Swiss authorities restructure venture capital program for up-and-coming businesses in developing economies
SECO Startup Fund Relaunched to Support Innovative Swiss-Linked Startups in Emerging Markets
The Swiss government has relaunched the SECO Startup Fund, with a new management team and a commitment of CHF 5 million (€5.4 million) to support high-growth and impact-driven startups in emerging markets. The fund, managed by advisory and impact investment firm iGravity and Seedstars, replaces FinanceContact.
Aliseé de Tonnac, CEO of Seedstars, expressed excitement about the next generation of innovative businesses in emerging markets. The fund targets early-stage and growing companies with proven business models that face difficulties securing traditional growth financing, particularly in emerging markets.
To be eligible, startups must focus on high-growth and impact-driven businesses, have meaningful Swiss ties via shareholders, suppliers, or partnerships, and align with SECO’s cooperation strategy themes such as decent work, access to essential goods and services, and climate-smart capacities. The goal is to create economic opportunity and local employment in these markets.
The fund will offer single-digit interest rate loans and low ticket sizes, starting from CHF 300,000. The relaunched fund will primarily focus on post-revenue startups in emerging markets, particularly those less than six years old who have gone beyond the early-stage phase but are still not eligible for commercial loans.
One such company that has benefited from the fund is Nairobi-based eWaka, a provider of electric bikes and a battery-swap network for corporate clients. eWaka's leadership team is Swiss-backed, and the company received a CHF 500,000 loan from the fund. Since its foundation in 1997, the SECO Startup Fund has invested CHF 44m in more than 120 companies.
Frei, the Swiss Minister for Economic Affairs, Education and Research, stated that the risk perception that commercial investors have for these countries is high, but the second startup fund allows for a thorough due diligence process to better inform decisions. The goal of the fund is to help these companies secure their first loan, build their financial history, and become eligible for more loans from commercial banks or traditional investors in the future.
In summary, the relaunch of the SECO Startup Fund marks a strategic shift towards impact investing in Swiss-linked startups that contribute to sustainable development goals in emerging markets. The fund will channel funding towards entrepreneurs who are building strong companies and solving real problems in their communities.
The relaunched SECO Startup Fund will focus on implementing blended finance solutions, combining public and private sector investments to facilitate the energy transition in emerging markets.
Investing in these startups not only supports economically viable businesses, but also contributes to achieving the United Nations' Sustainable Development Goals, particularly in the areas of decent work, access to essential goods and services, and climate-smart capacities.
