Switzerland's federal government wants to help local startups with an innovation fund.
The idea of an innovation fund for Switzerland is once again taking clearer shape. On Wednesday, Economy Minister Guy Parmelin wants to bring the implementation for such a project up for debate in the Federal Council, the «NZZ» daily (in German, behind paywall) reported Tuesday. The plans call for an initial stake in the investment vehicle with 500 million francs ($542 million) from federal coffers.
To fund the program, the federal government will inject about one-third of the amount into the fund as share capital, staggered over four years. The rest would then be granted via federal guarantees for the fund's borrowing. In the medium term, the plan is for the fund to have about 1 billion francs at its disposal, half of which would come from the federal government and half from external sources.
Not on the Sidelines
According to the statement, Parmelin is hoping for money not only from the cantons but also from institutional investors such as pension funds. The vehicle will operate as a fund of funds that distributes monies to venture capital funds who in turn invest in local startups. The strategy behind this is that it will have a lighthouse effect, attracting further investors to the Swiss startup scene.
To be sure, there is no glaring shortage of venture capital in Switzerland, and the fact that Swiss corporations such as UBS or Swisscom or even the Zurich Cantonal Bank have their vehicles does not bother the federal government. The core argument in favor of a federal fund is that many other countries also have such state investment vehicles. If Switzerland did not participate, it would be at a disadvantage.
