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Corona: Just Like a Meteor in Silicon Valley

How are venture capitalists dealing with the crisis? Many are investing in Silicon Valley, the world renowned hotspot of startups and tech innovation. The coronacrisis has hit the valley with a vengeance. Smaller startups are either bought up by their bigger rivals or perish because they run out of money. The bigger ones don't face the same liquidity issues but tend to have a concern about impending IPOs.

Is China an alternative? In no way, according to Bornhaeusser: «The financial system of China won't allow for that. For a foreign investor it is very difficult to invest profitably in China, even if you are nice to the government at all times. In joint ventures, there is always a third party involved that wants a share of the spoils. It makes more sense to wait for the end of the crisis and invest in the U.S. again.»

A Helping Hand in Singapore

The world-famous fintech hub of Singapore may provide an alternative: Singapore. The city-state has inched ahead of Zurich and Geneva in recent years in respect to fintech, thanks not least to the technological level of the country and the links between government and business.

These are the links that helped the business get much-needed support from the government in the current crisis: the financial authorities have announced a package of emergency aid worth 85 million francs on April 8 to the financial and fintech sectors.

Measured Approach to Help

The help promised to the industry included paid training courses, wage subsidies, help with funding and lower rental payments. The measures are designed to help the businesses improve their resilience, speed up the digital development and strengthen the professional knowhow.

The Swiss rivals could be forgiven for feeling envy towards the support their brethren receive from the government of Singapore. They aren't though, according to a letter sent to the government by the Swiss Finance + Technology Association.

The association's president, John Hucker, and chief counsel Christian Meisser welcomed the measures taken by the Swiss government and lauded them as well designed and implemented.

Not Substantial Enough

But some gaps remain. Startups indeed face a problem with their financing and potential investors are busy with other projects, some being affected themselves and hence forced to delay any investment decisions, the representatives said.

Those startups tend to have much bigger requirements than they could possibly get from the government. The government grants are based on past income.