TIN head of research Alex Dickson said New Zealand had spawned a critical mass of profitable tech firms with global reach over the past two decades.

"A feature of these companies is their use of dynamic hiring strategies that balance onshore and offshore expansion," Dickson said.

"After a period of rapid growth, New Zealand healthtech firms are adjusting to a more stable demand environment," report author and TIN head of research Alex Dickson said.

The healthtech sector's revenue grew 2.4 percent in 2023, with 89 percent - or $2.35b - generated overseas.

About 12 percent of total revenue was used to fund research and development.

"This hints at a play for longer-term, more sustainable growth," Dickson said.

"Established Kiwi firms like Orion Health, Aroa Biosurgery, and AFT Pharmaceuticals, among others, are building a broad spectrum of success, beyond the niche solutions and markets they started in."

But he said investment was lagging behind other developed countries, with a 10 percent increase to $66.8m invested in 2023.

"A pain point is the level of investment reaching early-stage companies, which is peanuts compared to the likes of Ireland, Denmark, and the Netherlands.

"The pandemic created a high tide of health-tech enthusiasm, fueling investment, development, and uptake. That tide has now subsided, leaving a tougher landscape of catch-up regulation, integration challenges, and scarcer investment capital," said report author TIN Head of Research Alex Dickson.

TIN Head of Research Alex Dickson said the pandemic created a high tide of healthtech enthusiasm, fuelling investment, development and uptake.

"that tide has now subsided, leaving a tougher landscape of catch-up regulation, integration challenges and scarcer investment capital."

Alex Dickson, head of research at New Zealand’s TIN (Technology Investment Network), says both New Zealand and Australia are seeing tougher times for tech investment currently, but Australia’s size with greater domestic market opportunities, and more mature and plentiful funding scene, is providing a buffer for the country’s startups.

Despite the rapid growth, the sector was yet to realise the gains offered by open banking, which had been held back by the lack of consumer data right legislation in New Zealand, despite being identified as a priority in 2019.

"The fintech sector will be relieved to see the Customer and Product Data Bill take its first legislative steps," report author Alex Dickson said.

The bill to support consumer data rights was still winding its way through the parliamentary legislative process.

TIN head of research Alex Dickson said investment had fallen off in line with the increase in interest rates.

"The macroeconomic climate has sort of deteriorated and money has become more expensive, globally investment and fintech has sort of fallen off a cliff," he said.

"And because a small number of international-led deals really drive the numbers up for New Zealand, when that money evaporates the bars plummet on the graph."

However, Dickson said the sector had a positive outlook and was responding with better cost control.

"There'll definitely be some fintech companies out there that are seeing their funding runways coming towards the end."

He said the outlook for the sector was brighter with open banking expected to give the fintech sector a boost from the second half of the year.

TINs head of research Alex Dickson tells Shoeshine global capital pools had "evaporated", valuations were falling, and the trans-Tasman IPO pipeline has "withered", meaning it was a tough time to secure new or follow-on cash.

“The rapid rise in offshore employees to exploit global revenue opportunities and counter local skills gaps means that hiring and managing a workforce in multiple markets is becoming the norm for New Zealand’s big tech employers,” says Alex Dickson, Head of Research at the Technology Investment Network."