Number of startup liquidations on the rise

In 2023, the overall conditions for start-ups deteriorated significantly. Rising interest rates and the slowdown in the digitalisation push triggered by the pandemic led to a clear decline in capital flowing into startups, as the latest Swiss Venture Capital Report showed. At the same time, the number of exits fell. This raises the question of how this deterioration is affecting the liquidation of startups. To provide a comprehensive view, Startupticker has conducted an evaluation of liquidations spanning the period from 2020 to 2023.

Overall, 2023 saw a significant increase in liquidations of Swiss startups. While the number of liquidations had remained steady in the previous years, it more than doubled in 2023 compared to 2022. In 2023 206 startups out of 4700 in the Startupticker database were liquidated, whereas in 2022 only 88 startups faced liquidation.

Things look clearly worse for startups with previous investments. In 2023, 73 start-ups that had previously been able to attract investors were liquidated. In 2022, the number was 19. This means that almost four times as many startups with investments had to give up in 2023 than in the previous year. In 2020 and 2021, around 20 startups with investments were liquidated, too. In 2023, the number of liquidations reached a completely new level for Switzerland.

Financed startups can be further distinguished by the number of funding rounds they were able to close. For startups with only one funding round, liquidations have more than tripled in 2023 compared to 2022. In 2023 there have been 47 liquidations of startups with one funding round, compared to 14 in 2022. For those startups which had more than one funding round, liquidations have more than quintupled. In this category, 25 startups have been liquidated in 2023, compared to only 5 in 2022. Besides, 2023 was the only year which saw liquidations of startups with five previous funding rounds.

For this evaluation, 4700 startups from the Startupticker database were run through the Swiss Official Gazette of Commerce. After filtering out those who have filed for liquidation in the events of an acquisition or a reorganization of the legal structure, Startupticker found liquidation entries for 470 startups. As date of liquidation, the first occurrence of liquidation in the Gazette of Commerce has been taken. For those startups the number of prior funding rounds which are recorded in the database of Startupticker were counted.

We will dive deeper into this topic in the next Swiss Startup Radar which will be published in Q4. The upcomin edition will focus on the topic of crisis. 

(Benjamin Klavins)