With Swisscanto’s new growth fund, the Swiss Startup ecosystem will get a large capital injection.
investiere is ZKB’s trusted venture partner. We spoke to Andreas Nicoli, Head Private Equity, about the large interest the fund received from institutional investors.
Swisscanto Invest has just launched a growth fund that will invest mainly in Swiss startups. What is the rationale behind this launch?
We are responding to an increased demand from clients that want to invest in private markets. This is why, at the beginning of 2018, we created a private market initiative in our bank that comprises private debt, private infrastructure and private equity. I am responsible for the private equity team and the fund is an outcome of this initiative.
Why do institutional investors want to invest in private equity?
They are looking for returns and diversification. The search for yield has intensified over the years because returns have been subdued in the fixed income space.
Swiss pension funds have mostly shied away from investments in non-listed equity so far. What was the reason for that?
Compared to listed equities, this space is characterized by an asymmetry of information, and many pension funds lack the size and know-how to build the structures necessary to invest directly. These concerns can be reduced by a transparent fund construct, that invests directly in startups, not in other funds, and coming from a reputable domicile and provider like us. The large interest in our fund underlines this. We have raised commitments of CHF 150 million in three months and will raise a maximum of another CHF 50 million in a second closing until May 2019.
In what kind of startups do you plan to invest?
Since it is a growth fund, we will finance startups that want to accelerate the commercialisation of their products, enlarge their product portfolio or internationalize their offering. We plan to do 20 to 25 investments over four to five years, with initial investments of around CHF 3 to 5 million. We will participate in later funding rounds of successful startups up to a maximal sum of CHF 30 million per company and aim to be a reliable financing partner for the best startups. We will aim for significant participations of between 10% and 40% in a startup and a board seat or at least an observer seat in order to support the companies in their value creation plans
What do you bring to the table beyond the investment?
This will be driven mainly by our two investment directors who will bring considerable experience in this field and a large professional network with them to help companies grow their business.
Can you tell me more about the background of your investment directors?
Nils Granath, who will lead ICT investments, has more than 25 years of experience in the IT industry as investor, founder and manager, and has already accompanied more than 20 growth firms on their journey. Dr. Robert Schier has a PhD in Biotech and more than 20 years of experience in Life Sciences and has been on the board of more than 20 private companies. Taken together, they have already invested CHF 250 million in 40 growth firms.
Are there sectors the fund will not invest in?
In all that we do, we adhere to the socially responsible investing criteria. Therefore, we exclude investments such as the producers of weapons and polluting industries. Other than that, we don’t exclude sectors explicitly.
Who committed capital to the fund so far?
It is open to qualified investors and we have a diverse investor base, ranging from wealthy individuals, family offices to pension funds. ZKB committed itself to the tune of CHF 30 millions, so we have considerable skin in the game.
What is the cost structure of the fund?
We have a flat-rate administrative commission of 1.9% over the first five years. Thereafter the fee steps down significantly.
How do you assess the value of the holdings in the fund?
We will do a quarterly valuation based on rules of procedure approved by Finma, the Swiss regulator. There are different methods that are appropriate for different stages of the life cycle of a company, like market and transaction comparables sales multiples or Discounted Cash Flow method. Our valuations will be audited once per year.
Can you talk about the first few planned investments?
We have already identified several targets but it is still too early to announce them.
If the second closing is successful, the fund will have CHF 200 million at its disposition. Is it even possible to invest that much in Switzerland?
We will deploy the sum over a time frame of four to five years, and we see a high quality deal flow already. With our “ZKB Pionier” program we are already close to the startup scene. We also work together with investiere, which complements our capabilities, so we can count on their large network, knowhow and dealflow as well. In addition, our investment managers have their own network. These three pillars of deal flow make us confident that we can deploy fund in a successful and timely manner.
Written by
WITH US, YOU CANCO-INVEST IN DEEP TECH STARTUPS
Verve's investor network
With annual investments of EUR 60-70 mio, we belong to the top 10% most active startup investors in Europe. We therefore get you into competitive financing rounds alongside other world-class venture capital funds.
We empower you to build your individual portfolio.
More News
“Ecorobotix is the high precision spraying category leader.”
Aurélien G. Demaurex, co-founder of Ecorobotix, outlines how the company’s AI-powered precision sprayers reduce chemical use while maintaining or even increasing crop yields. The Swiss startup is a recognized success story with around 250 employees, a proven technology, and hundreds of machines sold globally. In this interview, Demaurex provides insights into the potential of this sustainable agricultural innovation.
Limula: Unlocking the full potential of cell therapies with automation
Cell therapy manufacturing’s cost, complexity, and scalability challenges have restricted patient access to these life-saving treatments for too long. In this interview, Luc Henry discusses how Limula’s innovative device unlocks their full potential. The conversation also explores the broader promise and hurdles of cell and gene therapies, and how the company wants to catalyse a paradigm shift, towards decentralized manufacturing in hospitals.
“Our quantum computers make GenAI more creative.”
Leveraging the properties of light particles to accelerate the capabilities of generative AI may sound like a distant future. But ORCA Computing’s photonic quantum computers are already in use. In our interview, Richard Murray explains the power of combining classical and quantum computers to solve complicated problems and develop novel solutions.