investor surveys

Auto Added by WPeMatico

10 Zurich-area investors on Switzerland’s 2020 startup outlook

European entrepreneurs who want to launch startups could do worse than Switzerland.

In a report analyzing Europe’s general economic health, cost of doing business, business environment and labor force quality, analysts looked for highly educated populations, strong economies, healthy business environments and relatively low costs for conducting business. Switzerland ended up ranking third out of 31 European nations, according to Nimblefins. (Germany and the UK came out first and second, respectively).

According to official estimates, the number of new Swiss startups has skyrocketed by 700% since 1996. Zurich tends to take the lion’s share, as the city’s embrace of startups has jump-started development, although Geneva and Lausanne are also hotspots.

As well as traditional software engineering startups, Switzerland’s largest city boasts a startup culture that emphasizes life sciences, mechanical engineering and robotics. Compared to other European countries, Switzerland has a low regulatory burden and a well-educated, highly qualified workforce. Google’s largest R&D center outside of the United States is in Zurich.

But it’s also one of the more expensive places to start a business, due to its high cost of living, salary expectations and relatively small labor market. Native startups will need 25,000 Swiss Francs to open an LLC and 50,000 more to incorporate. While they can withdraw those funds from the business the next day, local founders must still secure decent backing to even begin the work.

This means Switzerland has gained a reputation as a place to startup — and a place to relocate, which is something quite different. It’s one reason why the region is home to many fintech businesses born elsewhere that need proximity to a large banking ecosystem, as well as the blockchain/crypto crowd, which have found a highly amenable regulatory environment in Zug, right next door to Zurich. Zurich/Zug’s “Crypto Valley” is a global blockchain hotspot and is home to, among others, the Ethereum Foundation.

Lawyers and accountants tend to err on the conservative side, leading to a low failure rate of businesses but less “moonshot innovation,” shall we say.

But in recent years, corporate docs are being drawn up in English to facilitate communication both inside Switzerland’s various language regions and foreign capital, and investment documentation is modeled after the U.S.

Ten years ago startups were unusual. Today, pitch competitions, incubators, accelerators, VCs and angel groups proliferate.

The country’s Federal Commission for Technology and Innovation (KTI) supports CTI-Startup and CTI-Invest, providing startups with investment and support. Venture Kick was launched in 2007 with the vision to double the number of spin-offs from Swiss universities and draws from a jury of more than 150 leading startup experts in Switzerland. It grants up to CHF 130,000 per company. Fundraising platforms such as Investiere have boosted the angel community support of early funding rounds.

Swiss companies, like almost all European companies, tend to raise lower early-stage rounds than U.S. ones. A CHF 1-2 million Series A or a CHF 5 million Series B investment is common. This has meant smaller exits, and thus less development for the ecosystem.

These are the investors we interviewed:

 

Jasmin Heimann, partner, Ringier Digital Ventures

What trends are you most excited about investing in, generally?
Consumer-facing startups with first revenues.

What’s your latest, most exciting investment?
AirConsole — a cloud-gaming platform where you don’t need a console and can play with all your friends and family.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
I really wish that the business case for social and ecological startups will finally be proven (kind of like Oatly showed with the Blackstone investment). I also think that femtech is a hyped category but funding as well as renown exits are still missing.

