Lexology In-Depth: Venture Capital Law in Switzerland

In recent years, the Swiss start-up scene has developed significantly and Switzerland is now perceived internationally as a start-up and investment location. Although the number of new start-ups stagnated between 2009 and 2016, this trend has reversed since 2017, with an increasing number of start-ups and financing rounds. However, while 2022 was a record year for almost all sectors, the downturn reached Switzerland in 2023, as expected, but a year after most other countries. Almost the entire venture capital (VC) ecosystem has been affected: from investment and fundraising to IPOs and trade sales. The year 2024 largely confirmed this negative trend, marking the second consecutive year of contraction, though the decline was less severe than in 2023 and probably less pronounced than in neighbouring Germany or Austria. In terms of capital invested in Swiss start-ups, 2024 showed continued stagnation, returning to levels last seen in 2019, prior to the covid pandemic.

As to the number of VC funds, it only slightly decreased in 2024. Pursuant to the Swiss Venture Capital Report 2025, 46 funds are currently in the fundraising phase, compared to 52 in the previous record year. The conditions for further growth of VC as an asset class thus remain good in Switzerland. However, the Swiss investor scene is still relatively young, which translates into a certain shortfall in professional investors and venture capitalists capable of investing frequently, in particular, in the growth phase. By contrast, Switzerland still has a very important number of private investors, in particular family offices, which provide the vast majority of capital in funds investing in Swiss start-ups.1

In 2024, key sectors for VC investments in Switzerland were the biotech and the cleantech sectors. Investments in biotech start-ups rose by 50 per cent in 2024, reaching levels less than 10 per cent below the previous record set in 2020. In addition, a growing focus on deeptech is being fueled by increased investment in healthcare, robotics, and cleantech start-ups that are developing truly innovative technologies. By contrast, the information and communication technology (ICT) sector, which includes fintech, saw a significant decline in invested capital in 2024, with ICT overall down by 12 per cent and fintech specifically dropping by 51.5 per cent.

Switzerland has a particularly high number of university spin-offs, in particular from the polytechnic universities of Zurich and Lausanne. Zug, Basel, Bern, the Cantons of Vaud and Geneva are the other Swiss start-up hotspots. Despite the difficult market conditions, Switzerland has retained its reputation as a prime destination for high-tech investments and remains a global leader in innovation, ranking first in both the 2025 IMD World Competitiveness Ranking and the 2024 WIPO Global Innovation Index among European high-income countries.2

Year in review

In 2024, capital invested in Swiss technology-driven young companies fell by 8.5 per cent compared to 2023, totalling nearly 2.37 billion Swiss francs, an amount roughly in line with the pre-pandemic level of 2019. Although the number of financing rounds in 2024 fell back to the level of 2021, activity still significantly outperformed 2019, when only 262 investments were completed. In total, 357 financing rounds took place in 2024, down from 383 in 2023.³

The ICT sector was hit the hardest by the downturn. Only 520.8 million Swiss francs were invested in ICT start-ups (including fintech) in 2024, which represents a drop of 12.9 per cent in the general ICT sector (and 51.5 per cent in fintech) compared to 2023. This sharp decline was largely due to the near-total absence of large investments, with only one ICT and one fintech deal among the top 20 rounds. By contrast, biotech (739.2 million Swiss francs) and healthcare IT (123.3 million Swiss francs) attracted more money in 2024 than in the previous year. With an invested capital of 219.4 million Swiss francs, the micro/nano sector shows similar figures in 2024 as in 2023. Although capital investment in the cleantech sector fell, cleantech was, once again, in second place in terms of the total amount invested (471.9 million Swiss francs) and has established itself as the second most important sector alongside biotech. As to the investment phases, seed and early-stage transactions contributed most to the overall decline, with deal volumes dropping by approximately 20 per cent. Seed funding amounted to 232 million Swiss francs in 2024, down from 285 million Swiss francs in 2023. Start-ups raising Series A capital secured 633 million Swiss francs, a decrease from 791 million Swiss francs the previous year. In contrast, later-stage rounds showed greater stability, with 1,504 million Swiss francs invested in 2024, only slightly below the 1,513 million Swiss francs recorded in 2023. The decline in volume of seed and early investments was due mainly to the decreasing share attributable to the top 20 transactions of the year (which amounted to 1.1169 million Swiss francs, a fall by 18.1 per cent compared to 2023). The companies with the four biggest rounds were as follows:

