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australian venture debt investor hunting NZ deals

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We’ve often heard NZ tech companies bemoan the lack of active venture debt investors in the NZ market.

In North America, venture debt from financiers like Silicon Valley Bank helps companies with strong cash flows to raise finance for growth without the level of dilution, or loss of control, that comes with raising venture capital investment.  This growth is often what is needed to bridge a company to a significant liquidity event (an exit or IPO) or to more traditional funding sources (bank finance).

In contrast, in NZ there is pretty much just private equity between venture capital investment and bank financing.  And securing meaningful bank financing is extremely hard for most NZ tech companies.

This may be about to change, however, as Australian venture debt financier Partners for Growth (PFG) is on the hunt for Kiwi tech companies interested in raising venture debt.

PFG venture partner, Karthi Sepulohniam, reached out to us last week to tell us about PFG and their financing criteria:

We focus on revenue-stage  companies – above $5 million in revenue – and with a growth  story.  We seek to fund good companies who generally can’t  get finance from banks and are seeking to minimise dilution from raising equity capital.  Originally founded in San Francisco in 2004, PFG has been financing companies in Australia since 2007 and we have now expanded to New Zealand.

We provide financing of between $1 million and $20 million and have a particular focus on financing technology and software companies.  Investment is typically via a mixture of interest bearing secured debt and warrants, sometimes provided alongside equity investors.

Karthi wanted to know if this type of offering would be of interest to some of our clients.  The answer of course is yes – we have an increasing number of NZ clients crossing the $5m revenue threshhold, and an additional type of local funding mechanism for these types of companies would be a great help.

If you are interested to find out more about PFG and venture debt, please drop Karthi an email or ask one of the Simmonds Stewart team to connect you.

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