EY Startup Barometer Update second half of 2023: Noticeable reduction in funding for startups in Switzerland

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• In the second half of 2023, 254 financing rounds for Switzerland-based startups were registered – a significant decline compared to the first half of the year (342).
  
  
• At 1.62 billion Swiss francs, local startups generated a significantly lower financing volume in the second half of 2023 than in the first six months of last year.
  
  
• Focus topic: representation of women in startup founding teams. Only 2% of all Swiss startups surveyed were established by all-female founding teams. 22% of the companies that received funding had at least one active female member in their founding team, while 76% of all founding teams did not include any women.

Zurich, 19 January 2024 – It had already become apparent, but now there is certainty: startups in Switzerland achieved a significantly lower financing volume in the second half of 2023 than in the first six months of the same year. Local startups garnered around 1.62 billion Swiss francs in financing (first half of 2023: CHF 1.93 billion). The investment volume also fell significantly compared to the second half of 2022 (1.84 billion francs). This is the lowest level recorded since the second half of 2020 (CHF 1.30 billion). Throughout the year, startups received a total investment of CHF 3.56 billion. This represents a decline of approximately 10% compared to the CHF 3.95 billion invested in the previous year.

The decrease in the number of financings that took place in the second half of 2023 is especially noteworthy: At 254 financing rounds, the last six months of 2023 are well below the figures for the previous six months. The number of financing rounds has thus fallen continuously since the first half of 2022 (1H22: 471 rounds; 2H22: 426 rounds, 1H23: 342 rounds). The number of transactions recorded in the second half of 2023 was the lowest since second half of 2020 (199). Throughout 2023, there were 596 financing rounds, marking a 34% decline from the 897 rounds conducted in the previous year.

An in-depth look at the final six months of 2023 reveals that the bulk of the investment volume, amounting to CHF 796 million, occurred in July. This was largely driven by the substantial financing rounds for TP24 and Atlas Agro. In the investment rankings for the second half of 2023, these two companies are at the forefront, with TP24 securing CHF 412 million and Atlas Agro receiving CHF 288 million. "The development in the second half of 2023 serves as a good example of the impact that a few substantial deals can have on the overall landscape of startup financing in Switzerland. Following the two major transactions in July, the total investment volume notably decreased to just 33 million francs in the subsequent month. Although there was a modest upturn in the final four months of the year, the investment levels seen in spring and early summer were not matched again," says Alexander Schatt, Head Startups & Scale-ups at EY in Switzerland.

Companies in the healthcare sector maintained a strong presence in financing activities, as evidenced by data from the first half of 2023: Among the top ten startups receiving the largest financings, six were in the healthcare field. Overall, the healthcare sector accounted for 173 out of the total 254 financing rounds documented, amassing over CHF 1.1 billion in investments. The other sectors by number of rounds are "Software & Analytics" with 143 rounds (CHF 460 million), "Hardware" with 47 rounds (CHF 194 million) and "FinTech/InsurTech" with 45 rounds (CHF 991 million).

These are the findings of the semi-annual update of the Startup Barometer Switzerland, published in Switzerland by the audit and consulting firm EY.

Composition of founding teams of Swiss startups financed in was predominantely male

In the EY Startup Barometer Switzerland we did a focused analysis on the representation of women among the founders who secured financing for their startups in 2023. Out of the 484 startups in Switzerland that received financing in 2023, only 10 had founding teams composed entirely of women. Meanwhile, in 108 startups, there was at least one female founder. A vast majority with 366 startups had founding teams consisting solely of men. Proportionally, this translates to 2% of the surveyed startups having all-female founding teams, 22% having mixed-gender teams with at least one female founder, and 76% that were founded exclusively by men.

"The proportion of female startup founders is not small per se, on the contrary. However, if we analyze the number of startups that successfully secure funding, the picture is somewhat different. We have to make assumptions here, this could be attributed to males predominantly holding decision-making roles at venture capital firms and other major investors. Other possible factors could include women’s potential challenge in penetrating crucial networks or the tendency of female-led startups may operate in industries that don’t typically draw a large amount of venture capital," says Alexander Schatt.

Among the 1,090 founders that were able to secure financing for their startup in 2023, 140 are female, which corresponds to a share of 12.8%. We observe that women are notably engaged in the sectors of education, healthcare and AgriTech. In the education domain, 29% of the surveyed founders are women (7 out of 24), in healthcare the representation is 20% (59 out of 296), and in the AgriTech sector, women constitute 14% of the founders (5 out of 35).

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