A venture capital lobby group wants rule changes to allow KiwiSaver fund managers to invest in small firms desperately seeking money to sell their products commercially.
A new report commissioned by the Ministry of Science and Innovation on biotechnology firms found no shortage of new start-ups, but many found it difficult to secure the $1 to $5 million needed to conduct trials and generate income.
Private Equity and Venture Capital Association executive director Colin McKinnon says firms in other sectors are facing the same constraints, because investors are wary of what are considered high-risk bets.
Current venture capital funds in New Zealand are fully committed, and Mr McKinnon says that gap could be addressed by Government changes to boost the pool of available capital.
He says those young companies are faced with the prospect of finding the money in New Zealand or going offshore which often means they relocate offshore as well.
Mr McKinnon says the association believes there are a number of options the Government should look at, although there is no silver bullet approach.
He says the Government could increase the pools of capital by looking at the wealthy migrant programme and the operation of pensions in New Zealand such as KiwiSaver.
Mr McKinnon says the Government should look at the barriers to them participating in the venture capital market more fully.
He says the Super Fund could also invest more in the bio-tech industry through the New Zealand Venture Investment Fund.
