Swiss authorities restructure their investment for budding businesses in developing economies
SECO Startup Fund Relaunched to Support Emerging Market Startups
The SECO Startup Fund, a Swiss government initiative, has been relaunched with a commitment of CHF 5m (€5.4m) to support post-revenue startups in emerging markets. The fund, managed by advisory and impact investment firm iGravity and Seedstars, aims to help companies secure their first loan, build their financial history, and potentially secure more loans from commercial banks or traditional investors in the future.
The updated eligibility criteria for the SECO Startup Fund primarily focus on startups that are in the growth stage (3-5 years old) and are ready to scale. These startups should operate in sectors such as Agritech, Fintech, and related value chains, and have a Swiss connection, which typically means some form of Swiss partnership, collaboration, or presence. The startups must be headquartered in or have significant operations in emerging markets, and are eligible to receive funding up to 100,000 Euros (or equivalent) for scaling and growing their projects.
The eligibility criteria for the SECO Startup Fund have been updated to be more flexible, such as no longer requiring one of the investors to have residency in Switzerland. This change reflects the fund's commitment to supporting startups with meaningful Swiss ties or those that align with SECO's cooperation strategy, which focuses on decent work, access to critical goods and services, and climate-smart capacities.
One of the startups that has benefited from the SECO Startup Fund is eWaka, a Nairobi-based startup that provides electric bikes and a battery-swap network for corporate clients. The startup's leadership team is Swiss-backed, and the fund has invested CHF 44m in more than 120 companies since its foundation in 1997.
The SECO Startup Fund has a thorough due diligence process to assess risk, and offers single-digit interest rate loans and low ticket sizes, starting from CHF 300,000. The fund's goal is to channel funding towards entrepreneurs addressing community problems, as expressed by Alisée de Tonnac, the CEO of Seedstars. De Tonnac also expressed excitement about the next generation of innovative businesses in emerging markets.
According to Frei, the risk perception of commercial investors for emerging markets is high. However, the SECO Startup Fund provides resources to look into high-risk investments, and has a focus on helping startups secure their first loan, which can be a crucial step towards securing further investment from commercial banks and traditional investors. For the most precise, up-to-date, and official eligibility details, it is recommended to consult SECO’s official website or contact their program officers directly.
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