Swiss authorities restructure financial support for budding startups in emerging markets
The Swiss government has announced the relaunch of the SECO Startup Fund with a commitment of CHF 5m (€5.4m). This fund, under new management with iGravity and Seedstars taking over from FinanceContact, aims to channel funding towards entrepreneurs who are building strong companies and solving real problems in emerging markets.
CEO of Seedstars, Aliseé de Tonnac, expressed excitement about the next generation of innovative businesses that the fund will support. The SECO Startup Fund is focused on investing in high-growth and impact-driven startups with Swiss ties in these markets.
The fund offers single-digit interest rate loans and low ticket sizes, starting from CHF 300,000. It targets early-stage as well as growing innovative companies that struggle to secure traditional growth financing. The relaunched fund will primarily focus on a funding gap in emerging markets: firms that are less than six years old, making money, but still not eligible for commercial loans.
To be eligible for funding, startups typically need to have strong Swiss connections, such as Swiss founders, partnerships, or significant operational ties to Switzerland. They must also operate or have a market focus in emerging or frontier markets. The business model should aim for high growth and impact, often in tech sectors.
One such startup that has benefited from the fund is eWaka, a Nairobi-based company providing electric bikes and a battery-swap network for corporate clients. eWaka was backed by a CHF 500,000 loan from the fund and has a Swiss-backed leadership team.
The SECO Startup Fund's new strategy aligns with the Swiss State Secretariat for Economic Affairs (SECO)’s broader development goals of fostering entrepreneurship that can drive sustainable development and innovation from a Swiss ecosystem perspective while addressing challenges in emerging economies.
Since its foundation in 1997, the SECO Startup Fund has invested CHF 44m in over 120 companies. The fund's goal is to help companies secure their first loan, which can build their financial history for future loans from commercial banks or traditional investors. This approach is crucial in reducing the risk perception of commercial investors for these countries, as the fund has a thorough due diligence process to assess this risk.
In conclusion, the relaunched SECO Startup Fund is set to play a significant role in fostering innovation and impact in emerging markets by supporting high-growth and impact-driven startups with Swiss ties. The fund's focus on early-stage startups with tech-enabled solutions will help bridge the funding gap in these markets and contribute to sustainable development and innovation from a Swiss ecosystem perspective.
- The SECO Startup Fund, with its new management under iGravity and Seedstars, is committed to channeling development finance towards entrepreneurs, focusing on investing in high-growth, impact-driven startups with Swiss ties in emerging markets.
- The fund offers innovative businesses single-digit interest rate loans and low ticket sizes, targeting early-stage as well as growing companies that struggle to secure traditional growth financing, especially firms less than six years old that are making money but still not eligible for commercial loans.
- To be eligible for SECO Startup Fund financing, startups typically need to have strong Swiss connections, operate or have a market focus in emerging or frontier markets, and aim for high growth and impact, often in tech sectors.
- By investing in startups like eWaka, a Nairobi-based company providing electric bikes and a battery-swap network for corporate clients, the SECO Startup Fund contributes to bridging the funding gap in emerging markets and fostering sustainable development and innovation from a Swiss ecosystem perspective.
