New Dotcom era in more ways than one

New Zealand's prospering tech sector looks set for further growth.

IT businesses are busy seeking funding to fuel their expansion; they are seeking investors directly, or going to the stock markets.

Among the most successful to date is Xero, an accountancy software company headed by Rod Drury. In just a few years since its first initial public offering (IPO), it has grown into a business with a market cap of more than NZ$1 billion, something seen as a fine example for others to follow.

It is not alone, which is something that led the New Zealand Herald a few days ago to speculate about the prospect of a new "tech IPO boom".

This followed plans by search engine technology company SLi Systems, which said it would seek NZ$27 million in an IPO.

Last week, we also heard how PowerbyProxi won US funding for its wireless charging technology.

Another successful software company, the Wynyard Group, is also considering raising capital on the markets.

The New Zealand government is encouraging this process, and has been a keen supporter for many small IT startups in need of help, assisting them to grow and then list on the markets.

These latest potential listings come as the country gears up for the major semi-privatisation of its electricity sector, something that might well be skittled by a combined Labour-Greens opposition, which finally has sufficient support in some polls to form a government after 2014.

With Labour and the Greens accused of "economic sabotage" for their plans to reform the energy sector, something that already caused share prices of energy firms to collapse amid talk of capital fleeing New Zealand, the tech sector, with its IPOs and other forms of capital raising, might offer investors a safer home in a less politically charged atmosphere.

Of course, investors will have to be wary. Xero's Rod Drury might be making his fortune, but other tech firms can seem like bottomless pits.

Syft Technologies has burnt through NZ$30 million of investors' money, with its boss telling me last week, after his latest capital-raising efforts this month, that the company should finally start making profit.

But with all of this action going on, it does seem like New Zealand is on the verge of a tech IPO boom, and potentially another Dotcom era for all that it entails.

Indeed, with a Mega listing also on the cards, it could be a new Dotcom era in more ways than one.

Update: This article previously stated that Xero's revenue was more than NZ$1 billion. This was incorrect, and has been amended to state the company's market cap is over NZ$1 billion.