What are you looking for in your next investment, in general?
I am looking for easy, scalable solutions with a great team.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
I think the whole scooter/mobility space is super hyped but also super capital intensive so I think to compete in this market at this stage is hard. I also think that the whole edtech space is an important area of investment, but there are already quite a lot of players and it oftentimes requires cooperation with governments and schools, which makes it much more difficult to operate in. Lastly, I don’t get why people still start fitness startups as I feel like the market has reached its limits.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Switzerland makes — maximum — half of our investments. We are also interested in Germany and Austria as well as the Nordics.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Zurich and Lausanne are for sure the most exciting cities, just because they host great engineering universities. Berne is still lagging behind but I am hoping to see some more startups emerging from there, especially in the medtech industry.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Overall, Switzerland is a great market for a startup to be in — although small, buying power is huge! So investors should always keep this in mind when thinking about coming to Switzerland. The startup scene is pretty small and well connected, so it helps to get access through somebody already familiar with the space. Unfortunately for us, typical B2C cases are rather scarce.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I think it is hard to make any kind of predictions. But on the one hand, I could see this happening. On the other hand, I also think that the magic of cities is that there are serendipity moments where you can find your co-founder at a random networking dinner or come across an idea for a new venture while talking to a stranger. These moments will most likely be much harder to encounter now and in the next couple of months.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
I think travel is a big question mark still. The same goes for luxury goods, as people are more worried about the economic situation they are in. On the other hand, remote work has seen a surge in investments. Also sustainability will hopefully be put back on the agenda.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Not much. I think we allocated a bit more for the existing portfolio but otherwise we continue to look at and discuss the best cases. The biggest worries are the uncertainties about [what] the future might look like and the related planning. We tell them to first and foremost secure cash flow.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Totally! Some portfolio companies have really profited from the crisis, especially our subscription-based models that offer a variety of different options to spend time at home. The challenge now is to keep up the momentum after the lockdown.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
What gives me hope is to see that people find ways to still work together — the amount of online events, office hours, etc. is incredible. I see the pandemic also as a big opportunity to make changes in the way we worked and the way things were without ever questioning them.

 

Katrin Siebenbuerger Hacki, founder, Medows

As investors and founders mature, Vienna emerges as a European startup hub

According to Austrian Startup Monitor, entrepreneurs have founded more than 2,200 startups in Austria since 2008, with the number of tech companies growing 12% per year since then, significantly faster than the 3% growth rate for traditional companies.

Home to roughly 50% of Austria’s startups, Vienna has a plethora of VC, corporate and university investors. Top VCs include 3TS Capital Partners, AC & Friends, Cudos Capital, FSP Ventures, Hansmen Group, i4g Investment, i5invest, LilO Ventures, next.march, primeCROWD, Speedinvest and Venionaire Capital, among others.

The local ecosystem benefits from several initiatives, including the Social Impact Awards, Vienna Startup Awards, Design Week, Climate KIC Stage, Innovation Incubation Center and INiTS Accelerator. The well-run Pioneers Festival contributed massively to the ecosystem for several years after a certain TechCrunch editor-at-large gave the organizers an excuse to expand on a simple TechCrunch meetup. But the festival was shuttered last year after its sale to a local accelerator meant that the event itself ran out of steam. Perhaps it was just as well, given this year’s pandemic.

State support for startups is also there. The Austrian government created a comprehensive startup program in 2016 to make the country more attractive to startups setting up there.

Standout exits include fitness app maker Runtastic, acquired by Adidas for $240 million in 2015, as well as listings marketplace Shpock, which was acquired by Norwegian publishing conglomerate Schibsted in 2015. Other notable startups originally from Vienna include mySugr, wikifolio, kompany and Codeship.

There have been jitters on the way, however. The Austrian Private Equity and Venture Capital Organization’s 2019 report found that Austria’s startups saw €237.6 million invested in 2018, but, this number fell 8.2% to €218 million in 2019; the number of deals exceeding €500,000 also dipped by 8.7%. Foreign funding also slowed in 2019 after a few years of a bull run — between 40% and 63% of deals sized €0.25-€1.99 million were significantly funded by foreign investors in 2018.

Despite the decline, local investors have started to pick up the slack, boosting the number of funding rounds over €5 million to 12 deals in 2019 from 11 in 2018. In both years, all but one of those deals drew a substantial part of the funding round from foreign investors.

We expect more to emerge from Vienna’s tech scene in the future. The Pioneers Festival (RIP) proved that Vienna is a fascinating bridge between Western European capital and entrepreneurial culture, and East European entrepreneurs and talent, which it will no doubt continue to benefit from in years to come. But — just as will happen with Lisbon this year and the loss of Web Summit — the loss of a major conference in Vienna to shine a light on the city and ecosystem, combined with the pandemic, may have cooling effects for the next couple of years.


