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April 16, 2022

Why Should a Startup Go to New Zealand

In the World Bank rankings for 2020, New Zealand is recognized as the first country where it is easiest to create a startup with the most favorable conditions for business in general. No wonder, because New Zealand is one of the least corrupt countries in the world, there is no capital gains tax, and you can register a company in a few hours. At the same time, 70% of all New Zealand companies operate without employees at all. The New Zealand government is interested in business development: special visas have been introduced for start-ups in the country, affordable state programs for financial support are provided, and there are incubators and accelerators.

Promising areas for business development in New Zealand are information technology, environmental technology, high technology, waste recycling, tourism, agriculture using innovation, educational courses for foreign students. In recent years, production in winemaking and cinema has increased.

The country is now paying special attention to increasing the volume of exports, so there are additional benefits for manufacturers of export products. For start-ups, the conditions for entering the country are facilitated, and they can also receive additional business insurance.

Among successful foreign startups, it is worth noting the PocketSmith income and expense control application from Malaysian Jason Leong and the KotahiNet Internet platform of Indian Kumar Vikram, which develops the concept of the Internet of Things.

Startup Visa

To open your business in New Zealand, you need to obtain one of the types of work visa – Entrepreneur Work Visa, which will be valid for three years. During this time, a young business project should get the first results from commercial activities. The first year is considered the start-up stage: an immigrant must assess the situation in the New Zealand market and open a business. The next two years are the balance stage, which involves transferring money to a New Zealand bank, concluding contracts, acquiring real estate, and so on.

To obtain a start-up visa, an entrepreneur and his project must meet several criteria. The first is the opportunity for the startup itself to invest in the business at least $100,000 New Zealand dollars. The amount may be less if we are talking about an export-oriented and fast-paying business. You also need to provide a well-thought-out business plan. Another important point is project testing: you need to score at least 120 points on a scale that determines the reliability of a business.

Requirements for a Startup

An entrepreneur should not have problems with the law. You will need to provide a certificate from the police of the applicant’s home country, as well as from each country where he has lived for at least five years since the age of 17.

This requirement is common to applicants for a New Zealand Long Stay Visa of any category. For a businessman, it also implies the absence of financial fraud, fraud, bankruptcy and business ruin in his commercial history for five years before applying. This, of course, does not violate the law, but casts a shadow on the reputation of the applicant as a successful businessman.

Other general visa rules also apply to a foreign startup: knowledge of the English language (IELTS certificate of at least 4 points or proof of communication and work experience in English) and good health: he must not have serious chronic diseases and the need for expensive treatment.

Where to Begin

First of all, it is necessary to decide on the organizational and legal form of the future company. Most often, start-ups are limited liability companies, limited liability companies. With such an organization of the enterprise, the financial collapse of the company will not be a blow to the personal savings of a start-up, in contrast to individual entrepreneurship – sole trader.

When choosing a location, you need to make sure that the law does not prohibit conducting the activity you are interested in in a particular place. For example, you cannot organize car repairs in a residential area: it will interfere with residents.

For each region there are environmental plans that define the permissible level of noise, environmental pollution and deterioration of water quality. If a new enterprise violates the natural balance (takes water from a river or stream, produces emissions into the atmosphere), then it will be necessary to obtain consent to the use of resources. This document is issued by the regional, district or city councils.

When thinking about a name for a new company, it is necessary to check its name, domain and trademark so that they do not coincide with legal entities already existing in New Zealand.

The next step is to register the company with the tax authority and obtain a taxpayer number. A foreign businessman, most likely, will need to involve professional specialists: an accountant and a lawyer. To conduct commercial activities in some areas – for example, catering – you will need to obtain a license.

Financing

There are three main types of funding available to startups in New Zealand:

At the initial stage of the project (seed capital) – $ 20-30 thousand. Investors will trust the project more if the founders themselves invested heavily in it. But even at the first stage of business development, you can find external sources of investment:

  • Capability vouchers – they can cover up to 50% of the cost of expanding and developing a business. These vouchers are issued by the Regional Business Partner Network, which, in turn, operates with the permission of the state business development agency.
  • Grants for research and development (research and development grants) are requested from another government agency – Callaghan Innovation.
  • Crowdfunding is very popular in New Zealand right now. There are a lot of sites, the most popular are PledgeMeSnowball Effect, Liftoff.

Angel financing – $100-500 thousand. When a startup has already launched a product on the market, or at least created a working prototype, it can use the help of a business angel who is listed in one of the specialized clubs. Among them, for example, Ice Angels in Auckland, Angel HQ in Wellington, Enterprise AngelsArchangels, Flying Kiwis, Angel Association. Startups can count on both a one-time investment and ongoing financial support.

Series A investment – up to several million dollars. A company can apply for Series A financing only when it has already established itself in the market. Then she sells preferred shares – they are called “series A” – and receives money from investors.

At all three stages, you can seek financial support from venture funds: New Zealand Private Equity & Venture Capital Association (NZVCA) and New Zealand Venture Investment Fund Limited (NZVIF). Venture capital funds do not invest money directly – they only provide information about the requirements for startups and provide a list of business angels.

Other Helpers

There are many incubators and accelerators in the country that support startups. To receive an invitation from them, you need to send an application with a description of your project and attach documents: a resume and information about available finances.

The Icehouse offers educational programs, business coaching, assistance in assessing the market situation. Prices for all these services can only be obtained upon request. Here you can rent a workplace in a coworking space – an average of $ 400-600 per table per month.

Lightning Lab implements educational programs, each of which lasts for several months. From the participants, the incubator asks for a small share of the startup capital (which one is not specified). But all participants will receive an investment of $20 thousand New Zealand dollars – $13.8 thousand. Only those who have a team, capital (or investor support), an interesting idea and a finished project are invited to the project.

Venture Up offers a six-week program for the youngest startups, ages 16 to 21. Accommodation, food and training are paid by sponsors, the participant only pays for travel to Wellington.

CreativeHQ organizes accelerator programs both individually and corporately. Participants are trained, receive advice from experienced professionals and meet potential investors. The cost of the programs is provided upon request.

R9 is an accelerator that implements several educational programs lasting three months. They teach entrepreneurs how to interact with the government and solve problems effectively. Participants of the programs receive a scholarship to fully cover the costs associated with education.

The New Zealand Export Credit Office helps startups that produce export products by insuring deals, managing risk and providing access to trade finance.

Useful links

We can help you to get your startup set up in New Zealand and also handle all the paperwork. Please Contact Us.

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