Swiss authorities restructure emerging market venture capital fund
SECO Startup Fund Relaunches with a Commitment to Impact-Driven Startups
The SECO Startup Fund, a Swiss-based organisation dedicated to supporting early-stage and growing innovative companies in emerging markets, has recently undergone a relaunch with a total capital commitment of CHF 5 million (€5.4m).
The updated fund aims to channel funding towards entrepreneurs who are building strong companies and solving real problems in their communities. Eligible companies must demonstrate meaningful Swiss ties or align with SECO’s cooperation strategy, which focuses on decent work, access to critical goods and services, and climate-smart capacities.
The SECO Startup Fund offers patient debt financing (senior secured loans) with terms from 2 to 5 years and tailored repayment schedules geared to cash flow realities in emerging markets. The loans range from approximately CHF 300,000 to CHF 1,034,000, and the fund's interest rates are kept at single-digit levels.
One such recipient of the SECO Startup Fund's support is eWaka, a Nairobi-based startup that provides electric bikes and a battery-swap network for corporate clients. eWaka received a CHF 500,000 loan and boasts a Swiss-backed leadership team.
The SECO Startup Fund's relaunch also marks a shift in focus towards 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. The fund has a thorough due diligence process to evaluate the risk associated with investing in these markets.
In a statement, Federal Councillor Guy Parmelin, who oversees SECO, expressed his enthusiasm for the relaunched fund, stating, "The SECO Startup Fund is an important tool for promoting economic opportunities and fostering growth in Switzerland's development partner countries."
Aliseé de Tonnac, CEO of Seedstars, echoed this sentiment, expressing excitement about the next generation of innovative businesses in emerging markets. Seedstars, an impact investment firm, will be managing the fund alongside advisory firm iGravity, following a handover from FinanceContact last year.
SECO's State Secretary, Mauro Dell'Ambrogio, emphasised the importance of commercial investors' high risk perception for these countries, stating that the SECO Startup Fund has the resources to examine this risk in detail. The relaunched fund aims to help businesses grow their operations and generate local employment in Switzerland's development partner countries.
Since its foundation in 1997, the SECO Startup Fund has invested CHF 44m in more than 120 companies, demonstrating its commitment to supporting impact-driven startups in emerging markets. The fund continues to play a crucial role in fostering economic growth and creating opportunities in these regions.
- The SECO Startup Fund, during its relaunch, has reinforced its commitment to investing in impact-driven startups, especially those less than six years old, in emerging markets.
- By channeling development finance towards startups that are solving real problems in their communities, the fund contributes to social impact, promoting economic opportunities and fostering growth in Switzerland's development partner countries.
- With a focus on post-revenue startups in these regions, the SECO Startup Fund, through its patient debt financing, aids in energy transition by supporting businesses that contribute to climate-smart capacities, such as the Nairobi-based eWaka, which provides electric bikes and a battery-swap network for corporate clients.