Notable Vienna startups:

  • Newsadoo: Uses artificial intelligence to personalize news.
  • Cashpresso: Links customers, merchants and banks to offer consumer financing options.
  • Jobrocker: An online job search portal that connects applicants’ CVs with job openings.
  • Storyblok: A headless content management system.
  • Byrd: First-mile shipping service that allows customers to ship items hassle-free.
  • Music Traveler: A marketplace that centralizes spaces with musical instruments and equipment.
  • PAYUCA: Provides flexible access to parking spaces in private office and residential buildings.
  • Refurbed: Fast-growing marketplace for refurbished electronics, across the German-speaking world.
  • Presono: A web platform for creating, managing and showing presentations in companies.
  • Blockpit: Develops software for portfolio tracking, tax calculation and compliance reporting of transactions for cryptocurrencies and crypto assets.
  • Robo Wunderkind: A robot for kids to build and program.
  • Medicus: Converts health data with their cryptic numbers and medical language into an easy-to-understand visual experience.
  • Cybershoes: VR accessory that allows you to walk through your favorite VR games.

Here’s who we interviewed:

Eva Arh, principal, Capital 300

What trends are you most excited about investing in, generally?
B2B software, robotics, no/low-code automation, AI-enabled vertical solutions, e-health, companies enabling others to hire and engage talent remotely.

What’s your latest, most exciting investment?
Lokalise.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Companies that enable others to manage and automate billing even further (e.g., per API call), next-gen video conferencing, solutions guiding women through menopause, providing solutions that help companies to offer mental health services to distributed teams, bringing cloud kitchens to the next level (not running central kitchens).

What are you looking for in your next investment, in general?
As always, ambitious, smart, hard-working teams eager to build a category leader in a huge market.

What other types of products/services are you wary or concerned about?
Concerned about solutions that leverage behavioral data to influence people for the sake of optimizing profit, overload of sales and marketing tech, overload of chatbot providers. [It is] hard to compete with players that have benefited from huge network effects such as food delivery.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We focus on German-speaking areas and Central Eastern Europe. Opportunistically we would also invest outside of the region, still in Europe.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Austria — no specific industry focus within software. However, well-positioned in the biotech space, CEE — given the strong presence of IT outsourcing companies, the region is well-positioned to build solutions in the business-process automation, dev tool space. Storyblok (our portfolio). Others to watch: Anyline, Adverity, Bitpanda, PlanRadar, Refurbed.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Regarding Vienna — we are seeing the first generation of entrepreneurs building global companies. Their and their team experience will be at utmost value creating a new wave of tech companies that compete on a global level.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes, we already see this — exciting companies coming out of small cities in Poland, Germany, etc. and companies going remote.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Telemedicine, online education has been accelerated. We see a shift that otherwise would have taken years, especially in the relatively conservative German-speaking area. As mentioned previously, mental health solutions, hiring and employing remotely are some of the opportunities highlighted by COVID-19. Companies that are heavily exposed are those that have been serving the long tail of companies, small merchants, and local businesses that were closed down or experienced much less traffic in past months and hence are extremely sensitive around their cost base, discontinuing services that are not 110% essential.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We have always been very selective and focused, partnering up three to four times a year. We continue at the same pace. The companies that perform well despite COVID-19 are still in a strong position for attracting external capital. Of course, we help our portfolio to secure a runway and have a discussion how/whether the situation has impacted their offering/GTM. Some companies have to rethink their value proposition, some rethink their target groups either to make up for slower sales cycles or on the other hand to leverage and benefit from the current situation.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, we see that Lokalise is growing heavily with the current customer base as their customers expand to new markets, likely to make up for slower revenue growth in their existing markets. We see that Nethone (fraud prevention) is able to double down on e-commerce. Online fraud and online transactions are skyrocketing as people spend much more time online. (On the other hand, their airline customers of course show a different trajectory.)

