admin Jul 18, 2023
Seca and Startupticker.ch published another version of the “Swiss Venture Capital Report 2023” which shows the status of the private equity market during Q1 2023. During the initial six months of 2023, Swiss venture capital funding succumbed to the worldwide decline. Approximately CHF 1.2 billion was invested, indicating a 54% decrease compared to the equivalent period in 2022. Although the number of finalized financing rounds experienced a notable decrease, dropping from 163 to 154.
Investment Summary
Swiss start-ups generated CHF 1,195.5 million in 154 financing rounds during the first half of 2023. This represents a 54% decrease in invested capital compared to the previous year. However, the number of financing rounds only decreased by 5%. It is important not to overestimate the stability of financing rounds, as the relatively stable number was likely due to start-ups closing rounds after receiving initial commitments from investors to avoid the risk of losing them. This resulted in different types of financing rounds, such as seed plus rounds, pre-series A rounds, and first closings of series A rounds, instead of a straight series A round. Overall, there were fewer financing rounds than last year, and the median amount across all rounds decreased from CHF 3 million to CHF 2.48 million. Additionally, the top investments also decreased significantly. In the first half of 2022, the three largest rounds received CHF 1.133 billion, similar to the total amount invested in all financing rounds in 2023. In comparison, the three largest rounds in 2023 only received CHF 331 million.
Sector allocation
The decline in total investment in Swiss start-ups can be attributed to the ICT sector. In the three sectors focused on - ICT, fintech, and healthcare IT - there has been a significant decrease in numbers. In the first half of 2022, start-ups in these sectors attracted almost CHF 1.4 billion, but in the same period in 2023, the amount dropped to only CHF 373 million - a decline of over 73%. Consequently, start-ups received only around a quarter of the funds they generated in 2022. On the other hand, the biotech sector experienced more stability, with a slight increase in investment compared to the previous year (+3.5%). However, investment in biotech start-ups remains considerably lower than the record levels seen in 2019 and 2021, where they generated well over CHF 400 million in both years. The cleantech and medtech sectors witnessed individual large investments, with the medtech sector reaching an all-time high one signicant significant financing round. In contrast, the cleantech sector received significantly less investment than in the first half of the year.
Exits
Despite the challenging conditions in the venture capital market, the number of exits has not been affected. Sales to foreign companies remained stable, while sales to domestic buyers actually increased in the first half of 2023. This may be due to founders and investors being more willing to accept reasonable offers, seeing acquisitions as a solution to the ongoing staff shortage. Additionally, Swiss start-ups have been increasingly acquiring other companies in recent years, and this trend continues into 2023. With eight acquisitions, start-ups have already acquired nearly half the number of companies as in the entire 2022. This trajectory suggests they are on track to reach the same level again. This presents an encouraging development as well-funded start-ups leverage lower valuations and the challenging refinancing landscape faced by other companies, enabling Swiss start-ups to grow at a faster pace.
A few words about Crowd4Cash’s current situation
The current trend shows once again that strict cost management is and will remain important. Crowd4Cash has long relied on this element in planning and has so far been able to assert itself in the market with a minimum of external funding. In addition to an EBITDA that has been positive for a long time, Crowd4Cash was even able to report a profit for the first time in 2022. This is thanks to an extremely innovative business model, strict cost control and steady sales growth. We therefore see Crowd4Cash as well positioned and ready for the future.
