Callaghan Innovation loan losses mount as MBIE takes tougher line
New Zealand's Callaghan Innovation is taking a stricter approach to recovering loans issued to start-ups during the pandemic, as the agency prepares to wind down. Data shows that 42% of loan recipients have defaulted, with the government now pursuing legal action to recoup funds.
Why it matters
The high default rate raises questions about the efficacy of government-led venture lending and the risks associated with state-backed 'picking winners' strategies.
Reminder, this is a Premium article and requires a subscription to read.
Fully 42% of Callaghan loan recipients have defaulted so far, with the numbers poised to get worse. Photo / Getty Creative
A Crown agency’s loan book – showing a high rate of delinquency – provides a window into the risks of backing start-ups.
It’s also prompted a veteran investor in early stage companies to question whether the Government should try to “pick winners” by allocating loans.
Herald inquiries have also revealed a new, tougher line being taken on companies with Callaghan Innovation loans that are in arrears as the agency is wound down.
Callaghan was established by the Crown in 2013 to assist companies with research by dishing out grants (which did not have to be repaid) and loans to start-ups.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in