Sam Stubbs. Photo: Supplied / Simplicity
Fund manager Simplicity has broken new ground by taking a 19 percent stake in technology firm Tax Traders and its related start-up company Taxi, for an undisclosed price.
"We're delighted to make this investment, which is designed to make our members sustainable returns and support good Kiwi businesses," Simplicity managing director Sam Stubbs said.
Tax Traders specialises in getting businesses more flexible and cheaper working capital, backed by their provisional tax payments, and has developed Taxi as a digital platform aimed at small and medium-sized firms.
"Taxi has the potential to have a huge impact for Kiwi businesses and New Zealand's GDP, and we knew that securing an investment partner would mean we could scale quickly and see many more businesses benefiting faster," Taxi and Tax Traders co-founder Nicola Taylor said.
However, she said the co-founders were particular about who to bring on as an investor.
"We were very clear that we wanted a partner who shared a vision for this country and was interested in sustainable business results, rather than an investor who was solely focused on a short-term financial return," she said.
Stubbs said Simplicity wanted to support businesses to grow over the long-term.
"The power of using our KiwiSaver and Investment Funds to gain exposure to private Kiwi companies is very exciting," he said.
"Our passive equity provides the company with another funding option instead of taking on debt or selling a major equity stake."
Taylor said New Zealand businesses experience negative cashflow for an average of four months a year, and research showed the use of forward tax payments, not only halved the cost of money for businesses, but could add close to a billion dollars a year to the economy.
"Long-run, widespread use of Taxi would increase GDP by up to $10.8 billion or 2.7 percent annually - similar to the food and beverage manufacturing industry.
"Savings on overdraft costs alone could easily exceed $50 million annually."