Venturing forward: Zürcher Kantonalbank executives Michelle Tschumi and Andreas Nicoli explore the landscape of Swiss startups

24.11.2023 14:30, Rita Longobardi

We discussed with Michelle Tschumi, Head of Startup Finance, and Andreas Nicoli, Head of Private Equity at Zürcher Kantonalbank, the powerful landscape of Swiss startups. They assessed the current market environment and pointed out the opportunities and challenges faced by the most promising startups. With teams dedicated to guiding startups through every phase of development, Tschumi and Nicoli shared their firsthand experiences and perspectives on the evolving dynamics of the Swiss entrepreneurial ecosystem.

Over the past 18 years, ZKB has invested in over 260 startups, making them one of the most active startup investors in Switzerland. The ZKB startup founder's desk also advises aspiring entrepreneurs on the topic of founding. In addition, to close the capital gap for Swiss growth companies, Zürcher Kantonalbank launched the Swisscanto Growth Fund in 2018 with a fund volume of over CHF 180 million. Michelle Tschumi is the Head of Startup Finance and Andreas Nicoli is the Head of Private Equity at Zürcher Kantonalbank.

The "TOP 100 Swiss Investor Summit" occurred recently. What role does ZKB play among Swiss venture capitalists?
Michelle Tschumi: Zürcher Kantonalbank is one of the largest venture capital providers in Switzerland. We have been supporting Swiss startups with equity or convertible loans for 18 years, making a significant contribution to the development of the local startup ecosystem.

Andreas Nicoli: In addition, in 2018, we launched the Swisscanto Growth Fund with a fund volume of over 180 million Swiss francs. This helps bridge capital gaps for companies transitioning from the startup phase to the growth phase.
 
How has the financing landscape changed with the increase in interest rates?
Michelle: We observe that the investment activity in Switzerland has been slightly declining recently. The valuations of non-listed companies are increasingly under pressure. This is not only due to the new interest rate environment but also to the current economic situation. On the one hand, this complicates the capital search for our portfolio companies, but on the other hand, it opens up opportunities for us as investors to participate in new companies on attractive terms.

How does this impact startups and your daily operations?
Michelle: The fundraising market environment is currently challenging. We find that funding rounds for startups take longer and require more resources. As a capital provider, we maintain a clear focus on our proven investment criteria: Strong complementary teams, innovative technologies without industry limitations, sustainable business models, participation in positive trends, and increased investment in sustainability solutions and products.

Talking about the growth sector, have you become more selective with private equity financing?
Andreas: We have always made selective investments in growth companies. The target companies go through a multi-stage evaluation process. On average, we examine more than 100 companies before participating in a company with the Swisscanto Private Equity Funds.

What specific needs do growth companies have and how do you support them?
Andreas: Switzerland is a global leader in research and innovation. The challenge lies in successfully commercializing internationally innovative technology from a relatively small internal market while securing a large part of the value creation nationwide. For growth companies, the focus is on scaling and international expansion. The challenges are diverse: Building a global distribution network, expanding production capacities, or adapting structures and processes to rapid team growth. The Swisscanto Private Equity investment team combines more than 70 years of experience in the venture capital business and actively assists companies in addressing these challenges. We provide the necessary capital and a relevant network to the companies. Additionally, our investment team typically actively participates in the leadership and development of the company at the board level. Therefore, it is crucial from the company's perspective that, as co-owners, we pursue the same values and visions as the entrepreneurs themselves.

Looking ahead, in which direction is the market heading?
Michelle: Once again, Swiss universities this year registered record numbers of company spin-offs. Therefore, the demand for venture capital is likely to remain consistently high in the coming years. As a venture capital provider, we think in very long cycles. The average time between initial financing and successful sales is seven to ten years. Therefore, even in the current challenging market environment, we remain a reliable partner for startups.
 
What about the perspective of growth funds?
Andreas: The use of artificial intelligence and the decarbonization of the economy are two themes that are increasingly coming into the focus of the broader public. As a leading Swiss asset manager, we want to offer qualified investors the opportunity to participate in these growth themes. That's why we recently expanded our private equity offering. The Swisscanto (CH) Private Equity World Carbon Solutions I KmGK, with a target volume of CHF 150 million, is currently open for subscription to new investors.




Michelle Tschumi and Andreas Nicoli discussing the evolving dynamics of the Swiss entrepreneurial ecosystem