In 2023, venture capital (VC) investment to Swiss tech startups fell by 35% year-on-year (YoY), a slump that was more pronounced in segments that are more mature and which require higher levels of capital, including information and communications technology (ICT) and fintech, data from the latest edition of the Swiss Venture Capital Report show.
The 2024 Swiss Venture Capital Report, produced by news portal Startupticker.ch, reveals that the investment downturn hit the ICT and the fintech sectors the hardest. In 2023, Swiss fintech companies secured a mere CHF 424.3 million in funding through 60 deals, making the sector the third biggest recipient in funding volume and deal count.
The numbers represent a 53% YoY decline in funding volume but a 11% YoY increase in deal count, suggesting that investors are shifting towards smaller-sized deals and startups at earlier stages of development. The figures are in stark contrast to 2022 numbers during which Swiss fintech companies raised US$909.9 million and 54 rounds.
Invested capital and financing rounds by sector in 2023, Source: 2024 Swiss Venture Capital Report, Startupticker.ch, Jan 2024
Fintech VC funding was cut in half in 2023 largely because of the lack of mega-rounds of CHF 100 million and up. The report also notes a slight decline in the number of growth rounds of CHF 10 million and up, which totaled 10 in 2023 against 13 in 2022. Overall, the year saw the median deal size fall from CHF 3 million in 2022 to just under CHF 2 million in 2023.
Nevertheless, Swiss fintech startups managed to secure some of the year’s largest rounds, with four fintech rounds being among 2023’s top 20 largest tech investments. These rounds were Taurus’ CHF 60.1 million Series B, the two rounds raised by Wefox of CHF 49.5 million each, and Tradeplus24’s CHF 45 million round, according to the report.
Swiss tech VC funding drops 35%
Swiss tech VC funding totaled CHF 2.6 billion in 2023, down 35% YoY. Despite the drop, the figure is still the third best value of the past decade, and represents a level that’s significantly higher than in the pre-pandemic years. In comparison, Swiss tech startups secured only CHF 2.3 billion in 2019. Furthermore, a total of 397 deals were secured in 2023, a new record for the market that reflects the dynamism of the market.
Invested capital and financing rounds of Swiss startups, Source: 2024 Swiss Venture Capital Report, Startupticker.ch, Jan 2024
Across all major segments, ICT was particularly hard hit by the VC funding downturn with only CHF 361.7 million raised by startups in the sector, down by a staggering 70% YoY from CHF 1.2 billion in 2022. For ICT rounds, the median deal size stood at a mere CHF 1.9 million in 2023, slightly lower than the CHF 2 million recorded for 2022.
Like fintech, ICT didn’t see any mega-round during 2023. The sector also recorded a massive dip in growth rounds with only four investments of CHF 10 million and up being secured during 2023, against 19 in 2022.
At the other end of the spectrum, sectors including biotech and medtech saw an increase in invested capital. VC funding to biotech startups rose by 22% to CHF 491.8 million while medtech funding increased by a staggering 41% to reach a new record of CHF 379 million. Meanwhile, although VC funding to cleantech startups witnessed a slight YoY decline in 2023, the sector rose to prominence last year, becoming the top funded tech sector in Switzerland with a share of 24% of all VC funding secured last year (CHF 630.1 million).
Invested capital and financing rounds by sector 2014-2023, Source: 2024 Swiss Venture Capital Report, Startupticker.ch, Jan 2024
The VC funding downturn in Switzerland aligns with trends observed globally. Data from KPMG’s Pulse of Fintech H2 2023 reveal that total fintech investment (US$113.7 billion) and the number of fintech deals (4,547) experienced their weakest results since 2017 amid a high interest rate environment, high inflation in many jurisdictions, and geopolitical uncertainties.
Total global funding activity (VC, PE and M and A) in fintech 2020–2023, Source: Pulse of Fintech H2 2023, KPMG, Feb 2024
A YoY decline was witnessed across all key regions with Asia-Pacific (APAC) experiencing the biggest drop, plummeting by a staggering 79% from US$51.3 billion in 2022 to just US$10.8 billion in 2023. Europe, the Middle East and Africa (EMEA) saw investment fall 51% from US$49.6 billion to US$24.5 billion over the same timeframe. The Americas showed the most resilience, with fintech investment dropping 18% from US$95.4 billion in 2022 to US$78.3 billion in 2023.
At a jurisdictional level, the US continued to maintain its dominance, attracting two-thirds of all fintech funding during 2023 (US$73.5 billion).
Featured image credit: Edited from freepik