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Expats keen to invest in NZ business - study
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There is a vast untapped pool of expatriate Kiwis who would be willing to invest in businesses back home, if only they could be connected with the right deal.
So say those behind a new survey from expat organisation Kea, which has found that at least 15 per cent of offshore-based Kiwis are strongly motivated to invest in New Zealand companies.
The survey of 500 people in New Zealand and overseas , including 469 expat Kiwis who identified themselves as prospective investors, had identified considerable untapped potential, Kea chair and co-founder Sir Stephen Tindall said.
''These findings prove there is a great opportunity for New Zealand's public and private sectors to mobilise the Kiwi expat investment force.
''Most New Zealanders see economic growth as our best chance of achieving improved prosperity, but growth requires capital and connections.''
Since 2006 foreign direct investment in New Zealand had declined from $4.7 billion that year, or 4.3 per cent of GDP, to just $0.6b, or 0.4 per cent of GDP, in 2010. This was one of the biggest deteriorations in the world, he said.
It wasn't just about money, however. Three-quarters of the offshore Kiwis said they would be willing to help mentor or manage a New Zealand small to medium enterprise.
Around 13 per cent of the prospective investors said they would invest $100,000 or more in a start-up business, but this rose to 18 per cent if there was an opportunity to co-invest with a domestically located angel investor, the survey showed.
Just over 15 per cent would invest $500,000 or more in a SME business, while 35 per cent said they would prefer a hands-off style of investment such as contributing to a seed fund.
The research found that commercial and active New Zealand investors - just under half those surveyed - were likely to earn over $200,000 and have been out of New Zealand for 10 years or more.
The survey was done in conjunction with the Bank of New Zealand and Auckland City economic development agency ATEED.
Government agency New Zealand Trade and Enterprise had been working these kinds of connections for years but it was time for all sectors to get on board, particularly following the international attention the Rugby World Cup had generated, Sir Stephen said.
''The research I think is a catalyst for action.''
However it also highlights a number of roadblocks to investing in New Zealand.
There was comment that New Zealand ''acts like a small, remote, conservative community that is not open to strangers'', and that Kiwi business owners lack the ambition and passion necessary to grow a global enterprise.
Some interviewees observed a culture of ''do it for me'' rather than ''do it for myself''.
There was also feedback that business owners displayed investment and market naivete and a reluctance to engage with advisors.
Several respondents were concerned that there is little investment in small Kiwi businesses by domestic institutions such as Kiwisaver and ACC, and that there is a lack of sophisticated investment vehicles for key sectors - for example, the dairy industry.
But they said New Zealand was an innovative market with a strong talent pool, and issues such as foreign exchange risk and taxation rules could be overcome for the right deal.
Alistair Jeffery is an example of the kind of person Kea wants to connect with. Now based in the UK where he is the executive chairman and largest shareholder of mortgage lender Bluestone, Jeffery grew up in Dunedin and did a mining engineering degree at Auckland University.
He has recently invested in Generator, a business club and serviced office provider for SMEs in central Auckland.
The connection came about after Jeffery used Generator's services while in New Zealand, CEO Ryan Wilson said.
He kept in contact with the startup and eventually invested two months ago.
''Once we had it up and running and could show revenue was heading in the right direction then it became an entity he was quite happy to invest in.''
He took a mentoring approach, helping to make sure the company had the right structures in place for future capital raisings.
Jeffery was looking to become involved in Kea, seeing it as a pipeline for further business opportunities, Wilson said.
Of his investment in Generator, Jeffery said it provided a dynamic and professional working environment for early stage, high growth businesses.
''The model is scalable, and meets a very clear demand in the market which in my experience is not being met by other providers, either in New Zealand or abroad.''
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