Revised Swiss government restructures startup fund for emerging markets
The Swiss State Secretariat for Economic Affairs (SECO) has recently relaunched the SECO Startup Fund, a CHF 5 million (approximately €5.4 million / $6.3 million) initiative, in collaboration with iGravity and Seedstars. This fund aims to support early-stage and growing innovative companies with proven business models that struggle to access traditional growth financing in emerging markets.
The new strategy of the SECO Startup Fund focuses on providing patient debt capital, with 2 to 5-year terms and tailored repayment schedules, to align with the cash flow realities of startups in these markets. Unlike traditional venture capital, which often seeks quick exits, the fund aims to create sustainable growth.
To be eligible, startups must be based in or operating in emerging markets, such as Africa, Asia, Latin America, and Eastern Europe. They must also demonstrate meaningful Swiss ties, which can be through Swiss shareholders, suppliers, partnerships, or close alignment with Switzerland’s development cooperation priorities. The startups should align with SECO’s core themes of decent work, access to critical goods and services, and climate-smart capacities.
One of the key features of the updated eligibility criteria is the removal of the requirement for one investor to have residency in Switzerland. This change reflects the fund's commitment to supporting startups with Swiss ties, regardless of their location.
The SECO Startup Fund's objective is to support startups underserved by traditional financing, thereby creating local economic opportunities. Patrick Elmer, CEO of iGravity, stated that the fund aims to create economic opportunity by helping businesses grow operations and generate local employment.
Since its foundation in 1997, the SECO Startup Fund has invested CHF 44m in over 120 companies. One such company is eWaka, a Nairobi-based startup that provides electric bikes and a battery-swap network for corporate clients. eWaka has received a CHF 500,000 loan from the fund and boasts a Swiss-backed leadership team.
Aliseé de Tonnac, CEO of Seedstars, expressed excitement about the next generation of innovative businesses in emerging markets. She believes that the fund's new strategy will address an acute funding gap in these markets for firms that have gone beyond the early-stage phase but still struggle to secure commercial loans.
The relaunched SECO Startup Fund represents a shift from seeking quick exits to enabling sustainable growth aligned with Swiss development priorities in emerging economies. By supporting innovative businesses, the fund aims to contribute to economic development and job creation in these regions.
| Aspect | Details | |------------------------|-------------------------------------------------------------------------------------------------| | Fund size | CHF 5 million (~€5.4 million / $6.3 million) | | Management | Co-managed by iGravity and Seedstars | | Target startups | Early-stage and growing, innovative startups with proven business models | | Capital type | Patient debt capital with 2-5 year terms, repayment aligned with cash flow | | Geographic focus | Emerging markets: Africa, Asia, Latin America, Eastern Europe | | Swiss ties requirement | Must have meaningful ties via shareholders, suppliers, partnerships | | Thematic priorities | Decent work, access to critical goods/services, climate-smart capabilities | | Objective | Support startups underserved by traditional financing, create local economic opportunities |
[1] Swiss State Secretariat for Economic Affairs (SECO). (n.d.). SECO Startup Fund. Retrieved from https://www.seco.admin.ch/seco/en/home/themen/wirtschaft-und-finanzen/finanzmarkt/finanzdienstleistungen/start-up-finanzierungen/seco-startup-fund.html
[2] Seedstars. (n.d.). SECO Startup Fund. Retrieved from https://seedstars.com/seco-startup-fund/
[3] iGravity. (n.d.). SECO Startup Fund. Retrieved from https://igravity.ch/seco-startup-fund/
- The SECO Startup Fund, with a focus on patient debt capital, is seeking to invest in early-stage and growing innovative businesses in emerging markets such as Africa, Asia, Latin America, and Eastern Europe, aiming to create economic opportunities, contribute to sustainable growth, and align with Swiss development priorities.
- In an effort to address the funding gap for businesses that have progressed beyond the early-stage phase but still struggle to secure commercial loans, the SECO Startup Fund has removed the requirement for one investor to have residence in Switzerland, emphasizing its commitment to supporting startups with Swiss ties, regardless of their location.
- As the SECO Startup Fund transitions from seeking quick exits to enabling sustainable growth, it looks to private equity as a means to continue its longstanding investments in businesses demonstrating meaningful Swiss ties, while focusing on biodiversity, job creation, and access to critical goods and services in emerging economies.