1. Alentis Therapeutics (160 million Swiss francs; biotech; later stage);
2. Asceneuron (89.5 million Swiss francs; biotech; later stage);
3. Bright Peak Therapeutics (80 million Swiss francs; biotech; later stage); and
4. iOnctura (76.5 million Swiss francs; biotech; later stage).⁴

Legal framework for fund formation

Laws and regulations

VC fund formation, management and marketing in or from Switzerland are primarily governed by the following laws and regulations:

1. the Collective Investment Schemes Act (CISA) of 23 June 2006 and its implementing ordinances, the Collective Investment Schemes Ordinance of 22 November 2006 (CISO) and the Ordinance of the Swiss Financial Market Supervisory Authority (FINMA) of 27 August 2014;
2. the Financial Services Act (FinSA) of 15 June 2018 and its implementing ordinance, the Financial Services Ordinance of 6 November 2019 (FinSO); and
3. the Financial Institutions Act (FinIA) of 15 June 2018 and its implementing ordinances – the Financial Institutions Ordinance of 6 November 2019 and the ordinance of the FINMA of 4 November 2020.

Vehicles used for fundraising

VC promoters active in Switzerland generally adopt the following structures:

1. Swiss limited partnerships for collective investments (Swiss LPs);
2. Swiss unregulated investment companies; and
3. offshore vehicles often structured as Luxembourg specialised funds or, more recently, as special limited partnerships or reserved alternative investment funds (RAIFs), as well as Delaware, Cayman Islands, Jersey or Guernsey limited partnerships.

A Swiss VC fund may also be structured as an investment club exempted from CISA, subject, however, to several limitations, including on the maximum number of members (which may not exceed 20) and the obligation for members (at least some of them) to make investment decisions. Certain data sometimes also count actively managed certificates (AMCs) as VC fundraising vehicles, even if traditionally AMCs are not categorised as investment funds or investment companies.

Swiss LPs

The Swiss LP was introduced in 2007. Swiss LPs face strong competition from offshore vehicles as they tend to be limited to local investors and focus on local niche areas. Several factors account for this situation, including limited access to the EU market (through private placement exemptions, when available) due to the absence of passporting available for Swiss investment fund managers. Against this background, the forthcoming limited qualified investor fund (L-QIF; see below) may be a welcome legal innovation to boost the local market for fund domiciliation.⁵

A Swiss LP is a closed-ended fund subject to regulatory approval and subsequent ongoing prudential supervision by FINMA. The creation of a Swiss LP requires a partnership agreement and a prospectus that must be provided to FINMA (although its approval by the regulator is not a requirement). The general partner, who is responsible for the management of the Swiss LP, has unlimited liability, while the other members (limited partners) are liable only up to their respective capital contribution. All investors in a Swiss LP must be qualified investors within the meaning of CISA. Limited partners are granted by law with certain information and governance rights but are deemed to be ‘passive investors’ in the sense that they cannot be involved in the day-to-day management. In practice, it is common for the general partner of a Swiss LP to appoint an investment manager.

Swiss LPs are treated as tax-transparent entities. As a result, they are not subject to corporate income tax. Income taxes are levied at the level of the investors, except for Swiss LPs, which directly hold real estate. However, Swiss LPs are not transparent for withholding tax purposes (WHT). Distributions and undistributed incomes reinvested at the level of the Swiss LP are generally subject to 35 per cent WHT (except for distributions deriving from capital gains and directly held real estate). Investors who are Swiss tax resident are, in principle, entitled to receive a full refund. Investors who are non-Swiss tax resident may receive a full or partial refund in accordance with applicable double taxation treaty between Switzerland and the jurisdiction of their tax residence. A full refund for non-Swiss tax resident investors may be applicable if at least 80 per cent of the underlying income is derived from non-Swiss sources (the ‘affidavit procedure’). The Swiss general partner, as a legal entity, is taxed on its annual net profit (typically its management fee and carried interest) and on its equity.

