Never before have so-called startups – young start-ups – received as much venture capital as last year. The ITC sector collected the most funds.
Specifically, 1.24 billion francs flowed into venture capital in young Swiss companies last year. This corresponds to a handsome increase of almost 32 percent compared to the previous year.
For the first time, the limit of one billion Swiss francs was exceeded, according to the Swiss Venture Capital Report published on Tuesday. This was created by the online news portal Startupticker.ch in cooperation with the Seca Investors’ Association.
ITC sector receives the most capital
The funds raised benefited 230 companies, 55 more than in the previous year (+ 31.4%). In a total of 230 rounds of financing, every second company received more than 2 million francs and every fifth received more than 10 million as a capital injection.
Investments in information and communication (including fintech) grew the most. Last year, 131 Swiss ICT startups conducted a round of financing and raised CHF 685 million from domestic and foreign lenders, 120 percent more than in the previous year.
The sector also represented ten of the twenty largest rounds of financing. The three top places, including Seba Crypto (100 million), Nexthink (84 million) and WayRay (77 million), also went to the industry, working on solutions to the challenges of digital transformation.
The ITC sector replaced life sciences as the largest venture capital investment sector. Investment in biotech companies dropped 43 percent to 253 million. In contrast, investment in medical technology increased by just under 42 percent to 123 million.
International at eye level
There was a clear focus on geographical distribution: In the canton of Zurich, 515 million francs were invested in 99 startups last year. This corresponds to an increase in the number of companies by 71 percent and the volume by almost 89 percent. Prominent in this regard is the ITC sector, where 64 companies collected a total of 314 million francs.
In a European comparison, the Swiss startup scene does not have to hide in terms of the volume of financing rounds. For example, in the 20 largest rounds of financing in the UK, $ 2.6 billion was invested in 2018, compared to $ 2.3 billion in Germany and $ 1.4 billion in France. Switzerland, however, followed with 687 million for the 20 largest companies already in fifth place behind Israel with 1.2 billion.
In general, it can be said that the Swiss venture capital scene has matured, said Maurice Pedergnana, Seca CEO, at a media conference. Switzerland appears to be offering very interesting projects to venture capitalists, which is also reflected in the fact that top names such as Google, Alibaba or Sony would invest in Swiss startups. In 2018, about 60 percent of the capital invested in such companies came from foreign investors.
A downside, however, remains that the investments by the local pension funds remained low. According to Pedergnana, large pension funds invest just 0.03 percent of their assets in the venture capital sector, even though the latter has lost average double-digit returns in recent years.