The problem facing New Zealand’s most promising sustainable businesses is not a shortage of ideas. It is a shortage of investors willing to wait. The second Next Wave barometer from the Sustainable Business Network and the University of Canterbury found two-thirds of surveyed firms are confident about their growth prospects. Yet 22% name short investment horizons as the single biggest barrier to raising finance, more than any other factor.
The survey covered 42 finalists in the 2025 Sustainable Business Awards’ Disruptive Innovation category, firms such as Naturally Genius, which is building mycelium packaging to replace polystyrene, and TROW Group, the salvaged-materials business founded by Saia Latu and Joe Vagana. These are not hobby projects. They are businesses with products, customers and plans, running into a capital system built on a shorter clock.
Fewer failures, almost no breakouts
The financial picture explains why. Losses are easing and more firms are surviving, but the top end has hollowed out. This year, 39% are operating at a loss, 31% are at break-even and only 3% clear 20% margins, down from 17% at the top end in the 2024 baseline. The report calls it the missing middle, businesses that have proven they can exist but cannot fund the leap to scale.
Policy is not helping. Only 18% think the current policy environment is supportive. SBN general manager James Griffin put it bluntly: “too many are still operating in systems designed for short-term returns rather than long-term impact and resilience.”
The sector is raising money, just not enough
This is not a story of a dead market. A 2026 Cleantech Impact Report tracking 52 innovators found $173.8 million raised across FY25 and FY26, up 53%, with 943 jobs supported. But ambition is outrunning supply badly. In FY25, 26 companies raised just $29 million against a planned $280.6 million, 21% of target, and 11 pushed back planned raises.
That is the gap in hard numbers. Founders spending a year chasing a round are not building product or selling to customers.
When local lenders blink, offshore banks step in
SolarZero showed what happens next. Back in 2024, its customer contracts ran 25 years while local bank lending amortised over roughly a decade, so it turned to French bank Societe Generale as its main lender. Then-CEO Matt Ward said that without matched finance, “we’d just be selling solar panels and batteries to the rich end of town.” Government-backed NZ Green Investment Finance had also put in $18 million plus $80 million through its Solar Finance programme by mid-2024.
The lesson for business is uncomfortable. A sound model with long-dated revenue had to look overseas, or to the state, for capital New Zealand’s private lenders would not structure.
The money is already here
The sharpest insight comes from the Climate VC Fund. In April 2026, it argued New Zealand deploys only about one-eighth of the funding its peers would. But it pointed to community trusts, iwi investment entities, regional development funds, super pools and family offices that manage billions with long-horizon mandates suited to exactly this kind of business. The barrier is labelling. Pitches framed as “deep tech early-stage venture impact” read to investment committees as unproven, volatile and long duration, and the money stays parked.
That should appeal to anyone sceptical of more subsidy. The fix is less about Wellington writing cheques and more about packaging deals so patient investors recognise them, through revenue-linked finance, infrastructure-style structures for contracted cash flows and co-investment that spreads early risk. A December 2024 EY report for the Ministry for the Environment made a related point, that stable ETS and emissions settings are a precondition for that capital to move. Policy flip-flops add risk premiums no deal structure can fully offset.
We have heard this warning before
None of this is new. At a 2008 Auckland symposium, Aquaflow’s then-director Nick Gerritsen said “our capital markets have failed“. Sean Simpson, co-founder of LanzaTech, said at the same event the country needed “more risk money“. LanzaTech went on to become a global business, largely built offshore.
Eighteen years on, the complaint has barely shifted, but the context has. The long-horizon money now plainly exists at home. If trustees, iwi funds and super pools keep filing these businesses under “risky”, the next generation of export-capable green firms will either stall in the missing middle or be financed, and eventually owned, by someone else. The ideas will still be Kiwi. The returns will not.
Sources
- NZ Herald: Next Wave 2026 – Sustainable businesses struggle to turn innovation into growth (2026-11-12)
- Sustainable Business Network: Next Wave Report 2026 (2026)
- NZ Business: Sustainable innovators ambitious but stuck in the ‘missing middle’, report finds (2026-06-18)
- MacDiarmid Institute: Cleantech Impact Report (2026)
- BusinessDesk: Call for banks to think longer term to fund renewable energy (2024-06-16)
- Climate VC Fund: One-Eighth – New Zealand’s Cleantech Capital Gap (2026-04-29)
- EY: Scaling Up Investment Into Nature-Related Projects in New Zealand (2024-12)
- NZ Herald: Lack of green-sector cash ‘may force talent overseas’ (2008-08-18)
Join the discussion
Add useful context, ask a good question, or challenge an idea — keep it specific and respectful.