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2020 capital raising transactions

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No one could have predicted the events of 2020, not even the trend-spotting venture capitalists. For many startups it’s been a year of survival, re-sizing or even pivoting. Amidst the worldwide turbulence and uncertainty, capital raising transactions continued to flow across our offices.

For the second year in a row, our New Zealand and Southeast Asia teams helped close more than 100 deals in a calendar year – 146 to be exact.

Our New Zealand team advised on 64 deals (c.f. 42 in 2019), while our Singapore team advised on 82 deals (c.f. 74 in 2019).

amount raised

We reported earlier in the year our findings on how kiwi startups anticipated the impact of Covid-19 and how it impacted their decisions around capital raising. Our numbers show that their resilient attitude bore out and capital raising largely went ahead as planned, even with international turbulence.

Overall, our data suggest that financing rounds were smaller and more conservative in 2020 than in previous years, with startups raising a combined $370m across the firm (compared to $470m raised in 2019).

Of this, Southeast Asia startups took home $248m with our NZ startup clients receiving $122m of investment this year.

Excluding small raises involving a solo investor and small non-institutional pre-seed rounds, the average NZ round size was $2.2m. The median round size for NZ financings was $1m.

The average raise in Southeast Asia was $3.2m, with a median of $2.1m. This is slightly higher than last year’s $1.6m. This number includes an increase in the amount of bridge financings that we advised on, with VCs looking to support existing portfolio companies through the uncertain times.

investment structure

Equity financings continue to be the most common investment structure in both New Zealand and Singapore in 2020 – 69% of the rounds in NZ and 61% of rounds in Asia were equity rounds. Convertible notes continue to become a much more permanent fixture in the NZ ecosystem compared to a few years back.

looking ahead in 2021

In terms of NZ, we anticipated at the beginning of 2020 that the Government’s new $300 million Elevate NZ venture capital fund might start to have an impact on the availability of growth capital in NZ. So far we have seen investments into the likes of Blackbird Ventures and Pacific Channel, and 2021 may see further progress.

Business travel is of course scuppered for now. In the past, many NZ startups have looked offshore for follow-on investment. This was hindered in 2020 without the possibility of in-person meetings. Whilst investment deals are still being concluded remotely we have heard stories of NZ-based startups postponing investment rounds because they cannot get in front of international investors.

This might be an opportunity for NZ’s investor community to step in during 2021. Given NZ’s success with Covid-19 leading to a level of normality in the startup and investment community (outside of some badly hit sectors), we also might see greater foreign investment into NZ companies in 2021 when the doors start to open again.

In Singapore, a lot of our VC clients paused somewhat in 2020 whilst they reviewed existing portfolio companies. Deals were still concluded, just at a slower pace. With a lot of dry powder we’d expect to see a greater return to action this year by the Southeast Asian VC funds. Those companies who hunkered down for survival in 2020 may well need to go out and seek funding.

Covid-19 also slowed down the emergence of new startups with in-person accelerator programmes essentially halted in Singapore. As these re-emerge in 2021, we should see an increase in seed investment transactions in the second half of the year.

Finally, whilst we don’t publish the numbers, we saw a notable increase in the number of exit transactions in both NZ and Asia. This reflects the global trend which is currently seeing a significant number of tech M&A deals. 2021 should have more of the same.

*all $ amounts are NZ$ unless otherwise specified

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what happened in 2020 for our commercial team

Like every business, we had fears that COVID would slow both us and our clients down. But putting aside the amount of time we spent on Zoom and Teams meetings, that’s not what the stats suggest.
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