Swiss VC bounces back after third quarter low

Venture capital expert Nick Blaydes sees an upturn this quarter. Ernst & Young

The amount of capital being invested in innovative, privately owned start-up companies hit a two-year low in the third quarter.

But the fourth quarter is already showing a healthy upswing, according to Nick Blaydes of the venture capital advisory group at Ernst & Young in Zurich.

According to Blaydes, it will “produce the strongest quarterly results of the year, thanks to large financing rounds” completed by the Genetics Company, Nemerix and esmertec.

The Genetics Company has raised SFr10 million, and esmertec pulled in SFr35.5 million.

Nemerix is not yet disclosing the amount of its venture funding, but industry insiders say the firm will announce closing a second round of SFr8-10 million.

The third quarter ranked as “the poorest quarter for venture capital activity in Switzerland” since VentureOne and E&Y started the survey, according to Blaydes.

Only five companies announced raising venture capital. They raised a total of € 9.7 million.

Another notable result was the absence during the quarter of any healthcare investments – for a long time the best performing industry group in Switzerland, added Blaydes.

US ahead

Europe in general is not in sync with the upswing in the US, indicated by yet another decrease in venture capital investment amounts and activity in the third quarter 2003.

This is a continuation of the almost unbroken quarterly decline begun in the second quarter 2001. Some €616 million was invested in 191 deals during the third quarter.

European total figures disguise wide differences at the individual country level, said Blaydes. The UK, for example, saw a 52 per cent increase in total investment, making the third quarter its best so far in 2003.

Biopharmaceuticals and software continued to dominate among the sectors, together accounting for over 60 per cent of total investment and 48 per cent of deal activity.

In a change from the second quarter, biopharmaceuticals (comprising biotechnology, drug delivery, drug discovery and pharmaceuticals) was the most significant sector by investment, with the average amount invested increasing by 33 per cent on the second quarter.

by Valerie Thompson