New Zealand’s deep tech ecosystem just scored a major win. Auckland-based Outset Ventures, the incubator-turned-VC behind breakout startups like Rocket Lab and LanzaTech, has closed its second fund with $41.5 million NZD, overshooting its original target by $25 million.
Outset is doubling down on startups built around serious science and engineering. While Silicon Valley pours billions into AI, Outset is carving a different path, backing Kiwi companies solving the downstream energy and infrastructure problems that AI is already putting pressure on.
“We know AI’s future hinges on energy,” said Angus Blair, partner at Outset. “It’s not just about who builds the smartest model—it’s about who can deploy energy the fastest.”
Energy Innovation at the Core of Fund II
Outset’s latest fund is laser-focused on technologies that make the grid smarter, cleaner, and more resilient. That includes energy generation and storage, waste heat recovery, and long-duration battery systems designed for tricky environments like offshore wind farms.
One standout from the new fund is OpenStar, a nuclear fusion startup developing levitated dipole reactors. It recently hit a milestone by producing superheated plasma at over 540,000°F—a feat that cost just $10 million, a fraction of what government-led programs have spent chasing fusion energy for decades.
Another rising star is EnergyBank, which builds long-duration energy storage specifically for floating offshore wind farms. Blair says their tech is a perfect fit for areas like the North Sea, where deep waters make traditional wind infrastructure harder to stabilize.
“If you can firm that power, its value increases by up to 50%,” Blair said. “And you’re also helping keep the grid stable and supporting data centers, especially in regions like Europe where resiliency is an issue.”
Outset Bets on Global Moonshots from a Small Island Nation
Fund I proved deep tech could thrive in New Zealand. Now Fund II is aiming even higher—with more capital, a bigger network, and bold goals to launch globally competitive science startups from the southern hemisphere.
Helping make that possible is Outset’s 60,000-square-foot facility in Auckland, which gives startups access to rare lab equipment, engineering tools, and prototyping space—all under one roof. In a country where hardware infrastructure is scarce, this kind of in-house support is critical to de-risking deep tech ventures.
And while $25 million USD might not sound like much compared to U.S. venture funds, Blair says it goes a long way in New Zealand’s ecosystem.
“Our companies are incredibly capital-efficient,” he explained. “The size of the fund is perfectly suited to the scale of opportunity here.”
Venture Capital Rebounds in New Zealand
New Zealand’s startup scene faced a tough 2023, with venture activity dipping amid inflation and global economic headwinds. But the bounce-back in 2024 has been impressive: local VC and early-stage funding hit $350 million USD ($587.6 million NZD), up 53% year-over-year—a new national record.
Outset’s second fund reflects this upward momentum. About two-thirds of the capital came from New Zealand-based institutions and private investors. The rest came from international high-net-worth individuals, many of whom have chosen to relocate to New Zealand and are now betting on its tech future.
Still, global capital remains hard to access for Kiwi founders. Blair notes that while interest from U.S. giants like Bessemer, DCVC, Founders Fund, and Khosla Ventures is growing, New Zealand’s distance from major VC hubs continues to be a hurdle.
Yet that hasn’t stopped Kiwi startups from thinking big.
“Deep tech is where New Zealand has always punched above its weight,” Blair said. “It’s where our biggest venture-backed wins have come from. So there’s this growing confidence—among founders and investors alike—that we can take massive moonshot swings and build globally relevant companies from here.”