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
It is inspiring to see how founders go through the current situation, act instead of reacting, especially in those countries where there is less government support incentives in place. Personally, I am also happy to see that people use the work from home time to rethink and introduce healthier habits.

Any other thoughts you want to share with TechCrunch readers?
As the world has gone online and the location matters much less, there is an opportunity to distribute the created value and wealth more evenly — be it a company founded in a “non-tech-hub” location or be it talent hired remotely.

Extra Crunch Friday roundup: Edtech funding surges, Poland VC survey, inside Shift’s SPAC plan, more

I live in San Francisco, but I work an East Coast schedule to get a jump on the news day. So I’d already been at my desk for a couple of hours on Wednesday morning when I looked up and saw this:

What color is the sky this morning pic.twitter.com/nt5dZp5wWc

— Walter Thompson (@YourProtagonist) September 9, 2020

As unsettling as it was to see the natural environment so transformed, I still got my work done. This is not to boast: I have a desk job and a working air filter. (People who make deliveries in the toxic air or are homeschooling their children while working from home during a global pandemic, however, impress the hell out of me.)

Not coincidentally, two of the Extra Crunch stories that ran since our Tuesday newsletter tie directly into what’s going on outside my window:

As this guest post predicted, a suboptimal attempt I made to track a delayed package using interactive voice response (IVR) indeed poisoned my customer experience, and;

Sheltering in place to avoid the novel coronavirus — and wildfire smoke — is fueling growth in the video-game industry, perhaps one factor in Unity Software Inc.’s plan to go public ahead of competitor Epic Games. In a two-part series, we looked at how the company has expanded beyond games and shared a detailed financial breakdown.

We covered a lot of ground this week, so scroll down or visit the recently redesigned Extra Crunch home page. If you’d like to receive this roundup via email each Tuesday and Friday, please click here.

Thanks very much for reading Extra Crunch; I hope you have a relaxing and safe weekend.

Walter Thompson
Senior Editor
@yourprotagonist


Bear and bull cases for Unity’s IPO

In a two-part series that ran on TechCrunch and Extra Crunch, former media columnist Eric Peckham returned to share his analysis of Unity Software Inc.’s S-1 filing.

Part one is a deep dive that explains how the company has grown beyond gaming to develop multiple revenue streams and where it’s headed.

For part two on Extra Crunch, he studied the company’s numbers to offer some context for its approximately $11 billion valuation.


10 Poland-based investors discuss trends, opportunities and the road ahead

The Palace of Culture and Science is standing reminder of communism in Warsaw, Masovian Voivodeship, Poland.

Image Credits: Edwin Remsberg (opens in a new window) / Getty Images

As we’ve covered previously, the COVID-19 pandemic is making the world a lot smaller.

Investors who focus on their own backyards still have an advantage, but the ability to set up a quick coffee meeting with a promising investor is no longer one of them.

Even though some VCs are cutting first checks after Zoom calls, regional investors’ personal networks are still a trump card. Tourists will always rely on guide books, however, which is why we continue to survey investors around the world.

A Dealroom report issued this summer determined that 97 VC funds backed more than 1,600 funding rounds in Poland last year. With over 2,400 early- and late-stage startups and 400,000 engineers in the country, it’s easy to see why foreign investors are taking notice.

Editor-at-large Mike Butcher reached out to several investors who focus on Warsaw and Poland in general to learn more about the startups fueling their interest across fintech, gaming, security and other sectors:

  • Bryony Cooper, managing partner, Arkley Brinc VC
  • Anna Wnuk-Błażejczyk, investor relations manager, Experior.vc
  • Rafał Roszak, investment director, YouNick Mint
  • Michal Mroczkowski, partner, Market One Capital
  • Marcus Erken, partner, Sunfish Partners
  • Borys Musielak, partner, SMOK Ventures
  • Mathias Åsberg, partner, Nextgrid
  • Kuba Dudek, SpeedUp Venture Capital Group
  • Marcin Laczynski, partner, Next Road Ventures
  • Michał Rokosz, partner, Inovo Venture Partners

We’ll run the conclusion of his survey next Tuesday.


