Swiss authorities restructure funds for startups in emerging markets
SECO Startup Fund Relaunches with CHF 5m Commitment for High-Growth Startups in Emerging Markets
The SECO Startup Fund, a Swiss initiative aimed at supporting innovative companies in emerging markets, has been relaunched with a commitment of CHF 5m (€5.4m). The fund will be managed by advisory and impact investment firm iGravity and Seedstars, replacing FinanceContact.
The updated eligibility criteria for the SECO Startup Fund include the following key requirements:
- The startup must be a high-growth and impact-driven company operating primarily in an emerging market.
- The startup should have a clear connection or tie to Switzerland, which can include Swiss founders, collaborations, or other direct Swiss involvement.
- The focus sectors are typically those with significant development impact such as agritech, fintech, and other value chains.
- The startup is expected to be in a phase that benefits from scale-up funding, aiming to expand operations and deepen market impact.
- Detailed criteria and a checklist have been shared in recent SECO-related posts and campaigns, outlining factors like innovativeness, sustainability focus, and scalability potential.
- The fund is targeted at startups with strong potential to create economic, social, and environmental impact in the emerging markets while maintaining links to Switzerland.
The fund offers single-digit interest rate loans and low ticket sizes, starting from CHF 300,000. The goal is to help these companies secure their first loan, building their financial history for future loans from commercial banks or traditional investors.
The fund will predominantly focus on post-revenue startups in Switzerland's development partner countries in Africa, Asia, Latin America, and Eastern Europe. The fund's focus is on firms that are less than six years old, making revenue but still not in a position to get a commercial loan, addressing a specific funding gap in emerging markets.
Since its foundation in 1997, the SECO Startup Fund has invested CHF 44m in more than 120 companies, including Nairobi-based eWaka, a provider of electric bikes and a battery-swap network for corporate clients, which was backed by a CHF 500,000 loan from the fund and has a Swiss-backed leadership team.
Frei, the Swiss Federal Councillor, stated that the risk perception that commercial investors have for the countries the fund targets is high, necessitating a thorough due diligence process. The fund's second iteration has resources to investigate this risk in detail, enabling better-informed decisions.
Aliseé de Tonnac, CEO of Seedstars, expressed excitement about the next generation of innovative businesses in emerging markets. The fund aims to channel funding towards entrepreneurs who are building strong companies and solving real problems in their communities. The relaunched fund has updated its eligibility criteria, including opening up the requirement for one of the investors to have residency in Switzerland.
- The SECO Startup Fund, with its CHF 5m commitment, is now managed by iGravity and Seedstars, focusing on high-growth, impact-driven startups in emerging markets that have ties to Switzerland.
- These startups, typically operating in sectors like agritech and fintech, are expected to be in a phase that benefits from scale-up funding, aiming to expand operations and deepen market impact.
- The fund offers single-digit interest rate loans and low ticket sizes, starting from CHF 300,000, to help these companies secure their first loan, building their financial history for future financing.
- By investing in these startups, the SECO Startup Fund aims to create economic, social, and environmental impact in emerging markets, as evidenced by past investments such as Nairobi-based eWaka.
