A new SFr6 million fund managed by ETeCH AG is investing in very early stage technologies in Switzerland and surrounding regions. It has invested in four projects in the Swiss region since late 2001.
ETeCH is a Swiss investment and development company based in Zurich. It was formed by Generics AG, the Swiss operating company of the international technology consulting firm, Generics Group AG, and Venture Partners AG, Zug, a Swiss-oriented venture capital investor.
The company was established late last year and it describes its stage of investment participation as "early-seed". Since being established, it has invested in a variety of early-stage technology projects, including a novel optical switch, a new white fluorescent material and applications in spin electronics, arguably the next paradigm in electronics, according to Ralph Strasser from Generics AG.
Originators of the technologies are institutions such as the University of Basel, ETH Zurich and Lausanne, the University of Geneva, Siemens Munich, and the Technical University of Vienna.
The fund is managed by ETeCH Management GmbH, which currently employs a team of four professionals. Plans are afoot to raise additional capital to top up the SFr6 million fund as it nears completion of its capital disbursements.
Defining early-seed investing
ETeCH is establishing a new category in the private equity industry, the so-called early seed phase. It enters the investment process at a stage somewhat earlier than incubator funds which typically participate in a "seed" round to help a company get to a first prototype of its product.
It is also entering the investment process much earlier than the venture capital industry would. VCs typically put their money into firms that already have a prototype or even later in the game when the first reference customers are already on the books.
The goal is to dramatically increase the value of such technologies and to then transfer them into commercial markets by way of an "optimal exploitation strategy", explains Strasser.
The fund can invest in patents but it also advises owners of patents or those planning to patent their intellectual property. Projects are typically found at a university or a research lab within a larger corporation. The size of each investment is relatively small, reflecting the early stage aspect, between SFr250,000 to SFr700,000.
"The company's managers look for the commercial potential of intellectual property and then identify its optimal exploitation route," says Strasser.
"The end result might be a start-up company, a trade sale where we would sell or license the technology to the likes of Siemens or Swisscom - or we might forward the project to a venture capital investment manager," Gerhard Plasonig, CEO of the Management Company, told Swiss Venture Update.
by Valerie Thompson