Swiss unregulated investment companies

A Swiss unregulated investment company is a company limited by shares, which is not subject to CISA and CISO requirements and thus needs no authorisation by FINMA (even if it remains subject to Swiss anti-money laundering requirements contrary to an investment club exempted from CISA based on the current practice of FINMA), provided:

1. its shares are listed on a Swiss exchange or all of its shareholders are qualified investors within the meaning of CISA; and
2. its shares are registered shares.

Swiss unregulated investment companies are quite commonly used by local venture capitalists.

These vehicles differ from SICAFs, which are Swiss companies limited by shares regulated under CISA and subject to regulatory approval and subsequent ongoing prudential supervision by FINMA. The sole purpose of a SICAF is the investment of collective capital. The SICAF regime was introduced in 2007 but so far not a single SICAF has been incorporated in Switzerland. Such lack of interest results primarily from the possibility of using the CISA exemption allowing the incorporation of unregulated investment companies, but also derives from the SICAF’s tax treatment regime – they are not transparent entities and are subject to corporate income tax (the same tax treatment is also applicable to unregulated investment companies).

In 2018, the Swiss Supreme Court considered that VC financing activities do not always qualify as collective investments, which is the key trigger of Swiss fund regulations. In substance, if a VC investment vehicle participates in the companies in which it holds a (minority) stake, it does not qualify as a collective investment inasmuch as the following conditions are cumulatively met:

1. there is no external management; and
2. any participation in the underlying portfolio companies is actively managed by the venture capitalist (i.e., the investment has an entrepreneurial nature).

In the absence of other case precedents, this 2018 ruling of the Swiss Supreme Court illustrates that VC activities alone do not necessarily trigger Swiss fund regulations.

From a tax perspective, SICAFs and Swiss unregulated investment companies are treated as separate business entities and are not tax transparent. Such companies are thus less attractive than Swiss LPs from a tax perspective. WHT is also applicable to such companies and distributions to the shareholders are subject to 35 per cent WHT. Investors who are Swiss tax residents are, in principle, entitled to receive a full refund. Investors who are non-Swiss tax residents may be entitled to a full or partial refund in accordance with the applicable double taxation treaty between Switzerland and their jurisdiction of tax residence. Finally, the issuance of shares of a SICAF or an unregulated investment company incorporated as a Swiss company limited by shares is subject to the Swiss issuance stamp duty.

Swiss Limited Qualified Investor Fund

As of 1 March 2024, the Swiss Limited Qualified Investor Fund (L-QIF) is available to managers and investors. The L-QIFs can be structured as Swiss contractual funds (SCFs), Swiss investment companies with variable capital (SICAVs) or Swiss limited partnerships for collective investment (Swiss LPs). The L-QIF does not require FINMA’s approval and can thus be launched more quickly and at a lower cost.

L-QIFs are limited to ‘qualified investors’ as defined in the CISA and are subject to an audit by a qualified auditor. While the L-QIFs themselves are not regulated, an L-QIF structured as a Swiss LP will have to be managed by a FINMA-supervised institution and, more specifically, an asset manager of collective assets. From a Swiss tax perspective, L-QIFs do not benefit from a particular or derogatory regime and will be treated like other Swiss-regulated collective investment schemes.

In terms of investment, the standard risk diversification rules and investment restrictions applicable to regulated vehicles do not apply to L-QIFs. This increased flexibility, however, will not exempt L-QIFs from defining in their documentation the applicable investment restrictions according to the specific limits imposed on leverage, collateral and total exposure of net assets of L-QIFs.

According to the commentary on L-QIF, specific approval of side pockets by FINMA remains required, in the absence of existing international standards or other points of comparison, as well as empirical values. As a result, an L-QIF cannot create side pockets. By contrast, for regulated vehicles, side pocketing is possible provided that the relevant vehicle documentation expressly provides in advance for the possibility of creating side pockets, and, upon an illiquidity event, FINMA authorises the creation of the relevant side pocket while keeping the investors informed via a specific publication.

