ITP Techblog

If mergers and acquisitions are a way of measuring progress, New Zealand software companies have had a phenomenal run in the last 15 years.

Investment bank Clare Capital has tracked $11 billion worth of acquisitions and mergers of tech companies, starting with the acquisition of Trade Me for $750 million by newspaper publisher Fairfax.

Of the total, 38% of the M&A activity relates to software as a service companies, such as Vend, Xero and Timely. The SaaS category has grown rapidly in the last decade with New Zealand businesses showing a particular ability to come up with business software with global appeal.

"Sceptics thought Trade Me was a once-in-a-generation opportunity, and since then we've seen the equivalent of more than 15 Trade Me sales, and many of these have been sales of SaaS businesses," says Clare Capital founder, Mark Clare. 

Clare Capital found that the market cap of New Zealand tech companies listed on the NZX and ASX companies increased from $10 million to $28.4 billion over the same period, with SaaS companies accounting for 95% of them.

Xero currently accounts for 79% of the total market cap of ASX/NZX listed Kiwi tech companies captured in Clare Capital's analysis.

"There's no reason why New Zealand can't have more Xero-sized SaaS businesses," says Clare. 

"You only need to look at the incredible growth numbers we've seen since the Big Bang of New Zealand Tech in 2006 to see that this sector will continue to grow." 

Key SaaS stats:

- The New Zealand SaaS industry is very productive, generating high revenues per head. For example, Pushpay $623k, Xero generates $233k per employee, and Vista $187k.

- Xero has averaged 26% annual revenue growth for the past 3 years, recording FY21 revenue $945 million. Pushpay's FY21 revenue was $256 million, and has averaged 38% annual revenue growth for the past 3 years.