The New Zealand Fintech Fund (NZFF) is looking to invest between $100,000 and $500,000 a pop in early-stage firms in areas like “neo-banking” and digital lending. Photo / Getty Images
A new venture capital fund, aimed at fintechs, has already made its first three investments – and its founders are hoping the sector will get a boost from an open data bill introduced to Parliament
last week.
The New Zealand Fintech Fund (NZFF) is looking to invest between $100,000 and $500,000 a pop in early-stage firms in areas like “neo-banking” and digital lending.
The fund was created in a collaboration between finance industry specialists Marty Kerr (a former Visa executive) and Mike Burke (a former director of digital ventures for Westpac NZ), business growth specialist Point16 and venture capital firm Icehouse Ventures.
Kerr said just under $2m had been raised for the fund. It hopes to close out, over the next two quarters, at between $8m and $10m.
The NZFF’s first three investments are in Indi, billed a “digital mortgage disruptor”, personal finance app SortMe (recently included in a roundup of budgeting apps by Herald columnist Diana Clement), and employee benefits app HealthNow (which earlier drew backing from Anna Mowbray). The startups also get strategic support from NZFF, which Kerr says will help them navigate banking regulations.
Some fintec startups, and some large established players, including payments network operator Worldline, have said banks have been too slow to introduce open banking – including “application programming interfaces”, or APIs, that will let apps talk to their systems, allowing startups to more easily offer full-blooded financial services, and let customers take their data with them when they switch providers (potentially even taking their bank account numbers with them, in the same way you can take your mobile number with you when you change telco).
Commerce and Consumer Affairs Minister Andrew Bayly says the Consumer and Product Data Bill 2024, introduced to Parliament last week, will make it easier for new digital payment apps to emerge, as well as new lending options (the first focus will be on banking, once the legislation is passed, but Bayly believes it will also apply to electricity and other markets).
Nudged along by Bayly, the major banks have also agreed to meet preliminary open benchmarks by May 30, and be operational for open banking by November 30.
Fintech investment fell sharply in 2023
A fintech report released last week by Tin (the Technology Investment Network) found strong growth overall in the sector.
“But the investment numbers were disturbing,” Kerr said.
The report said NZ reached peak fintech investment of $186m in 2022, but funding fell sharply in 2023, down 89 per cent to $21m as deal volume halved. Of the $372m total capital raised in the past three years, $224m was from deals led by offshore investors (a top-up for the Crown-backed Elevate fund failed to materialise in the tech-light Budget 2024, among other measures some in the sector had been hoping for).
Kerr said NZ was a long way behind Australia, Britain and other markets in fintech. “I’m optimistic the new legislation will help, but it won’t happen overnight,” he said.
Regulation was part of the equation, but better access to capital and knowhow was also required – which was where he saw NZFF coming in.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