Foreign vehicles

It is common to see foreign investment funds involved in VC transactions and fundraising even when the venture capitalists or part of their operations are based in Switzerland. There are multiple reasons for using foreign structures, including:

1. favourable tax treatment;
2. absence of authorisation requirement or simplified registration and approval process abroad; and
3. international limited partners’ circle familiar with foreign vehicles and their management.

There is no general restriction to invest in Swiss markets through a foreign vehicle. The offering of foreign vehicles’ units (shares or interests) to Swiss-based investors may, however, trigger FinSA and CISA requirements. In addition, when the (non-discretionary) investment adviser is based in Switzerland, careful attention should be paid to the structuration of the carry and the portion allocated to the investment adviser to prevent a requalification of the investment advisory services as investment management.

Fund marketing

Overview

No FINMA approval or registration is required for foreign funds offered to Swiss qualified investors, including, without limitation, VC funds. However, depending on the type of investors that are targeted, a Swiss representative and a Swiss paying agent may have to be appointed.

The reverse solicitation exemption is now generally recognised under Swiss law in cross-border situations. In particular, the following services are not deemed to be provided in Switzerland:

1. financial services rendered by foreign financial service providers under a client relationship entered into at the explicit initiative of the client; and
2. individual financial services requested from foreign financial service providers at the explicit initiative of clients.

To benefit from this exemption, the foreign promoters or managers (or their representatives, e.g., a placement agent) must not have initiated the contact with the client, meaning that no prior marketing or advertising is allowed. While this condition is not expressly mentioned in the FinSO, it should nonetheless remain relevant as it is consistent with previous rules on reverse solicitation.

The notion of ‘pre-marketing’ is not legally defined under Swiss law. Contrary to the European Union, Switzerland has no specific regulatory regime applying to early-stage marketing. However, general and abstract discussions with investors, which do not refer or relate to a specific fund should not qualify, in principle, as a ‘financial service’ or an ‘offer’.

Finally, any marketing activity in Switzerland is also subject to the Swiss legislation against unfair competition or business practice, which prohibits market behaviour or business practice that is deceptive or that infringes upon the principle of good faith in any other way that may affect the relationship between suppliers and customers. These rules may also apply in conjunction with CISA provisions prohibiting the use of confusing or deceptive fund designations.

The consequences of advertising, offers and financial services

The FinSA and the FinSO (which both entered into force on 1 January 2020) repealed the notion of ‘distribution’ and the corresponding exemptions applicable to fund marketing under the old CISA. Instead, they introduced three new concepts – advertising, offer and financial services – and their respective exemptions.⁶

The concept of advertising is broadly defined as any communication aimed at investors that draws their attention to certain financial services or instruments. Any advertising must be clearly identifiable as such and must refer to the prospectus and the key information documents (if any), as well as the location where such documents are available. Any communication about a foreign fund (regardless of its legal form) that amounts to advertising is considered the same as an offer of the fund and triggers FinSA and CISA applicable requirements. Certain communications do not constitute advertising within the meaning of the FinSA, such as publication of the nominal references of funds, regardless of whether it is related to the publication of prices, rates, net asset value (NAV), price list or changes or tax-related data, or transmission by the financial service provider of an issuer’s communications to existing clients.

The concept of offer in the context of fund marketing is defined as any invitation to acquire a financial instrument that contains sufficient information on the conditions of the offer and the terms of the fund. Certain communications do not constitute offers within the meaning of the FinSA, such as the provision of information in reverse-solicitations, where no advertising related to any specific financial instrument is made by either the financial service provider or an agent thereof, or the publication of nominal references of funds accompanied, where applicable, by factual information. This information includes the international securities identification number (ISIN); NAV; prices; information on risks; price trends or tax information; the provision of factual information; and the preparation, provision, publication and transmission to existing investors or financial intermediaries of information and documents required by law or contract relating to financial instruments, such as general meeting invitations.

