Large Swiss companies are increasingly investing in start-ups

In Switzerland, CVCs are a young phenomenon: 70% invested for the first time only in 2016 or later. The latest wave of growth has been driven by financial services companies. Despite the young age, the CVCs take a professional approach, with 70% having a dedicated team or experienced consultants.

When selecting start-ups, strategic goals, in particular access to technology that is of interest to the parent company, are more important than purely the prospect of financial gain. Start-ups with groundbreaking technology and which can expand the company’s product portfolio are more likely to be sought than those with products already on the market.

The CVCs proactively seek start-ups, but are also open to opportunities and use accelerator programmes to identify investment goals. They invest heavily in the seed and early stage phase, prefer minority stakes and usually aim for an exit via a trade sale.

Some of the older CVCs are among the most active Swiss start-up investors: they have 20 companies or more in their portfolio and have invested more than CHF 100 million over the past five years. A good half of CVCs have invested up to CHF 20 million in up to 10 start-ups in the past five years. As many CVCs are less than five years old, these numbers will increase in the future.

An international comparison shows that the proportion of capital invested by CVCs in Swiss start-ups has risen sharply in the past five years and has been at the level of other European countries and the US since 2020. However, as with investment by pure VCs, more money comes from abroad than from within the country.

Start-up investment is also a challenge for CVCs. According to the respondents, the success rate is less than 50% on average. Nevertheless, about half of CVCs want their activities to continue at the current level and more than 40% want to expand them.

The analysis is based on responses from 24 well-known large Swiss companies. The survey was conducted in June 2021.

The analysis is part of the Swiss Venture Capital Report- Update H1 2021. It can be downloaded from our assets section. Investments of Swiss CVCs can be found in our investor directory with activated filter "CVC".

(SK)