The Venture Capital Law Review

In recent years, the Swiss start-up scene has developed significantly and Switzerland is now perceived internationally as a start-up and investment location. While 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. In 2021, a record year for almost all sectors, venture capital (VC) investments in Swiss technology-driven young companies amounted to almost 3.1 billion Swiss francs, with a higher number of financing rounds – 355 (representing an increase of approximately 16.8 per cent compared to 2020) – in spite of a slight decrease in the investment amounts per round (the median fell from 2.9 million Swiss francs to 2.3 million Swiss francs).² According to available data, VC investments in Swiss start-ups should bring new records in 2022, with 163 financing rounds happening in the first six months alone (more than 30 per cent higher than for the same period in 2021) and more than 2.585 billion Swiss francs of equity investments in the same period (including a mega-round of 600 million Swiss francs in the Zurich-based pioneer of the carbon removal industry Climeworks).³

The number of VC funds, including corporate VC funds, has also significantly increased in recent years, especially since 2018. Pursuant to the Swiss Venture Capital Report 2022, 35 funds are currently offered by domestic venture capitalists, which is more than ever before.⁴ VC as an asset class is thus continuing to progress 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. By contrast, Switzerland has the most informal private investors, in particular friends and relatives investing in pre-seed and seed rounds, in the world. 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 one-third came from the United States, with the United Kingdom and France contributing 12 per cent and 6 per cent respectively. Swiss start-ups absorbed more than 5 billion Swiss francs in foreign direct investment in the same period.⁵

Key sectors for VC investments in Switzerland are the information and communication technology (ICT) sector, including fintech, and the life sciences sector, although biotech start-ups generated less capital in 2021 than in 2020.

Switzerland has a particularly high number of university spin-offs, in particular from the polytechnic universities of Zurich and Lausanne. Basel, Zug and Geneva are the other Swiss start-up hotspots. Despite two years of the covid-19 pandemic, Switzerland has retained its reputation as a go-to location for high-tech investments and remains among the world leaders for innovation. Read more

Accreditation: Reproduced with permission from Law Business Research Ltd. This article was first published in The Law Reviews (Published: September 2022). For further information please visit:
https://thelawreviews.co.uk/title/the-venture-capital-law-review/switzerland