Venture capital for Swiss tech startups surges

Could this be an investor who has made a good return? SWX

Since mid-summer, close to SFr 100 million ($78.7 million) has found its way into the coffers of up-and-coming ventures in this country.

Improved opportunity to realize their investments is giving venture capitalists the motivation to increase financing of Swiss technology companies with proven products.

The latest evidence of the resurgence of interest in Swiss technology is the SFr21 million ($17 million) participation by Index Ventures of Geneva in the equity of nine-year-old Oanda Corp.

Co-founder Richard Olsen told swissinfo earlier this month that he sold a stake in his company to Index Ventures, believing that the venture firm’s network of contacts in Silicon Valley and London could help it expand the business globally.

Olsen is referring to Index’s exit, or realization of investment, that occurred when its portfolio company, Skype Technologies SA of Luxembourg, was acquired by online auction house eBay Inc. of San Jose, Calif.

eBay is expected to pay up to $4.1 billion for the internet telephony company, making it one of the largest venture-backed exits in Europe since 2000.

Institutional financing

Oanda is the company behind Fxtrade.com, as well as the popular currency converter on the right hand of swissinfo’s Swiss Venture homepage http://www.swissinfo.org/sen/swissinfo.html?siteSect=166. It is Oanda’s first round of institutional financing.

Olsen and co-founder Michael Stumm spun Oanda out of a now defunct Zurich-based econometrics company in 1996.

In 2001, Oanda launched a foreign exchange trading platform, Fxtrade.com, for retail investors. In the meantime, it moved the legal headquarters to the US, although Olsen still works out of the firm’s Zurich office, while Stumm is based in Toronto, Canada.

It was the potential of the dotcom business that attracted Index Ventures to the firm.

Other Swiss deals announced recently include text to speech software-maker SVOX AG, which raised about SFr3 million; Precimed Group, the surgical instrument manufacturer, which raised SFr 34 million; biotech firm Xigen SA, which raised SFr 26 million and SpinX Technologies SA, a lab on a chip company, that raised SFr 15.4 million.

Proven technology

Swiss Venture has profiled all these investments. One thing the firms have in common is a proven technology with a large potential for export and international growth.

Another large round of financing was reported this month by Nemerix, the Manno-based semiconductor firm specialized in low-power global positioning system (GPS) chips.

It raised a whopping SFr38 million ($31.02 million) in a Series-B financing, attracting new US-based investors Cadence Design Systems of San Jose, Calif. and Oak Investment Partners of Menlo Park, Calif., in addition to its early Europe-based investors.

Driving deal making is increased confidence on the part of the venture capitalists. They see a good chance of reaping returns via trade sales and IPOs. Larger technology and service companies are once again looking to acquire nimble and innovative startups.

Resurgence

At the same time the resurgence of Europe’s stock markets, which have shown appetite for certain types of fast growing, profitable, or close to profitable, ventures, is fueling the desire to back technology firms.

A case in point of the latter trend is the floatation of Esmertec. If it goes ahead as planned this month, it will be the first venture-backed software IPO on the SWX Swiss Exchange since 2000.

The listing will add several new multi-millionaires to the Swiss economy as Esmertec’s founders and some key members of the management will be selling some of their shares in the float.

The venture firms will achieve returns too, if all goes well, but they will have to wait until their lockups are lifted several months after the first day of trading.

by Valerie Thompson