Brands that hyper-personalize will win the next decade

Customer Relationship Management and Leader Concepts on Whiteboard

Image Credits: cnythzl (opens in a new window) / Getty Images

Even for fledgling startups, creating a robust customer service channel — or at least one that doesn’t annoy people — is a reliable way to keep users in the sales funnel.

Using AI and automation is fine, but now that consumers have grown used to asking phones and smart speakers to predict the weather and read recipe instructions, their expectations are higher than ever.

If you’re trying to figure out what people want from hyper-personalized customer experiences and how you can operationalize AI to give them what they’re after, start here.


VCs pour funding into edtech startups as COVID-19 shakes up the market

For today’s edition of The Exchange, Natasha Mascarenhas joined Alex Wilhelm to examine how the pandemic-fueled surge of interest in edtech is manifesting on the funding front.

The numbers suggest that funding will far surpass the sector’s high-water mark set in 2018, so the duo studied the numbers through August 31, which included a number of mega-rounds that exceeded $100 million.

“Now the challenge for the sector will be keeping its growth alive in 2021, showing investors that their 2020 bets were not merely wagers made during a single, overheated year,” they conclude.


How to respond to a data breach

Digital Binary Code on Red Background. Cybercrime Concept

Image Credits: WhataWin (opens in a new window) / Getty Images

The odds are low that someone’s going to enter my home and steal my belongings. I still lock my door when I leave the house, however, and my valuables are insured. I’m an optimist, not a fool.

Similarly: Is your startup’s cybersecurity strategy based on optimism, or do you have an actual response plan in case of a data breach?

Security reporter Zack Whittaker has seen some shambolic reactions to security lapses, which is why he turned in a post-mortem about a corporation that got it right.

“Once in a while, a company’s response almost makes up for the daily deluge of hypocrisy, obfuscation and downright lies,” says Zack.


Shift’s George Arison shares 6 tips for taking your company public via a SPAC

Number 6 By Railroad Tracks During Sunset

Image Credits: Eric Burger/EyeEm (opens in a new window) / Getty Images

There’s a lot of buzz about special purpose acquisition companies these days.

Used-car marketplace Shift announced its SPAC in June 2020, and is on track to complete the process in the next few months, so co-founder/co-CEO George Arison wrote an Extra Crunch guest post to share what he has learned.

Step one: “If you go the SPAC route, you’ll need to become an expert at financial engineering.”


Dear Sophie: What is a J-1 visa and how can we use it?

Image Credits: Sophie Alcorn

Dear Sophie:

I am a software engineer and have been looking at job postings in the U.S. I’ve heard from my friends about J-1 Visa Training or J-1 Research.

What is a J-1 status? What are the requirements to qualify? Do I need to find a U.S. employer willing to sponsor me before I apply for one? Can I get a visa? How long could I stay?

— Determined in Delhi


As direct listing looms, Palantir insiders are accelerating stock sales

While we count down to the September 23 premiere of NYSE: PLTR, Danny Crichton looked at the “robust secondary market” that has allowed some investors to acquire shares early.

“Given the number of people involved and the number of shares bought and sold over the past 18 months, we can get some insight regarding how insiders perceive Palantir’s value,” he writes.


Use ‘productive paranoia’ to build cybersecurity culture at your startup

Vector illustration of padlocks and keys in a repeating pattern against a blue background.

Image Credits: JakeOlimb / Getty Images

Zack Whittaker interviewed Bugcrowd CTO, founder and chairman Casey Ellis about the best practices he recommends for creating a startup culture that takes security seriously.

“It’s an everyone problem,” said Ellis, who encouraged founders to promote the notion of “productive paranoia.”

Now that the threat envelope includes everyone from marketing to engineering, employees need to “internalize the fact that bad stuff can and does happen if you do it wrong,” Ellis said.