Swiss venture capital financing was no longer able to escape the global downward trend in the first half of 2023. Just under CHF 1.2 billion was invested – a drop of 54% compared with the same period in 2022. However, the current half-year update of Swiss Venture Capital Report, published by the online news portal Startupticker.ch and the investor association SECA in cooperation with startup.ch, also shows that Swiss investors believe that rock bottom has been reached.
In the first six months of the current year, Swiss start-ups generated a total of CHF 1,196 million in venture capital, significantly below the two boom years of 2021 and 2022. The number of investments was more stable at 154 compared with 163 in the same period in 2022.
The area of digitalisation is primarily responsible for the decline. Start-ups from the ICT, fintech and healthcare IT sectors attracted only CHF 373 million in 2023, a decrease of more than 73% compared with the first six months of 2022. Not only were particularly large financing rounds missing, but there was also a fall across the board. At CHF 1.4 million, the median of the ICT financing rounds is more than 63% lower than in the same period in 2022, and also significantly below that of the pandemic years of 2020 and 2021.
Cantons Zurich and Zug faced with biggest decline – ray of hope from acquisitions
The cantons in which the majority of ICT and digitalisation start-ups are based accordingly recorded the greatest losses. In Zurich, the total amount invested was 70% below the previous year’s value, and in Zug it reached 81%. In addition to the industry focus, the fact that the invested capital had risen sharply in both cantons in 2022 is also a factor.
M&A transactions provided a ray of hope: 32 start-ups were taken over – a new record – and of these 11 were acquired by Swiss companies, more than ever before in the first half of a year. Eight start-ups took over other companies in order to boost growth, similar to the previous year’s level.
Outlook: environment remains challenging, but investors are optimistic
Our survey of approximately 100 Swiss investors, conducted by SECA, provides an outlook for the next 12 months. A third will make fewer new investments in the next year and focus more on follow-up financing. Thus, the financing environment for start-ups will remain challenging. According to the investor responses, start-ups that want to receive investment have to prove that they can efficiently achieve business milestones with the capital invested, and they will have to accept compromises in their valuation.
Almost half of the lenders surveyed expect investment to continue to decline slightly over the next 12 months; however, a third anticipate a recovery. Overall, respondents are more optimistic about the coming 12 months than they were a year ago.
The 16-page update can be downloaded from our assets section.
(Press release)
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