Last week, the Swiss government promised to help the fintech industry during the coronacrisis. The finance director of the region that is home to many startups believes that the support package will not go far enough.
The federal government on Wednesday pledged 154 million Swiss francs ($158 million) to help fintechs and startups survive the current crisis, support that was eagerly awaited by the industry.
Heinz Taennler, who is head of finance of the cantonal government of Zug, home to a cluster of fintech firms (the famous «Crypto Valley»), believes that the government aid doesn’t go far enough though. He plans to launch a new vehicle to supplement the government package with local government and private investments, according to a report in «Sonntagszeitung» (in the printed edition only).
Public-Private Partnership
Taennler hopes to generate a further 100 million francs for an industry that the government expects will one day provide the basis for a new economic success story. If things go according to Taennler’s plans, the canton and the city of Zug will inject 20 to 30 million francs, with a further 10 to 15 million coming from the state’s purses.
The rest will have to come from private investors. The key difference to the emergency loans that the government has pledged to give to companies is that the money from the fund can be converted into share capital. For startups with barely any revenues to speak of, this is easier to handle than loans that have to be repaid within a set period of time.
Profound Worries Among Entrepreneurs
The government of Zug is in negotiations with the federal government about the details of the fund. Taennler's proposal will likely be welcomed by the industry, which is under enormous stress due to the economic downturn.
In a survey published earlier this month, 4 out of 5 crypto fintechs in Zug said they feared having to file for bankruptcy within six months if they couldn’t get financial support.
