Making money by DOING GOOD
Kiwi companies with a sustainability focus are showing their wares in the US, hoping to attract investors as well as customers, writes Tamsyn Parker.
By the end of this year, Americans will be able to buy New Zealand merino wool sticking plasters in convenience stores in the Grand Canyon. The Kiwi company behind the plasters — Wool Aid — is hoping it will also be able to attract US investors so it can expand in a country that is the world’s biggest market for adhesive bandages.
It’s not just the money it is looking for, says Wool Aid chief executive Louise Cunningham, but the expertise to help open doors.
“Yes, the dollars will be important because that will allow us to accelerate the growth we know we can have up there — that would mainly be spent on working capital and marketing. But the expertise will be something we are looking for. How somebody can help us open doors and bring something else to the table — that is far greater value than just the money.”
Wool Aid is one of about 25 companies being promoted by NZ Trade and Enterprise as part of its Do Good, Do Well campaign.
Launched last month in New York and timed to coincide with the start of Air New Zealand’s direct flights to the city, the campaign aims to attract investors who not only want to make money from their investment, but also support companies offering products or services that are good for people and the environment.
Dylan Lawrence, general manager of investment at NZTE, says the US market is its biggest focus because that is where New Zealand companies most want to expand to.
“We follow NZ companies — if the company is looking to grow there [in a specific country] that is where we look to find the investors because that is where they need the help.”
And for the first time, it is pushing to find investors on the US eastern seaboard.
“I’m pretty excited about that direct route,” says Lawrence. “The reason I’m excited is the feedback we get from investors is, if it is more than one flight away they won’t invest.
“Having a direct flight to the East Coast is going to open that up.
“We have never really pushed that side of the coast hard. We have got the new investor migrant visa programme as well. We are going to try and leverage that opportunity as well on the eastern seaboard and get into pockets of capital with huge networks and connections that we otherwise have never been engaged with.”
Foreign investment in New Zealand companies rose to record levels during Covid, despite the border being shut and investors unable to get to this country to carry out due diligence.
Between January 2019 and October 2022, 241 US-based investors put money into 201 New Zealand companies. The capital invested — some of it from outside the US — totalled US$6.37 billion.
Lawrence says huge amounts of economic stimulation have helped. But now that stimulation has largely dried up and the cost of capital has risen, things are going to get tougher.
“We think it is going to be more difficult. We are going to have to be more proactive. There will be investors that continue to invest. Many will tell you that the down cycles are the best time to invest. But you are going to see a lot of people sitting on their hands.”
Lawrence predicts that private equity investors will continue to invest but wealthy individuals are likely to stay on the sidelines.
New Zealand Trade and Enterprise hatched the campaign as part of this country’s bid to reconnect with the world after Covid.
“As we were sitting in the middle of Covid, we were looking out at the other side and we thought, right, we have a chance to really reset the narrative after coming out of Covid, reconnecting with the rest of the world. Let’s make sure we take that opportunity with both hands.”
Lawrence says NZTE decided to focus on making an emotional connection with investors rather than just appealing to their desire to make money.
“We don’t need a lot of money in New Zealand in the scheme of things. But the money or investment we want, we want to make sure it is right for what we need. We want investors to take a value-based approach to their investment.”
He says New Zealand punches above its weight when it comes to companies doing good around the world.
“We want to show that prioritising and promoting businesses that are already doing good when it comes to sustainability, people and innovation that we can . . . hope to secure investment that will help them grow but it also incentivises other New Zealand businesses to take a similar approach.”
Cunningham believes there are a growing number of investors who care about doing good as well as making a return.
“From an investor perspective there is, in my view, less of an acceptance, or it is becoming less acceptable to just make a profit and cause harm in the process.”
The US consumers that Wool Aid is targeting have been labelled “LOHAs” — people focused on lifestyles of health and sustainability. It’s a market estimated to be worth $355 billion a year, says Cunningham.
“If those people are starting to make choices about how and where they spend their money and they like to do it on good, then that is ultimately what investors need to be aware of because they are the ones — they make the money.”