Money continues to flow to Swiss startups

“There is a lot of money in the market.” Co-author of the Swiss venture capital report published Thursday, Stefan Kyora, who also runs the specialist information website Startupticker.ch, sums up the mood that prevailed in 2021 amid young Swiss sprouts.

With the exception of a small interruption observed in 2020, the amounts earned by entrepreneurs in Switzerland have been growing at a steady pace for several years. While the SFr1 billion raised threshold was reached just three years ago, a record SFr3.1 billion was raised last year by young Swiss tech companies, according to estimates by Startupticker and the Swiss Association of Equity Investors and Financing (SECA). In one year, the increase is 44%. The acceleration of digital transformation and the attraction of life sciences combined with a strong availability of capital largely explain this strong increase.

Both holders of a federal polytechnic school in their territory, the cantons of Zurich and Vaud confirm their status as innovation heavyweights, with investments of 1.3 billion francs respectively (+ 102.1%) and 605 million (+ 47.8%). According to the authors of the report, the growing activity of Swiss venture capital funds is not unrelated to these good numbers. They identified 35 new investment vehicles during the period under review.

Lack of intermediary financing

Investor enthusiasm for young tech companies is not unique to Switzerland. In November, the British investment firm Atomico, which publishes an annual report on the state of European technology with partners, estimated the total value of investments made in Europe in 2021 in this sector at USD 100 billion. Ten times the level observed in 2015 during the first census carried out.

Although seed funding no longer appears to be a problem in Switzerland, data released by the Swiss Venture Capital Report shows greater difficulty in finding investors in the CHF 10-20 million range. “While it is now easier to obtain initial funding, finding funds at this stage takes more effort,” notes Thomas Heimann, deputy secretary general of the SECA. On the other hand, once the prototypes have been developed and the business model confirmed, foreign investors step in and funding is found.

Five fundraising events in excess of SFr100 million were thus carried out last year. The tallest was operated by Wefox. Active in insurance technologies and operating primarily in Germany, this Zurich start-up has raised 584 million francs.

Long ago, the Vaud-based company Nexthink also entered the Swiss league of unicorns – start-ups valued at more than a billion francs – thanks to a cash inflow of 162 million francs. Specializing in financial information related to start-ups, the company Dealroom last November identified nine young one-horn shoots on Swiss soil in 2021. By way of comparison, at the same time, it identified 55 in Germany and 22 in France.

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The other three “table rounds” estimated at more than SFr100 million are to be credited to life science companies. Like Wefox and Nexthink, they are still well below the stratospheric amounts raised at the continental level, with no Swiss start-ups appearing in Europe’s top 10 fundraisers. The record was set by the Swedish company Nothvolt, which develops batteries for electric cars. As of June 2021, it has raised $2.75 billion.

many acquisitions

Motivated by market liquidity, eleven Swiss companies decided to venture into public markets, such as Vaud Sophia Genetics and Astrocast. Listed on Nasdaq, the former, active in precision medicine, captured $234 million. The producer of small satellites raised 45 million francs on the Oslo stock exchange. On the other side of Sarine, it was the remarkable IPO of On Shoes, a company backed by Roger Federer, that impressed. Listed on the New York Stock Exchange, the company currently weighs nearly eight billion dollars.

Fifty-five other companies were acquired. This is, for example, the case in another canton of Vaud, Green Motion. This pioneer of electric car charging stations was purchased by American company Eaton for an undisclosed sum. A sale is also the hope cherished by Vaud-based start-up Bestmile. As the operation did not materialize, the two co-founders of this company had to resign themselves to cease their activities. They have already recovered to high positions in the Swiss economy, a sign, certainly, that the view of failure has evolved in our latitudes.

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The dynamism of the microcosm of technology-based startups is just the tip of the iceberg of growing interest in entrepreneurship in Switzerland. In 2021, 50,545 businesses were created there, according to data provided by the IFJ company. That number is 8% higher than 2020, which was once a record year.

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