The concept of financial services includes the purchase or sale of financial instruments, such as shares, units or interests in funds. In short, the active offering of funds is qualified as a financial service. Certain activities, however, are excluded from the scope of the FinSA, such as M&A and corporate finance advisory services as well as the provision of market research, unless such research contains a personal recommendation to buy or sell specific financial instruments. More generally, the following activities do not qualify as financial services:⁷

1. advice on structuring or raising capital, on business combinations, acquisition or disposal of participations and the services associated with such advice;
2. placement of financial instruments with or without a firm commitment and the corresponding services;
3. financing within the scope of services provided in accordance with (a) and (b); and
4. granting of loans to finance transactions provided that the financial service provider is not participating or otherwise involved in these transactions.

Some new rules, in particular the rules of conduct under the FinSA, entered into force on 1 January 2022. This chapter does not deal with such transitional rules.

In essence, to the extent that the activities conducted in Switzerland qualify as financial services consisting in proposing funds’ units, shares or interests to Swiss-based qualified investors, the following requirements may apply:

1. certain rules of conduct, in particular information and reporting duties (unless institutional clients are targeted, it being specified that professional clients may waive some of these rules);
2. certain organisational rules, in particular regarding conflicts of interest;
3. registration in the register of clients of employees of the foreign promoter providing the financial services (exemption is available if only institutional or per se professional clients are targeted and the foreign promoter is subject to a prudential supervision abroad); and⁸⁹
4. affiliation with a mediation body (ombudsman office) (exemption is available if exclusively institutional or per se professional clients are targeted).¹⁰

In this context, only interactions with ‘end investors’ qualify as financial services under the FinSA. Accordingly, the provision of information on funds to prudentially supervised financial intermediaries (e.g., Swiss banks or Swiss asset managers) is generally not regarded as a financial service (triggering the consequences described in points (a) to (d) above), provided that the supervised financial intermediaries are acting on behalf of their clients.

At product level, the foreign funds may have to appoint a Swiss representative and a Swiss paying agent before starting to market the funds if ‘elective professional clients’ (see below) are targeted. No such appointment is required when the relevant foreign fund is exclusively proposed to institutional or per se, professional clients.

Concept of qualified investors

The FinSA categorises clients (investors) as private clients, professional clients and institutional clients. The FinSA also provides for opt-in and opt-out mechanisms to certain categories of clients. All investors who are not private clients must be informed of any opting-in possibilities prior to receiving any financial services.

The CISA refers to the FinSA for the definition of qualified investors: professional and institutional clients under the FinSA are treated as qualified investors under the CISA. In this context, the following are defined as qualified investors:

1. supervised financial institutions such as banks, securities firms, fund management companies, asset managers and insurance companies;
2. pension funds and companies with professional treasury operations;
3. large companies; and
4. elective professional clients (i.e., high net worth individuals (HNWIs) and related investment vehicles set up for the latter (upon provision of an opting-out declaration)).¹¹

Private (retail) clients who are not HWNIs under the FinSA but who have concluded a long-term asset management or investment advisory agreement with a supervised financial intermediary may be classified as qualified investors (subject to certain requirements).

Fund agreements

The Asset Management Association Switzerland (AMACH) and the Swiss Private Equity & Corporate Finance Association (SECA) have issued a model prospectus with an integrated partnership agreement, which serves in any FINMA filing of Swiss LPs as it facilitates the review by the regulator. However, it may be adapted and modified depending on the outcome of negotiations between the general partner and its limited partners or the general partner’s own preferences. When the limited partners are willing and able to negotiate the terms of the partnership, discussions with the general partner regarding preferred rate of return, catch-up structure, management fee offset, clawback, general partner removal, most favoured nation and key man clause can take place.

