Funding for start-ups barely dented by coronavirus

Funding continued to flow into start-ups last year, but was spread out more thinly than 2019. © Keystone / Christian Beutler

More than CHF2 billion of venture capital flowed into young Swiss companies for the second year in a row, a sustained rate of funding that defied the economic destruction wreaked by the pandemic last year.

Investors poured more money into fledging cleantech and biotech projects in 2020 at the expense of ICT and particularly fintech companies. These are the findings of the annual Swiss Venture Capital reportExternal link released on Tuesday by startupticker.ch and the investor association SECA.

Despite a wobble last March, and to a lesser extent in October, funding for the year fell by just 7% to CHF2.1 billion ($2.37 billion) in 2020. This followed a record smashing 85.5% increase in venture capital (CHF2.3 billion) in 2019, a rate of start-up financing that largely held firm last year despite many investors pulling back on risk in the face of Covid-19. In the first six months of 2020, investments fell by a third in value but rallied strongly in the second half of the year.

Investors spread their financing more thinly last year, avoiding the type of mega-deals worth more than CHF200 million that were a feature of 2019.  

Biotech start-up projects continued their rally over the last few years to overtake the amount of venture capital invested into ICT companies. As a result, Basel City, home to many pharmaceutical and biotech firms, moved up to second spot in the rank of cantons that attracted such funding. The report plays down the significance of the pandemic for this trend, arguing that very few Covid-19 solutions were offered by start-ups last year.

In 2020, a record 46,842 new companies set up shop in Switzerland, an increase of more than 5% on 2019, according to the Institute for Young Enterprises.