Tokyo (SCCIJ) – In 2023 and similar to other countries, Swiss start-ups faced a challenging investment climate, marked by a significant reduction in venture capital funding. However, the medtech sector recorded a new investment high, and the number of financing rounds remained relatively stable. Investors expect an upturn for 2024.
Investment in Swiss start-ups decreased last year but there were bright spots (Image: Pixabay).
Mature start-ups hit
Investment in knowledge-based young Swiss companies fell by 35% in 2023 compared with the previous year, totaling 2.6 billion francs. This decline, the first significant one since the 2008/2009 financial crisis, was highlighted in the Swiss Venture Capital Report, a collaborative effort by startupticker.ch, the industry association SECA, and startup.ch.
This reduction in funding was particularly severe among more mature start-ups, which typically require higher capital. Despite the decrease in investment volume, the number of financing rounds increased slightly from 383 to 397.
Sector differences
The challenging global venture capital market, which also affected countries like the US, the UK, Germany, and Scandinavia, contributed to this decline. Rising interest rates and general economic uncertainty led to a cautious approach from venture capitalists, who were more inclined to reserve funds for existing investments rather than committing to new ones.
Sector-wise, the impact was uneven across different fields. Information and communications technology as well as fintech start-ups faced the most significant challenges, with investments dropping over 60% to 786 million francs. In contrast, biotech and medtech start-ups saw an increase in investment, with biotech up by 22% to 492 million francs and medtech registering a record increase of 41% to 379 million francs.
Optimism returns
As a consequence of the investment climate, the year 2023 also saw a reduction in the number of exits. Sales of venture capital-financed start-ups to larger industry-related companies decreased, with 38 start-ups finding new owners compared to 67 in 2022. Notable transactions included the sales of Zug-based fintech start-up nChain and Basel biotech company T3 Pharmaceuticals, each with a transaction volume of about 500 million francs.
Despite these challenges, investors remain optimistic. Thomas Heimann, a start-up manager at industry association SECA, described the year as unprecedented. However, the annual investor survey conducted for the report indicates a potential rebound in financing activity in 2024.
About 50 Swiss venture capital firms are currently raising funds for new investment vehicles, and as of January 1, 2024, around half of these funds already secured the finance for their initial investments. This suggests a potential uptick in investment inflows for the coming year.
Text: GGBA (Editing by SCCIJ)
