In the current environment, the search for money has become more difficult and time consuming for start-ups. Nevertheless, Zurich proptech smino managed to raise growth capital within a short period of time, with a growth financing from UBS playing an important role. UBS Growth Advisory Team Head Lukas Reinhardt and Transaction Manager Robert Baumann, as well as managing partner Sandor Balogh and CFO Rebecca Büsser from smino talk about the background.
Mr Balogh, many markets are currently affected by uncertainty. How is business at smino?
Sandor Balogh: Good. Our growth is currently more than 100% compared to the previous year.
How do you explain the great demand for smino’s collaboration software for the construction industry?
Balogh: In general, construction projects are becoming increasingly complex with more and more specialists involved. That is why they can no longer be processed without a collaboration solution.
Is there not a lot of competition? What makes smino’s solution special?
Balogh: There is indeed competition. However, many solutions have been developed by established players and are outdated in terms of functionality, look and feel. Our success factor is that our software reduces complexity and works easily, quickly and intuitively for the different user groups. This is a challenging task considering that the solution must be as well received by architects using it in the office as by construction workers on the building site.
Who are smino’s clients; who ultimately decides whether your solution will be used in a project?
Balogh: The benefits of our solution are greatest when it is used over the entire course of a project, from planning and construction to handover and operation. Our clients are therefore primarily building owners and architects, but also general contractors.
How many companies use the smino software today?
Balogh: About 13,000, mostly in the DACH region.
What are the next steps for the company?
Balogh: We are concentrating on scaling sales and distribution. We benefit from the fact that our product creates a viral effect.
Ms Büsser, I assume that the funds raised in the first half of 2023 will be used to finance this growth?
Rebecca Büsser: Absolutely. We are happy to get the trust from UBS to provide us with their highly sought-after growth financing for startups. This will help us further expand in the German-speaking markets and beyond.
How did you come into contact with UBS?
Büsser: An existing investor put us in touch. And then things moved quickly: two months after the initial contact, we had the commitment.
Mr Baumann, you are involved with the case. What was it about smino that convinced UBS?
Robert Baumann: It was a combination of several things that came together. First, the strong existing investor bases; then the continuous growth since the company’s foundation and the well-known customers, and of coursethe team, which comes from the industry and thus knows the user requirements first-hand.
Two months to complete the financing seems, to me, very speedy. How was this done?
Baumann: In addition to the convincing case, it was the good preparation on the part of smino. We received immediate answers to all our questions that were backed-up by data.
Mr Reinhardt, let’s talk briefly about the general funding environment. UBS Growth Advisory has various growth financing options, including putting start-ups in touch with interested wealthy private investors. How has this group’s interest in investing in start-ups evolved?
Lukas Reinhardt: In line with the recent general decline in venture capital investments, the interest of private investors in startup investments has also waned, even though investors now have more attractive entry opportunities given the lower valuations in the market.
Will this situation continue or will investment recover?
Reinhardt: We are clearly in a down-cycle, and it is hard to say when exactly the market will recover. However, considering the strong volume growth in VC investment in the years leading up to 2021, I am sceptic that we will return to the volumes and valuation levels of 2021 any time soon.
What is your advice for start-ups in this situation?
Reinhardt: Profitability is much more important to investors today than growth and start-ups should take this into account. The situation also shows how important it is for start-ups to choose investors that have financial firepower and thus can continue to finance their portfolio companies through a downturn.
In principle, start-ups can flourish as long as the basic trends are intact; for example, the trend towards digitalisation. How do you see the development here?
Reinhardt: There is certainly nothing to worry about when it comes to a megatrend such as digitalisation, the development will continue.
Mr Balogh, what is the state of digitalisation in the construction industry? There is a lot of talk about BIM – Building Information Modelling – with planning, execution and management of real estate digitalised throughout. How far along is that in practice?
Balogh: It’s only at the beginning. Our goal is to be an important driver of this development and that’s why we acquired BIM SPOT in autumn 2022, which develops solutions in the BIM area. There’s still a lot of potential here.
Further information about UBS Growth Advisory can be found on the UBS website.
The new Swiss Venture Capital Report was published on 26 January. It analyses 304 financing rounds closed in 2020 and includes further article such as an interview with Michael Hengartner, President of the ETH Board, and a list of Swiss "soonicorns". 
Please login or sign up to comment.
Commenting guidelines