A Swiss-law governed partnership agreement for a VC fund typically contains the following provisions:

1. name of the partnership, registered office as well as corporate name and registered office of the general partner;
2. purpose of the partnership, in particular the sector or sectors in which the partnership will invest (e.g., ITC and biotech);
3. duration and extension of the partnership, and the competent body that may decide on such extension;
4. investment strategy, including eligible investments, restrictions, investment techniques, risk diversification and risks associated with investments;
5. initial and additional subscription and investment periods;
6. total capital commitment and repayment of capital, and capital call modalities;
7. partnership expenses and management fees;
8. conditions for admission and withdrawal of limited partners, and interest transfer restrictions and conditions;
9. limited partners’ information, including the general partner’s reporting duties (as a rule, reporting on a quarterly basis and issuance of annual reports, while it is generally possible to obtain an exemption from FINMA for the issuance of semi-annual reports);
10. co-investment conditions;
11. delegation of certain tasks by the general partner (such as risk, compliance, investment management, accounting and maintaining the limited partners’ interest register);
12. appointment of a limited partners’ advisory committee, and its composition and attributions;
13. organisation of the partners’ meetings and communications to the limited partners;
14. appointment of a custodian or paying agent;
15. distribution of proceeds (waterfall); and
16. dispute resolution clause (generally arbitration).

Other contractual provisions may be included in the partnership agreement, subject to FINMA’s review and approval. Additional limitations may result from the general principles of Swiss contract law (which, however, remain rather flexible). Side letters are not prohibited under Swiss law, but general partners must ensure that any side letter complies with their duty to act loyally and treat limited partners equally.

Fund management

As a rule, Swiss VC investment managers, whether of Swiss or foreign funds, are subject to a mandatory licensing requirement in Switzerland under the FinIA. By way of exception, de minimis managers are only required to be authorised as individual portfolio managers and not as asset managers of collective assets. All VC managers are subject to ongoing supervision and audit. In the case of a partnership, both the Swiss LP and its general partner are subject to FINMA licensing and ongoing supervision (unless the fund is structured as an LQIF, in such case, there is no product-related authorisation). General partners without authorisation as managers of collective assets may only be active as general partners in one Swiss LP.¹²

General partners generally abide by the 2016 SECA Guidelines for the calculation and disclosure of costs of private market funds. These Guidelines are relevant for both domestic and foreign funds. Total expense for domestic products must be published in the annual financial statements or be specifically communicated to investors.

Furthermore, Swiss general partners and investment fund managers must comply with the AMACH Code of Conduct, which implements the general legal principles set out in the CISA and CISO. In line with the FinSA, the Code of Conduct provides for certain disclosures both at fund manager and general partner levels. Disclosures concern, in particular, fees, costs, the existence of commission-sharing agreements, soft commissions and risks associated with investments. According to the revised Code of Conduct, significant changes in personnel or in the organisation and conflicts of interest must be disclosed to investors. In addition, fund managers are subject to FinSA applicable disclosure obligations regarding the financial services they provide. The partnership agreement may provide for additional contractual disclosure requirements that exceed those set forth in the SECA Guidelines and AMACH Code of Conduct.

Raising capital by start-ups

In Switzerland, VC investments (whether in seed, early-stage, late-stage or growth start-ups) are generally made in exchange for equity; that is, by subscription of newly issued shares of the investee company as part of a share capital increase. It is not unusual for common shares to be issued to investors in pre-seed and seed rounds; however, in practice, venture capitalists generally receive preference shares, providing for preferential rights relating to dividends, subscriptions and, predominantly, liquidation and sale proceeds. Certain preferential rights (e.g., as to dividends) may be reflected in the articles of association of the company, while others, in particular, preferences on proceeds in the case of a trade sale, are contractual in nature and must thus be specifically agreed with the other shareholders. Convertible loans and similar debt instruments are also common in practice, especially in pre-seed and seed rounds, notably to bridge finance the start-up until the next round. As a rule, convertible lenders are granted the right to convert the loan (with or without interest) into equity of the company at a reduced issued price in the next round or at an agreed maturity date (discount). In addition to investing, VC firms generally take an active role in the funded company, advising and monitoring its progress before releasing additional funds.

