Redesigning the startup fund for emerging markets by the Swiss government
Swiss Government Relaunches SECO Startup Fund to Boost Economic Opportunities
The Swiss government has recently relaunched the SECO Startup Fund, a venture aimed at creating economic opportunities by supporting businesses in emerging markets to grow their operations and generate local employment. Managed by advisory and impact investment firm iGravity and Seedstars, the fund replaces FinanceContact.
According to Irene Frei, deputy head of private sector development at SECO, the updated eligibility criteria for the SECO Startup Fund require that startups should demonstrate significant connections to Switzerland. This could be through shareholders, suppliers, partnerships, or alignment with SECO’s cooperation strategy, which emphasizes themes such as decent work, access to critical goods and services, and climate-smart capacities.
Since its foundation in 1997, the SECO Startup Fund has invested CHF 44m in over 120 companies, including eWaka, a Nairobi-based startup that provides electric bikes and a battery-swap network for corporate clients. eWaka received a CHF 500,000 loan from the fund.
The relaunched fund will predominantly focus on firms in emerging markets that are less than six years old, making money, but still not in a position to get a commercial loan. The fund targets early-stage and growing innovative companies in emerging markets that have proven business models but face difficulties obtaining traditional growth financing.
The committed investment amount for the fund is over €5 million to support 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, to post-revenue startups in Switzerland's development partner countries in Africa, Asia, Latin America, and Eastern Europe.
Patrick Elmer, CEO of iGravity, emphasized that the fund is not just about capital, but about creating economic opportunity and helping businesses grow their operations. The fund will help these startups to overcome the challenges they face in obtaining traditional growth financing.
The SECO Startup Fund has been relaunched with a commitment of CHF 5m (€5.4m) from the Swiss government for high-growth and impact-driven startups with Swiss ties in emerging markets. The fund is set to make a significant contribution to the economic development of these regions by supporting innovative companies that are poised for growth.
The relaunched SECO Startup Fund, now focusing on firms in emerging markets, synergizes development finance and technology to invest in high-growth startups that have proven business models but struggle with traditional growth financing. These startups, with Swiss ties, are expected to make a significant social impact, particularly in the areas of energy transition and employment generation, thereby contributing to the economic development of their regions. By offering single-digit interest rate loans and low ticket sizes, the fund aims not only to provide financing but also to foster business growth and overcome challenges faced by these impact-driven entrepreneurs.
