Offshore some of these funds have helped develop more sophisticated segments of capital markets, such as venture capital. But in New Zealand the relatively small scale and low risk appetite of institutional funds means that this market has had to rely on a small number of high wealth individuals and has developed much less as a result.
This limits high growth, high risk firms’ access to growth capital, particularly important in a market where home bias is strong due to the inevitable uncertainties in assessing start-up / growth firms. Some consequences of our equity short-fall What are the consequences of New Zealand’s households’ preference for investment in housing over investment in businesses?