founders shift more towards remote working tools such as videoconferencing to build trust and confidence through the capital raising process.
*all $ amounts are NZ$ unless otherwise specified
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