Insights from the Swiss Start-up Monitor – Are we facing a funding gap?

Firstly, one would expect investment seeking start-ups being in a very early stage (1 year or less in the market), but data provides a counterintuitive picture: ventures, founded one or less than one year ago, represent the minority (6%). Indeed, most of the considered start-ups were founded two or three years ago (58%), followed by four and five years old start-ups (23%). “Older” ventures, e.g. founded six, seven, or more than seven years ago, are only weakly represented among the 125 considered start-ups.

Secondly, a deeper look at the cantonal distribution reveals that most of the start-ups looking for funding are located in Zurich (37.6%) and in the Lake Geneva Region (31.2%), which is not surprising, as the numbers of new venture creations in these regions are the highest of Switzerland. Therefore, a consideration of the funding seeking start-ups in relation to the number of new venture creations per region will lead to a more realistic picture of the geographical funding gap. The Swiss Start-up Monitor team finds that only 31.3% of the created ventures in Zurich and 35.5% of them in the Lake Geneva Region are looking for an investment. Contrary to that, the percentage of funding seeking start-ups is twice as big in Ticino with 66.7%, followed by Northwest Switzerland with 50%. Thus, 2 of 3 Ticino start-ups are currently looking for an investment.

Thirdly, the sector comparison results in a high percentage of ICT (40%), followed by medtech (14%), and engineering ventures (11%) seeking for an investment or being involved in talks with potential investors.   

Summarizing, the first analysis indicates that there is a non-satisfied need for funding from the second till the fifth year after foundation (defined as registration with authorities). On the other hand, one-year-old start-ups are weaker represented among the 125 start-ups looking for funding. This may signal that there exists a greater funding need with regards to later-stage financing rounds. If this funding-need leads to a real funding gap, will be part of further analysis. Moreover, the regions Ticino and Northwestern Switzerland show less entrepreneurial activities compared to the top regions of Zurich and the Lake Geneva, but at the same time display a relatively high funding need. Finally, it is noteworthy that 40% of the start-ups looking for funding belong to the ICT sector, while the statistics from 2005 to 2011 show increasing numbers of new ICT ventures per year. Has this competition for funding still a market fostering effect?

About the Swiss Start-up Monitor
The Swiss Start-up Monitor is a joined research initiative of the University of St.Gallen, ETH Zurich and University of Basel supported by the Commission of Technology and Innovation (CTI), Gebert Rüf Stiftung and AVINA Stiftung. The main goal is to build up an exclusive panel of Swiss start-ups in order to foster entrepreneurship on a micro- and on a macro-economic level. This aim will be achieved by collecting and analyzing data of Swiss start-ups on an aggregate and anonymous level, providing high data security and user controllability at any time. The recent sample size is 1500 in the public directory and 376 in the private area for registered user. Visit the Start-up Monitor Homepage to get more information: www.startupmonitor.ch.