Business angels to answer startups’ prayers in 2002

Logitech Chairman Daniel Borel was voted Business Angel in 2001 Keystone

Some €30 million is to be invested in young, privately owned companies by Swiss and business angel investors.

The €30 million (SFr44.3 million) figure is an estimate of the amount to be invested in the coming year and is based on the results of a survey announced on Tuesday of 120 well-known business angels (30 percent response rate) by Brains-to-Venture, a professional services firm, specialised on supporting the business angel activity and the State Secretariat for Economic Affairs (Seco).

“Things have stabilised and despite the dip after the peaks of 2000 evident among angel investors, there is still a vast improvement in the potential for startups to raise capital from what it was like in 1995 when I started working in this sector,” points out Hermann Arnold, CEO of Brains-to-Venture.

Business angels are wealthy individuals, typically entrepreneurs who, having made a personal fortune in business, have a taste for high risk investing in startups. The investors surveyed in this particular report say they will invest on the average €250,000 in young companies in the following months.

Venture capital

While SFr44.3 million is a small proportion of what is invested in venture capital – in Switzerland last year some SFr409 million was invested, according to a soon-to-be published report sponsored by Venturix.com – it is an important part of the development of an innovation economy because of their ability to propel the growth of very early stage companies.

Such investors are less influenced by the vagaries of the capital market or economic cycles than venture capitalists. Business angles expectations are longer term, and only some 58 percent of invest primarily for financial profits, according to the survey.

The rest of the angels surveyed are looking for access to new technologies and markets, or to build up their know-how in a new area of business.

by Valerie Thompson