The SECA has published VC model documentation, in particular, a model investment agreement and a model shareholders’ agreement, for investments by business angels and similar investors in the range of 500,000 Swiss francs to 5 million Swiss francs (model documentation light) and for VC investments by institutional investors in the range of 5 million Swiss francs and above (model documentation large). SECA’s VC model documentation is widely used by Swiss practitioners and has become the standard for VC investments in Switzerland.

From a practical perspective, and depending on the investment's stage, VC investors usually insist on certain key contractual clauses and mechanisms to protect their investment. In particular:

1. control-related or veto rights in relation to certain important matters (whether falling within the competence of either the shareholders or the board of directors);
2. rights of first subscription of new shares and, conversely, waivers by the existing shareholders of their legal rights of first subscription in certain circumstances;
3. anti-dilution mechanisms in the case of down rounds (narrow or broad-based weighted average adjustments being common in practice, while full-ratchet mechanisms are only rarely agreed upon);
4. preference rights relating to dividends (rare), sales and liquidation proceeds (e.g., up to a liquidation preference amount);
5. restrictions on transfer of shares (e.g., lock-up period, rights of first refusal and pre-emptive rights, drag-along and tag-along rights, and call-options in certain triggering events), it being specified that the start-up’s articles of association usually provide for the board’s right to refuse share transfers in certain circumstances;
6. right to be represented on the board of directors;
7. information and inspection rights;
8. representations, warranties and indemnities typically granted by all or some founders; and
9. non-compete and non-solicitation obligations imposed on the founders (which, however, are subject to limitations under Swiss law).

Exit

Sales of the entire start-up company to a third party (trade sales), in particular to large foreign groups, are by far the most common exit used by VC funds and investors in Switzerland. In comparison with initial public offerings (IPOs) and among other benefits, trade sales can be implemented within a shorter time frame and at (much) lower costs. However, M&A transactions may entail deferred purchase price payment mechanisms (e.g., earn-outs) and thus delay or affect the VC investor’s final payout. According to market surveys, more than 400 trade sales of Swiss start-ups were carried out between 2000 and 2018, including the acquisition in 2017 by Johnson & Johnson of the Swiss biotech company Actelion for US$30 billion (which remains the biggest sale exit in the history of the Swiss start-up scene). In 2024, it was primarily multinational corporations that drove activity in Switzerland’s exit market, drawn by the country’s favourable business environment. Notable examples include Dutch-Swiss biotech firm Calypso Biotech, acquired by Novartis for an upfront payment of US$ 250 million, and Greek-Swiss engineering software company BETA CAE Systems International, which was acquired by California-based Cadence for US$ 1.24 billion. The value of such takeovers increased compared to 2023 but still fell short of 2022 levels.¹³

By contrast, IPOs remain rare. Generally, an IPO consumes significantly more time and entails much higher costs compared to other exit routes. Furthermore, when a company goes public, it becomes subject to additional and more cumbersome obligations, restrictions and requirements (e.g., financial reporting, management and directors’ compensation, ad hoc publicity and disclosure of major shareholdings), and it falls under strict regulatory supervision and increased public scrutiny. As regards the access of venture-backed companies to Swiss public markets, the SIX Swiss Exchange (Switzerland’s main stock exchange) has launched Sparks, a new equity segment for small and medium-sized enterprises (SMEs), with a trading model specifically designed for companies with lower capitalisation. The new segment is expected to provide SMEs, including Swiss venture-backed growth start-ups, with better access to the Swiss public equity capital market.¹⁴

After a record year in 2021 (with 11 IPOs), no IPO took place in 2024.

Secondary transactions, where existing shareholders sell their shares to other investors, may be an alternative exit option. However, there is no later-stage fund in Switzerland that routinely buys out earlier investors.

