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UPDATED: 11 May 2020: On Thursday this week, the Hon. Grant Robertson will announce the government’s 2020 Budget. It will be against the almost surreal economic background created by the COVID-19 pandemic. Last month, Agritech New Zealand released the results of its Insights Sector survey. It reflected several areas of major concern for New Zealand agritech businesses.

Over the past few weeks, Agritech New Zealand has been working closely with the government’s Agritech Industry Transformation Plan (ITP) taskforce to promote the ITP’s inclusion in Thursday’s announcement. We believe it can create significant opportunity for New Zealand’s agritech businesses, both short-term and long-term. We now await the outcome of that work.

The Agritech New Zealand Insights Sector Survey results are out. You can view the detailed Survey results here.

The purpose of the Agritech New Zealand Insights Survey was to get a better understanding of the New Zealand agritech sector’s resilience and business continuity planning, both during the COVID-19 lockdown and beyond. The Survey took place between Tuesday 31 March and Thursday 9 April 2020.

The respondents’ answers to the open and closed questions highlighted several major areas of concern. These included:

  • Access to funding
  • Access to customers
  • Access to markets

In this post, I am going to provide some detailed commentary on each area of concern. In later posts, I will talk about some of the actions that government and industry can take to address them.

Access to Funding

One surprising feature of the survey was the relatively small number of startup businesses taking part in the survey (26). This might be because their focus is on survival. Anecdotally, a significant number of pre-revenue startup businesses across New Zealand’s tech landscape are in survival mode. On Friday 17 April, Callaghan Innovation released figures based on research conducted during the current COVID-19 Level 4 lockdown, which suggested that perhaps 50-60% of New Zealand’s pre-revenue tech businesses might fail.

More established agritech companies are also under funding pressure. This was confirmed by Arama Kukutai, co-founder and managing director of Finistere Ventures and Richard Dellabarca, CEO of New Zealand Capital Growth Partners (formerly known as NZVIF) during two Insights webinar sessions hosted by Agritech New Zealand during the weeks of 13 & 20 April. Portfolio companies are being asked to re-set their business plans and financial models to extend cash runways to the end of 2021. In many cases, this will result in a reduction of R&D spend and a reduction in headcount.

When asked about the most significant need post COVID-19 lockdown, the survey respondents pointed to financial support as the most relevant support mechanism required for economic recovery. This was cited by 50% of all respondents. Anecdotally, Callaghan Innovation is accelerating its Project Grant application process to support ongoing R&D activity by some customers. The survey also indicated however that a number of companies, particularly in the start-up / SME phase were either reducing investment into R&D or going into full R&D hibernation.

It is clear that novel solutions need to be considered to address the funding issue. During any severe economic downturn, poorly performing businesses are likely to fail. The unprecedented nature of the current COVID-19 pandemic however means that many potentially high growth New Zealand agritech businesses have been exposed at the most important part of their funding cycle.

Access to Customers

At the time of the survey, the biggest risk to ‘current business activity’ was access to customers. This was cited by 50% of all respondents. This was particularly apparent for the SME sector.

It is likely that for domestic customers, access will become less of a problem as New Zealand reduces its COVID-19 alert level. At the time of the survey, a large number of agritech businesses, corporate as well as SME, were not classified as ‘essential’ businesses. This meant that they were not able to support or service customers in the primary sector. A number of respondents were critical of the government’s process for determining an ‘essential service’ at a time when the primary sector was the main driver of the country’s economy during lockdown.

Access to offshore customers however remains a significant challenge. Just over 50% of respondents cited that the restriction on international travel had impacted their business. With no end-date in sight for the relaxation of New Zealand’s closed borders, this is a challenge whose impact is likely to grow. Responses to the open question, enabling respondents to comment further on the impact of travel restrictions, indicated that a number of agritech businesses had already lost overseas sales and others were putting their offshore market development plans into hibernation.

Access to Markets

New Zealand’s closed borders threaten a number of agritech businesses medium to long-term offshore market development plans. This is significant.

Over the past 5 years, New Zealand’s exports of agritech products and services have flatlined at approximately NZ$ 1.5 billion per year. Compared with international peers such as Israel & the Netherlands, this figure suggests under-performance given the size of New Zealand’s agricultural sector.

One of the key drivers behind the government’s Agritech Industry Transformation Plan (ITP) initiative was to identify actions that could accelerate the growth of New Zealand agritech export sales. This activity would not only generate more export dollars, it was designed to create more highly paid jobs, particularly in the regions where much of the sector is based.

Based on the results of the survey, Agritech New Zealand believes that the closed borders will significantly impact the ability of agritech businesses to grow their offshore sales in the short to medium term. To compensate for the inability of entrepreneurs to travel overseas, a novel set of support mechanisms need to be put in place to ensure that international markets remain open to New Zealand’s agritech sector post the relaxation of border controls.

Access to offshore markets, includes one additional key metric; access to global capital to support potentially high growth agritech businesses invest and scale. Based on conversations that have taken place over the past 3 – 4 weeks with a number of global offshore funds – particularly those associated with Farm2050 (, new investment into New Zealand agritech companies at a Series A scale is unlikely to materialise until 2021. For a number of New Zealand agritech companies looking to start a Series A or B funding round, this is likely to impact significantly on cash runway and operations unless other finance options can be found.

Addressing these Challenges

In my next post, I will provide some insight into the potential mechanisms that government and industry can use to begin to address these real challenges that a number of businesses in our sector face.

Over the past 4 weeks, Agritech New Zealand has been in constant contact with government officials to promote ongoing support for the sector as we enter the economic recovery phase. Working collaboratively together, I express the hope and the belief that New Zealand’s agritech sector will emerge stronger as we go forward.