Unique collaboration between Swissto12, SERV and UBS made financing possible

Mr de Rijk, Swissto12 has received orders for four geostationary satellites this year. When will the first one be sent into space?
Emile de Rijk (Swissto12): In the first half of 2026. That’s when the Intelsat satellite is scheduled to fly on an Ariane rocket.

What sets the Swissto12 satellite apart?
EdR: Our HummingSat is significantly smaller, about three to five times less than conventional larger geostationary satellites used for telecommunication applications. This size reduction makes them more cost-effective to build and launch.

Which customer group is Swissto12 targeting with this?
EdR: Satellites for telecommunications out of geostationary orbit have been in service since the 1960’s. Since then, they have become as large as a rocket can host, because in principle, they become more efficient with size. However, this development has also made them increasingly complex and expensive, raising the entry barrier for telecommunication operators and countries wishing to deploy satellites. Our HummingSat is designed for those of whom this entry barrier has become too high. It’s ideal for small and medium-sized countries looking to establish their own sovereign, secure communication infrastructure in space, or for those needing bespoke regional or gap-filling services, where large satellites would not be financially viable. Additionally, HummingSat offers a competitive replacement option for certain legacy geostationary satellites that have reached the end of their lifetime.

Is this a niche or a large market?
EdR: The market is certainly worth several hundreds of million dollars. I estimate the volume to be a significant portion of the market for geostationary telecommunication satellites.

If the market potential is so significant, why haven’t established manufacturers tapped into it? In other words, why is Swissto12 the sole company to build such low-cost satellites?
EdR : Firstly, our edge lies in our deep knowledge in the field of advanced Radio Frequency (RF) systems, essential for satellite connectivity. Since 2011, Swissto12 has been at the forefront of developing of radio frequency communication products for satellites, using groundbreaking and patented 3D printing technology. We leveraged our expertise in this area to develop unique telecommunication systems for satellites, integrating large data capacities into our compact HummingSat. Unlike large aerospace integrators focused on bigger projects, our development relies on smaller, interdisciplinary teams. This approach has led us to conceive a clever and competitive satellite design.

The key factor is production: Setting up production for the HummingSat is very capital-intensive. Hence the CHF 25 million financing from UBS, backed by a guarantee from SERV. How did you get the idea of turning to SERV?
EdR: We had worked on a smaller project with SERV previously and were therefore familiar with their offer, basic requirements, and processes. We then met informally for the first time in the fall of 2022 to discuss whether SERV could assist us again in this venture.

Mr Hendriks, can you explain in a few sentences what SERV does?
Christian Hendriks (SERV): SERV, as a state backed Export Credit Agency (ECA), supports the Swiss export industry and banks by insuring them against various risks. This includes safeguarding against potential payment defaults by buyers in the import country due to either political or commercial risk as well as credit risks on the Swiss exporter’s side.

Our working capital insurance mitigates credit risks associated with the (pre-)production of goods to be exported. Banks leverage this insurance to facilitate loans to exporters in cases where they are unable or unwilling to finance production with their own funds and cannot use a regular, unsecured credit line. This service is particularly valuable for rapidly expanding companies embarking on major export projects.

For fast-growing deeptech companies in particular, encountering such financial challenges is common. What criteria must companies meet to secure approval from SERV?
CH: We take a thorough look at various factors, including the planned transaction itself, the market, the company’s USPs and their expertise. It’s crucial for us to ascertain that the company is capable of fulfilling the order and meeting its contractual obligations to the buyer or importer. We also consider financial stability and investor support, as well as the impact on employment in Switzerland, whether it involves retaining existing jobs or creating new ones.

Many of these criteria seem challenging to assess based on a single snapshot. I imagine that familiarity, particularly with large sums of money like these, is beneficial?
CH: Absolutely. Our prior relationship with Swissto12 built a foundation of trust, simplifying the process. The team was already familiar with our procedures and the way we work from the first project. Incidentally, this was also the case with UBS: They are well-acquainted with SERV, and our collaboration is well established. This familiarity naturally facilitates cooperation.

Mr Polat, does UBS carry out its own audit when a company like Swissto12 approaches with a SERV guarantee?
Kamil Polat (UBS): Absolutely! Basically, we check the same criteria as SERV does. In this case, we paid particular attention to the company’s USPs, expertise, and their high-profile customers and investors.

Mr Rueb, would UBS have refrained from granting the credit facility without SERV’s insurance cover?
Leon Rueb (UBS): Correct. Without SERV’s involvement, securing the financing would have been more challenging. SERV can take on risks that UBS, as a commercial bank, cannot take on independently. The combination of SERV’s guarantee, strong investor support, and our loan made this transaction possible. This principle holds true for both young and more established companies.

In view of the current reluctance of VCs to invest, can SERV-backed financing be an alternative to a financing round?
LR: SERV-backed financing is not a substitute for equity investments. The loans we grant under this scheme are tied to specific export transactions. Our SERV-covered working capital loans provide liquidity for fulfilling various aspects of a concrete export contract, like manufacturing, procurement, or engineering.  Therefore, this type of financing is more suitable for companies in the scale-up phase rather than in the early start-up phase, as it requires a certain track-record and existing export contract(s).

Is there a minimum financing amount for projects under SERV cover?
LR: We typically consider cases starting at CHF 500 000 and above. This ensures that the costs and administrative efforts are proportionate to the loan amount.

Mr Hendriks, from SERV’s perspective, what else should entrepreneurs keep in mind when seeking insurance?
First and foremost, they should come to us as early as possible. Our aim is to find a solution collaboratively with exporters. For this to happen, they need to initiate discussions early, both with us and their bank.

Does SERV operate differently from a typical commercial insurance company?
It is difficult to draw a comparison. SERV has a unique mandate focused on preserving and creating jobs in Switzerland, strengthening the Swiss export sector and enhancing Switzerland’s standing as a business hub. Entrepreneurs can rely on us to go the extra mile in collaborating with them and to find a way to make financing feasible. However, the underlying business case must be viable.

Mr de Rijk, aside from kickstarting production, what other positive impacts has the financing facility had?
EdR: A SERV guarantee also acts as a catalyst for foreign buyers to place orders with us. It reinforces our ability to contribute to financing large programs and strengthens our standing as a solid contractual counterpart.

The participants:

Emile de Rijk, co-founder and CEO Swissto12

Christian Hendriks, Senior Vice President Client Advisory & Acquisition SERV

Kamil Polat, Corporate Client Advisor UBS Switzerland AG

Leon Rueb, Structured Export Finance UBS Switzerland AG