Swiss Venture Funding Sees Another Record Year: What Makes Switzerland an Attractive Start-up Hub?
Venture Funding in Switzerland has reached another record high. As in previous years, Zurich-based ICT start-ups again received the lion’s share. Key trends in Swiss Venture Funding and how Switzerland is developing into an innovation hub.
Switzerland is best known for the beauty of the Alps and its banking sector. What many don’t know is that the small alpine nation is slowly developing into a tech hub with a vibrant start-up scene. In 2018, investment in Swiss start-ups had exceeded CHF 1 billion for the first time; in 2019, start-up funding reached CHF 2.3 billion.
Zurich attracts the lion’s share of Swiss venture funding
Zurich stands out among the Swiss cantons. That’s not just because it’s a great city to live in, but also because of the proximity to large banks, its international reputation, and the ETH Zurich, a leading university in Europe. That’s why it’s no surprise that Zurich-based start-ups attracted about half of the overall financing, particularly Information and Communications Technology (ICT) start-ups. The two largest rounds, GetYourGiude (CHF 488m) and Finance App wefox (CHF 233.5m), both happened in Zurich — both deals together accounted for about one-third of the total venture financing in 2019.
Swiss start-ups are maturing
Swiss start-ups are growing up: In 2019, later-stage rounds (Series B and later) accounted for about CHF 1,676 million in 2019, compared with CHF 821 million in 2018. That shows the increasing maturity of the Swiss start-up scene. Especially ICT, Fintech, and Biotech sectors saw an uptick in later stage rounds. Looking forward, increasing start-up maturity suggests IPO activity might accelerate in the next years because the next step for many of these companies will be going public. Further growth and development are expected not only due to the upward sloping trends, but also due to the improving support lines within Switzerland, such as accelerator programs, new VC funds and also foreign later stage investors watching and seeking Switzerland.
Outlook: What’s next for Switzerland?
Switzerland, and in particular Zurich, also differs from other start-up locations in terms of the type of start-up it attracts. With high living and business costs, the country is not exactly the easiest place to bootstrap. Instead, most start-ups are well funded, innovative and have strong backers, what makes Switzerland a “premium start-up” location in Europe. Neon and Imburse, Zurich based FinTechs in neo-banking and payment ecosystems, are prime examples for the complex but still beneficiary start-up environment. Neon with the innovative mindset to shake up the traditional banking landscape in Switzerland and Imburse disrupting and simplifying payment integrations for enterprises with its outstanding backers, such as the US based VC SixThirty, local marks like PostFinance, soon to be joined by new extraordinary investors with international reputation and outstanding performances. If Switzerland and especially Zurich wants to keep this pace and position themselves as the premium start-up hub, innovative ideas changing pre-travelled pathways have to steadily emerge and not only superior local but also foreign institutional investors choose Swiss investment opportunities. Making it premium through a tough bootstrap basis but with a high standard of quality. Quality over quantity is an age-old wisdom of humanity — it could also be the slogan for Switzerland as a start-up hub.