Venture Debt - Switzerland | Statista Market Forecast

Switzerland is projected to reach a Total Capital Raised of US$184.10m in the Venture Debt market market in 2024.
Traditional Venture Debt is expected to dominate the Swiss market with a projected market volume of US$174.30m in 2024.
In global comparison, the United States will lead in Capital Raised with US$22.4bn in 2024.
Switzerland's venture debt market is gaining traction among startups seeking alternative capital raising options in a traditionally risk-averse financial landscape.

Definition:

The Venture Debt market refers to a form of equity and debt financing combination, which is used to finance early stage and growth stage capital-backed companies. Besides equity funding rounds, business can seek venture debt that minimizes ownership dilution and governance requirements to increase the cash runway to reach the next milestone or even provide a cushion for delays.

Structure:

The market consists of two segments:
- The Traditional Venture Debt market refers to a form of debt financing that is often provided to venture-backed companies to either buy new equipment, meet a deficiency of short-term capital, or support expansion plans.
- The Growth Venture Debt market refers to a form of debt financing that is often structured with warrants or options, which provides a rapid development stage in which businesses can support their long-term oriented growth plans.
The market data comprises of the amount of capital raised, number of deals, and average deal size.

Key players in this market are companies such as Wells Fargo and Hercules Capital.

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Venture Capital
Venture Debt funds are sponsors by governments

Switzerland, known for its strong financial sector and innovative start-up ecosystem, has seen significant growth in the Venture Debt market in recent years.

Customer preferences: Swiss entrepreneurs and start-ups have shown a growing interest in Venture Debt as an alternative source of financing. This is driven by several factors. Firstly, Venture Debt allows companies to raise capital without diluting their ownership stakes, which is particularly appealing to founders who want to maintain control of their businesses. Additionally, Venture Debt offers more flexible repayment terms compared to traditional bank loans, providing companies with the financial flexibility they need to fuel their growth.

Trends in the market: One of the key trends in the Venture Debt market in Switzerland is the increasing number of venture capital-backed start-ups opting for this form of financing. As the start-up ecosystem in Switzerland continues to thrive, entrepreneurs are looking for ways to fund their growth without relying solely on equity financing. Venture Debt provides them with the opportunity to access additional capital while minimizing equity dilution. Another trend is the rise of specialized Venture Debt providers in Switzerland. These lenders have a deep understanding of the start-up landscape and are able to offer tailored financing solutions to meet the unique needs of entrepreneurs. This specialization has led to a more competitive market, with lenders offering attractive terms and conditions to attract borrowers.

Local special circumstances: Switzerland's strong financial sector and stable economy have created a favorable environment for the development of the Venture Debt market. The country has a well-established network of banks and financial institutions that are well-positioned to provide debt financing to start-ups. Additionally, Switzerland's reputation for innovation and entrepreneurship has attracted a significant number of venture capital investors, further fueling the demand for Venture Debt.

Underlying macroeconomic factors: The growth of the Venture Debt market in Switzerland can be attributed to several macroeconomic factors. Firstly, the low interest rate environment has made debt financing more affordable for start-ups, encouraging them to explore alternative financing options. Additionally, the availability of venture capital funding has increased in recent years, leading to a greater demand for complementary debt financing. Finally, the strong performance of the Swiss economy has created a favorable investment climate, attracting both domestic and international investors to the start-up ecosystem. In conclusion, the Venture Debt market in Switzerland is experiencing significant growth, driven by customer preferences for non-dilutive financing and flexible repayment terms. The rise of specialized lenders and the favorable macroeconomic environment have further fueled this growth. As the start-up ecosystem continues to flourish, it is likely that the Venture Debt market in Switzerland will continue to expand in the coming years.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only some of the VC-backed companies develop into successful and highly profitable businesses. In 2020, the leading venture capital backed company worldwide was the Manbang Group, which based in Nanjing, China.