Outset Raises $25M for New Zealand Deep Tech - Rocket Lab Backed

New Zealand's Deep Tech Sector Receives Significant Investment

A substantial $25 million investment has been made to bolster New Zealand’s burgeoning deep tech industry.

Outset Ventures Closes Oversubscribed Fund

Outset Ventures, a venture firm and incubator based in Auckland – responsible for the success of companies like Rocket Lab and LanzaTech – has successfully closed its second fund. The fund totals an impressive $41.5 million NZD, exceeding initial expectations.

Focus on Hard Science and Engineering

The fund’s primary objective is to support startups focused on groundbreaking advancements in hard science and engineering. New Zealand’s unique strengths make it an ideal location to spearhead these technologies.

Areas of particular interest include aerospace and medical technology, with a strong emphasis on energy generation and storage solutions.

Addressing AI's Energy Demands

Outset Ventures believes New Zealand can excel in addressing the infrastructural challenges created by the rapid growth of Artificial Intelligence. Specifically, the firm is concentrating on the increasing demand for energy.

Angus Blair, a partner at Outset, explained to TechCrunch that the key limitation to AI expansion is the ability to rapidly deploy sufficient installed energy capacity.

Supporting Innovative Startups

Many companies within Outset’s portfolio are dedicated to developing more affordable and sustainable methods for energy production and storage. They also aim to resolve infrastructure bottlenecks exacerbated by AI’s growing energy needs.

OpenStar: Pioneering Nuclear Fusion

OpenStar, a nuclear fusion startup focused on levitated dipole reactors, stands out as a prominent example. The company received funding from both Fund I and Fund II.

Last November, OpenStar achieved a significant milestone by generating superheated plasma at approximately 540,000 degrees Fahrenheit. This achievement, accomplished with a $10 million investment, represents a major step towards viable fusion energy.

EnergyBank: Long-Duration Energy Storage

EnergyBank is another key portfolio company, developing long-duration energy storage solutions specifically designed for floating offshore wind farms in deeper waters.

Blair highlighted that integrating their storage solution could increase the profitability of offshore wind assets by around 50%. It also provides crucial support for data centers and grid stability, particularly in Europe.

Scaling Moonshot Bets Globally

Outset Ventures aims to scale these ambitious projects on a global scale. Fund I demonstrated the viability of deep tech for New Zealand startups, while Fund II positions the firm as a launchpad for companies driven by hard science and international expansion.

Auckland Facility Provides Crucial Resources

The firm’s 60,000-square-foot facility in Auckland provides portfolio companies with access to essential lab and engineering equipment. This is particularly valuable in a country where early-stage capital and specialized facilities can be scarce.

This vertical integration helps to mitigate the risks associated with deep tech ventures.

Capital Efficiency in the New Zealand Ecosystem

While $25 million may seem modest compared to Silicon Valley, Blair emphasizes its effectiveness within New Zealand’s ecosystem.

“We have remarkably capital-efficient businesses here, and the funds go a long way,” Blair stated.

Rebounding Venture Investment in New Zealand

New Zealand’s startup funding environment historically prioritizes capital efficiency and technical excellence over rapid scaling. Venture investment experienced a decline in 2023 due to economic uncertainties, but rebounded strongly in 2024.

In 2024, venture and early-stage investment reached a record high of $350 million ($587.6 million NZD), representing a 53% increase from the previous year.

Local and International Investment

Outset’s investor base reflects this trend. Approximately two-thirds of Fund II comes from local institutional and private sources, while the remainder is from international high-net-worth individuals who have chosen to invest in New Zealand’s future.

Challenges in Accessing Global Capital

Despite growing interest from global firms like Bessemer, DCVC, Founders Fund, and Khosla Ventures, securing international capital remains a challenge for Kiwi startups.

Distance and a smaller local investor base can hinder access to global capital networks, which are crucial for scaling operations.

New Zealand's Position in Deep Tech

Blair contends that New Zealand is uniquely positioned to address global challenges, and deep tech represents a proven area of success.

“Our biggest venture-backed successes have historically come from this sector,” Blair said. “This encourages both founders and VCs to pursue ambitious, technically demanding projects.”