Finally, special purpose acquisition companies (SPACs) have been authorised on the Swiss stock exchange since December 2021. Both equity and convertible-bonds SPACs are possible. In terms of listing requirements, SPACs are exempt from the financial track record requirement, and from publishing historical financial information. SPACs are, however, subject to the same reporting requirements as other listed companies on SIX Swiss Exchange, but the De-SPAC process must be completed within three years. VT5 Acquisition Company AG has become the first Swiss SPAC to join the Swiss stock exchange through the new regulatory framework that allows SPACs to be listed in Switzerland. However, no further SPACs have been confirmed as listed alongside VT5, and no de‑SPAC transactions have been completed on SIX yet. There is active interest and a pipeline in development, but VT5 remains the only live Swiss SPAC to date.¹⁵

Outlook and conclusions

New technologies and Switzerland’s competitiveness, including in innovative products, as well as the strong start-up basis, contribute to sustaining VC markets in Switzerland. On the regulatory side of the equation, the introduction of the L-QIF adds a new investment vehicle that can be suitable for various investments, including VC opportunities. Despite the absence of a specific tax regime coupled with limited EU market access, the flexibility of the L-QIF from a regulatory standpoint could be advantageous for venture capital, in particular if Swiss investors are targeted. Currently, twenty-two L-QIFs have been launched, including three structured as Swiss LPs and a certain number of these vehicles are focusing on real estate and private equity.¹⁶ The results are modest at this stage. Time will tell whether this new vehicle will be as successful as the authorities are hoping.

Footnotes

1. ^ All data stems from the Swiss Venture Capital Report 2025 regarding 2024 and its Update regarding the first half of 2025 (http://www.startupticker.ch/en/swiss-venture-capital-report), published by the news portal startupticker.ch in collaboration with the Swiss Private Equity & Corporate Finance Association (SECA).
2. ^ See, for example, the IMD World Competitiveness Ranking 2025 (www.imd.org/centers/wcc/world-competitiveness-center/rankings/world-competitiveness-ranking), or the Global Innovation Index 2024 published by the World Intellectual Property Organization (https://www.wipo.int/web-publications/global-innovation-index-2024/en/).
3. ^ Swiss Venture Capital Report 2025, pp 6 et seq and 59 et seq.
4. ^ All data is from the Swiss Venture Capital Report 2025.
5. ^ Despite the fact that Switzerland successfully passed the technical review of the European Securities and Markets Authority (ESMA) in 2015 for the purposes of extending the benefit of passporting of the Directive 2011/61/EU (AIFMD) to non-EU managers.
6. ^ Some new rules, in particular the rules of conduct under the FinSA, entered into force on 1 January 2022. This chapter does not deal with such transitional rules.
7. ^ Other financial services include (a) receipt and transmission of orders in relation to financial instruments; (b) administration of financial instruments (portfolio management); (c) provision of personal recommendations on transactions with financial instruments (investment advice); and (d) granting of loans to finance transactions with financial instruments.
8. ^ As per the practice of the authorities in charge of maintaining the registers. Certain practitioners consider that this exemption should also apply when elective professional clients are targeted.
9. ^ Employees of unregulated Swiss financial services providers must register in any instance.
10. ^ Exemption is also available to Swiss-based institutions.
11. ^ HNWIs and related investment vehicles must meet the following requirements to be able to opt out: to have either (a) financial liquid assets of at least 2 million Swiss francs; or (b) financial liquid assets of at least 500,000 Swiss francs and market knowledge based on individual education and professional experience or similar experience to assess the risks of investments.
12. ^ A fund manager will be considered de minimis if all investors of the funds it manages are qualified investors and either (a) the assets under management (AuMs), including the assets acquired through the use of leveraged finance, do not exceed 100 million Swiss francs; or (b) the AuMs do not exceed 500 million Swiss francs and consist in non-leveraged collective investment schemes where investors are not permitted to exercise redemption rights for a period of five years from the date of their first investment.
     
13. ^ Swiss Venture Capital Report 2025, p 7 and 38 et seq.
14. ^ The first listing on Sparks took place on 11 February 2022 (see http://www.six-group.com/en/newsroom/media-releases/2022/20220211-xlife-sciences-listing.html).
15. ^ See http://www.six-group.com/en/newsroom/news/the-swiss-stock-exchange/2021/vt5-ipo.html.
16. ^ See https://backend.sif.admin.ch/fileservice/sdweb-docs-prod-sifadminch-files/files/2025/05/06/89d109ff-2bd1-4506-a4e7-40eddf8c5ddf.pdf.