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The Venture Capital Law Review: Switzerland

Switzerland Chapter

In recent years, the Swiss start-up scene has developed strongly and the international perception of Switzerland as a start-up and investment location has significantly increased. While the number of new start-ups stagnated between 2009 and 2016, a reversal of this trend has been apparent since 2017, with an increasing number of start-ups and financing rounds. In 2020, venture capital investments in Swiss technology-driven young companies amounted to 2.1 billion Swiss francs, with a higher number of financing rounds – 304 (representing an increase of approximately 14 per cent compared to 2019) – and significantly higher investment amounts per round – the median rising from 1.95 million Swiss francs to 2.9 million Swiss francs. According to data available thus far, venture capital investments in Swiss start-ups should experience a massive growth in 2021, with already 202 financing rounds and more than 1,850 million Swiss francs of equity investments during the first two quarters (including a mega-round of 588 million Swiss francs in the Zurich-based insurtech wefox).

The number of venture capital (VC) funds, including corporate VC funds, has also significantly increased in recent years, especially since 2018. Pursuant to the Swiss Venture Capital Report 2021, at least 25 Swiss VC fund managers were planning to fundraise in the short and medium term, including newcomers and existing actors launching new funds. VC as an asset class is thus progressing in Switzerland. However, the Swiss investor scene remains relatively young, which translates into a certain shortfall in professional investors and venture capitalists capable of investing frequently, in particular, in the growth phase.5 By contrast, Switzerland is world-class when it comes to informal private investors, in particular friends and relatives investing in pre-seed and seed rounds: no other country in the world has as many informal private investors as Switzerland. Another feature of the Swiss investor landscape is the very high proportion (about three-quarters) of capital investments coming from abroad. Between 2010 and 2019, only about one-quarter of the capital invested in Swiss start-ups came from Swiss investors, while more than a third came from the US, with the UK and France contributing 12 per cent and 6 per cent respectively; more than 5 billion Swiss francs in foreign direct investment went to Swiss start-ups during the same period. Read more

The chapter for Switzerland was written by Jérôme Levrat and Vaïk Müller. Please find below the complete article.

Accreditation: Reproduced with permission from Law Business Research Ltd. This article was first published in The Law Reviews (Published: October 2021). For further information please visit https://thelawreviews.co.uk/title/the-venture-capital-law-review/switzerland

Authors

Portrait of Vaïk Müller
Dr Vaïk Müller
Partner
Geneva
Portrait of Jerome Levrat
Jérôme Levrat
Partner
Geneva