The Swiss Federal Council wants a governmental boost in the market for financing startups. But there is lot of work ahead.
On Wednesday, the Swiss government made a fundamental decision in favour of the creation of a state innovation fund. According to a press release, this so-called Swiss innovation fund should focus on the areas of "decarbonisation" and "digitalisation". Frankly: Why limit yourself anyway? There are promising young companies in many fields in Switzerland.
According to the press release, the focus should not be on financing the first million Swiss francs for startups. I think so too as it is not that difficult for early-stage and mid-stage startups to raise money. Therefore, the envisaged innovation fund should be intended for growth investments, to put it simply, from the second to the twentieth million Swiss francs a company raises.
There is something I do not understand: Why did it take the Federal Council that long? Other countries launched funds like these years ago, for example: Germany, France, Belgium, The Netherlands and Great Britain. The planned fund is likely to start investing in 2025 at the earliest. In the first stage after Wednesday's decision on the direction to be taken, the Department of Economic Affairs must submit the key parameters of the planned innovation fund and also possible financing variants by the end of January 2023.
Execution is key – especially in a fast-pace environment like venture capital. I fear that even as good as the Swiss government’s intentions are the organizational burdens might be heavy and slow down that progress that has been made in the last months. We need a fast und unbureaucratic way for the money to flow to Swiss startups. So just saying: why don’t you give the money to the experts, namely venture asset managers like Serpentine Ventures?
In other words: The success of this fund depends on who is managing it and how. I doubt that there is sufficient venture capitalist expertise to be found in the Department of Economic Affairs. You need years of individual experience in order to be able to identify the most promising companies that have growth potential and can prevail in the market.
It is obvious that we need this expertise if we want to reach the bigger goals of this attempt: Create future proof jobs in Switzerland, improve pensions of Swiss people, secure our position as an innovation leader, retain billions of wealth creation in Switzerland instead of moving it abroad and establish venture as an asset class.
