Swiss fintech startups are losing favor with investors. In H1 2024, investments in fintech startups in Switzerland fell by 58.5% year-on-year (YoY), plummeting from CHF 191 million in H1 2023 to CHF 79.2 million in H2 2024, according to new Swiss Venture Capital report. The number of financing rounds also saw a significant drop, declining from 30 in H1 2023 to just 13 in H1 2024, marking a 56.7% decrease. The half-year 2024 update to the Swiss Venture Capital Report, released on July 16, reveals that fintech funding continued to decline in H1 2024, despite notable rounds like Sygnum Bank’s CHF 34.5 million round. That fall was much more pronounced in the fintech sector than the broader Swiss startup landscape. In H1 2024, approximately CHF 1.1 billion was raised across 138 financing rounds in Switzerland, a slight decline of about 10% in both figures compared with 2023. Investment in Swiss startups in first half of year, Source: Swiss Venture Capital Report 2024 | Update, Startupticker.ch, SECA and startup.ch, Jul 2024 This year, investors are shifting their focus to sectors like biotech, as well as energy and cleantech. In H1 2024, biotech startups generated CHF 405.3 million, the third highest amount ever, with four of the five largest financing rounds completed by these companies. This is a significant improvement compared to H1 2023, during which biotech startups secured CHF 282.8 million through 14 deals. Energy and cleantech startups, meanwhile, secured CHF 160 million across 27 rounds, up from CHF 137 million and 19 deals in H1 2023. Swiss startup funding in H1 2024 by sector, Source: Swiss Venture Capital Report 2024 | Update, Startupticker.ch, SECA and startup.ch, Jul 2024 Large and later-stage deals decline The continued decline in Swiss startup funding is primarily driven by the lack of large rounds. In H1 2024, the three biggest rounds in the country attracted only CHF 218 million, compared to CHF 331 million in H1 2023. This difference of CHF 113 million nearly matches the overall drop in total invested capital (CHF 121 million), indicating that funding for the majority of rounds outside the top three remained relatively stable in H1 2024, the report says. Another sign of the reduced number of large rounds is the drop in later-stage deals, which fell from 45 in H1 2023 to 26 in H1 2024. The amount of capital invested in later stage startups also continued to decline, though at a much slower rate. This trend suggests that the selection process among startups is becoming more stringent as investors are more reluctant to provide interim financing to startups with less than convincing performance. Similarly, seed stage funding experienced a continued decline in both invested capital and the number of rounds. This indicates that investors are shying away from the high risks associated with seed funding. In contrast, early-stage investments performed surprisingly well in H1 2024, with total investment reaching CHF 344 million, up 60% YoY. The number of financing rounds also increased, rising from 43 in H1 2023 to 56 in H1 2024. Swiss startup funding by phase and amount, Source: Swiss Venture Capital Report 2024 | Update, Startupticker.ch, SECA and startup.ch, Jul 2024 Valuations and exits Looking at valuation and exit trends, the report shows that Swiss startups in the seed and early-stage phases that have secured investors are still achieving historically high valuations. In H1 2024, the average valuation for seed rounds stood at CHF 11 million, significantly higher than the CHF 6.9 million seen in the boom year of 2022. Early-stage financing valuations, meanwhile, averaged CHF 24 million, only slightly below the CHF 27 million valuation in H1 2022. In contrast, later-stage rounds saw much lower valuations, averaging CHF 138 million in H1 2024. That’s a significant decline from the average of around CHF 350 million recorded in both H1 2023 and H1 2022. Average valuation by phase of investment (CHF m), Source: Swiss Venture Capital Report 2024 | Update, Startupticker.ch, SECA and startup.ch, Jul 2024 The number of exits also remained low, totaling 20 transactions in H1 2024. According to the report, many of these exits were rescue operations, providing little impetus for a revival of the venture capital (VC) market. Furthermore, strategic investments, which involve an older company acquiring an interest in a startup to collaborate with it, were also few. In H1 2024, just over 5 strategic investments were recorded, indicating that companies are not extensively taking advantage of the lower valuations to acquire innovative young companies. Exits and strategic investments, Source- Source: Swiss Venture Capital Report 2024 | Update, Startupticker.ch, SECA and startup.ch, Jul 2024 Optimistic outlook Despite the continued decline, investor sentiment remains optimistic. A survey of about 100 Swiss startup investors conducted by investor association SECA reveals that the vast majority of respondents anticipate an increase in both investment opportunities and the number of investments over the next 12 months. In addition, they expect that opportunities for exiting portfolio startups will improve through the year, with 56% of respondents anticipating a rise of up to 25% in exit opportunities. The survey also highlights that VCs still have significant uninvested capital available for the coming two to four years. On average, 50% of VCs have around 60% of their funds remaining for future investments. Fintech funding activity in Switzerland mirrors global trends. CB Insights’ State of Fintech Q2’24 Report, released on July 16, shows that global fintech funding totaled US$16.4 billion in H1 2024. This marks a 32% YoY decline from US$24.1 billion in H1 2023. Quarterly fintech funding, Source: State of Fintech Q2’24 Report, CB Insights, Jul 2024   Featured image credit: edited from freepik The post Swiss Fintech Funding Falls 58.5% YoY appeared first on Fintech Schweiz Digital Finance News - FintechNewsCH.

The Swiss Financial Market Supervisory Authority FINMA published guidance on the issuance of stablecoins. In it, it comments on default guarantees, the associated risks and discloses its practice on stablecoins. It further draws attention to the increased risks in the area of money laundering. In recent years, projects seeking to issue stablecoins have also gained in importance in Switzerland. They generally pursue the goal of providing a means of payment with low price volatility on a blockchain. FINMA has already commented on this in its supplement to the ICO guidelines for enquiries regarding the regulatory framework for initial coin offerings (ICOs) from September 2019. In the guidance, FINMA provides information on aspects of financial market law that arise in relation to stablecoin projects and the impact of such projects on the supervised institutions. In connection with stablecoin projects, FINMA draws attention to the increased risks in the areas of money laundering, terrorist financing and the circumvention of sanctions. These also result in reputational risks for the Swiss financial centre as a whole. FINMA notes that various issuers of stablecoins in Switzerland use default guarantees from banks, which means that they often do not require a licence from FINMA under banking law. This creates risks for both the stablecoin holders and the banks providing the guarantee. In addition, FINMA provides information on its minimum requirements for default guarantees in order to protect depositors. These also apply when dealing with stablecoins. The post FINMA Publishes Guidance on Stablecoins appeared first on Fintech Schweiz Digital Finance News - FintechNewsCH.