Swiss VC Investment Tops CHF 1.2 Bn. Insights from the 2019 Swiss VC Report

12.02.2019.Bloomio.0 Likes.0 Comments

News that investment in Swiss start-ups has smashed the 1 billion franc mark will come as no surprise to those who have been involved in angel and VC investing in the confederation over the last year: momentum has been building both on the entrepreneurial side and the financial.

The latest Swiss Venture Capital Report from Startupticker[1] shows that CHF 1.24 billion flowed into Swiss start-ups in 2018, with each side playing its part in the 31.8% jump in investment.

The money came through a variety of investors: from local business angel groups and experienced Swiss VC funds to big name international investors and billionaires, an ecosystem is building to service the growing number of high-quality businesses with a unique selling point and strong entrepreneurial teams.

As Startupticker’s editor in chief, Stefan Kyora said: “In order for a start-up scene to develop its own momentum, it needs not only ambitious founders with promising projects, but also investors, financing for their funds, and established companies that are willing to work together with start-ups and ultimately take them over. Over the past year, there has been significant progress in all these areas.”

Although ICT and Fintech made the biggest gains, together accounting for 55% of the investment, Switzerland showed a relatively balanced spreads across sectors in comparison to European peers: in France, 70% of start-up investment went to ITC alone. At 35% of start-up investment, the Swiss biotech sector in particular provides a strong counter point to the relentless rise of IT solutions and fintech.

ICT companies did, however, take the top three spots among the largest deals of 2018, and made up half of the top 20, with SEBA Crypto’s CHF 100m funding round leading the pack. The Zug-based company, which wants to combine online and bricks and mortar retail in order to cater to all possible user requirements for crypto and traditional banking services, was backed by BlackRiver Asset Management, Summer Capital, and several private investors.

It was notable, however, that the number of funding deals grew at almost the same rate as the funding itself. In what the report’s authors called a sign of the “increasing maturity of the ecosystem”, the top 20 rounds contributed only 56% of the volume – five years ago, it was 82%. The report tracked funding deals over CHF 100,000, and found that there were 230 last year – up by 31.4% on 2017.

Alongside the explosion in innovation and a growing start-up culture in Swiss cities such as Zurich, Zug and Basel, investors of all sizes are feeling emboldened by the level of impressive exits seen on the international stage. Ten-year-old Swedish firm Spotify ended its first day on the market with a $26,5bn valuation, but this was just the tip of the unicorn’s horn: more $1bn companies are being created in Europe than ever before.

Thomas Heimann and Maurice Pedergnana, co-authors of the Swiss Venture Capital Report, said: “Success stories such as exits and IPOs act as catalysts. Europe is becoming more attractive as a venture capital location and is catching up with the US.”

They point out that Switzerland is creating the kind of disruptive “deep-tech” that is attractive to investors, while valuations and the quality of prospects in Europe are looking attractive to Asian and US funds. A positive cycle is therefore being created for local investors at the earlier stage too: With the supply of new fund vehicles investing in both earlier and later stages, follow-on financing in Switzerland is becoming more likely to produce a successful product in the market and investors in earlier rounds are more likely to take the investment risk as there is a better prospect of finding a strong late-stage financial partner.

Heimann added: “Even though Switzerland is not yet a unicorn factory, the largest rounds of financing are certainly impressive in comparison with Europe.”


Categories: VC Industry
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