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10 ways to get funding for your Swiss startup.

Startup funding 10 ways

10 ways to get funding for your Swiss startup.

Funding is essential for your startup to thrive. Plenty of options are available, but you have to choose the most appropriate one for your business’s stage.

The process can be confusing. To make things easier, this guide shows you 10 ways to acquire funding for your startup.

Learn which type of funding is best for you and how to get it. Give your startup the best chance to succeed by learning how to raise capital and propel your business forward.

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1. Bootstrapping.

Bootstrapping is starting and growing your startup without external funding or support. You only use your personal savings and reinvest the revenue into your startup.

It’s usually only done during the pre-seed funding stage. Nearly half of startups (45%) successfully raise around $100 million or more by bootstrapping in their initial days.

Research from the US Small Business Administration (SBA) found that founders using bootstrapping to fund their startups have a 52% 5-year survival rate. That’s much higher than businesses that depend on outside funding (35% survival rate).

Entrepreneurs opt for bootstrapping to retain control and make independent decisions, maintain flexibility and agility in adapting strategies, achieve financial independence by reinvesting profits, and potentially increase their valuation through milestone achievements before seeking external funding.

Dr. Adrian SprengerManager Entrepreneurship at Basel Area Business & Innovation

Is bootstrapping for you?

It’s the best option if you want to maintain complete control over your business. It helps you become incredibly resourceful and efficient in your operations because you learn to stretch the money as much as possible.

Use bootstrapping techniques to fund your business if you have disposable income, savings or family money. Make sure you have enough money to get the startup off the ground and materialize your idea.

You’ll likely experience slow growth during this phase due to limited funding.

2. Friends and family.

Contact your network of friends and family to invest in your startup. Most people’s friends and family aren’t seasoned investors, so you shouldn’t expect large investments.

Raising funds for your startup this way is more common than most founders realize. Nearly a quarter (22%) of startups fund their businesses with family and friends’ money.

Is funding from friends and family for you?

You should involve family and friends if you’re still in the early stages (pre-seed phase) of your startup. For example, during the research and development phase, when your product hasn’t hit the market.

How to get funding from friends and family.

Create a presentation or a product demonstration to show people before asking for investment. Call on your LinkedIn network and talk to your university professors who might be interested in your idea and understand the potential of your business.

3. Startup competition.

Various companies, foundations, clubs, incubators and private firms hold startup competitions to fund and support innovative startups. These competitions can be online or in person.

Usually, the money you win in these competitions is all yours. The company giving you the funds won’t ask for equity or to pay back the funds after a specified period. There can be exceptions to this, so always read the fine print.

Here are a few great startup competitions and events for Swiss startups:

Is a startup competition for you?

Participate in startup competitions before market entry. You can apply even if your prototype isn’t ready. Most competitions don’t offer massive investments, as VC funds or angel investors do. Their awards are enough to help you create a Minimum Viable Product (MVP), push it into the market or improve your marketing budget.

We asked Gillianne Bowman, research manager and company advisor at Euresearch, whether it makes sense to apply to as many competitions as possible or only pick high-reward ones:

It's important to prioritize competitions based on their alignment with your startup's current goals and needs. You always need to balance the time and resources you invest in the competition against the potential rewards: not just a prize at the end, but learning from the feedback and networking opportunities during the process itself, with increased visibility even if you don't reach the final stage.

Gillianne BowmanResearch Manager and Company Advisor at Euresearch, University of Basel

How to secure funding at a startup competition.

Some foundations, such as Innosuisse, require you to become a member before you can participate in their startup funding fairs or competitions.

Some competitions only allow startups from specific niches. Once registered, follow their guidelines and submit your business for consideration. You may be invited to the event to present your idea for a chance to win.

4. Grants.

Various organizations, universities and businesses give out grants and awards to fund startups. A new law allows the state to fund startups directly after Switzerland separated from EU research.

The most significant benefit of a grant is that you usually don’t have to pay it back. You can use the money to grow your business, from marketing to research and development.

There are exceptions to that. Some grants have deadlines and reporting requirements. Always check the details before accepting grants for your startup.

Here are some grants you can apply for as a Swiss startup:

Are grants for you?

Each grant program has specific eligibility criteria. Your startup may, for example, need to benefit the local community significantly. Or you may need to operate in a particular industry. Applying for grants is highly competitive and requires much time and energy.

You should consider grants in the pre-seed funding stage. They allow you to launch your product and generate enough buzz to secure valuable investors and attract more prominent venture capitalists.

How to get a grant.

Choose a grant from the list above. Check carefully if you qualify and send out your application. You may have to pass an interview and sign contracts before receiving the money.

Some grant programs may require product demonstrations. Others may ask you to prove your startup is a certain type of business, such as a green, women-owned or minority-owned business.

5. Crowdfunding.

Crowdfunding is raising funds by having many people (a crowd) give you small sums of money. Cumulated, it can amount to millions of Swiss francs. Depending on the platform, people submit these funds as donations or investments.

Crowdfunding can be a great source of short-term financing, such as for launching a new product.

Here are some excellent crowdfunding platforms for Swiss startups:

Is crowdfunding for you?

Crowdfunding is a great option if your idea resonates with many people or supports a popular cause that many regular people want to get behind. You can launch a crowdfunding campaign before or after bringing your product to market.

How to successfully crowdfund.

Find and capitalize on your unique selling points to win big in crowdfunding. Have proof of being a trustworthy founder and a reliable business idea. Create a business plan which outlines how you’ll use the money to grow your startup and the benefits it’ll offer society, the planet and investors.

You can do crowdfunding online via websites explicitly designed for it. You can also crowdfund in person in your local community and at startup events.

You can choose a donation-only crowdfunding model. Or you can offer rewards to your supporters in return for their investment. These can range from a free product when it launches to a stake or equity in your business.

6. Accelerator and incubator programs.

Accelerator and incubator programs offer funding along with mentoring, networking opportunities and business support. Here are some programs with great funding offers for Swiss startups:

Swiss founders might prefer Swiss-based startup support structures over Silicon Valley due to the advantages they offer: proximity to a diverse European market allows for easier access to customers, partners and investors, while the stability and high quality of life in Switzerland create an environment conducive to consistent business operations and attract top talent.

Dr. Adrian SprengerManager Entrepreneurship at Basel Area Business & Innovation

Is an accelerator or incubator for you?

Startups that have established themselves in the market with at least an MVP should apply for funds from accelerator programs during seed funding rounds. You can use the funding and mentorship to capitalize on market opportunities and scale your business quickly.

Most accelerator programs ask for equity in your business, so be ready for that.

How to get into an accelerator or incubator.

Accelerator programs and incubators are selective. You must fill out the application forms and usually present your business and unique selling points in an interview to get in.

7. Angel investors.

Angel investors are businesspeople who invest their private assets into your startup in exchange for equity. You can find them online, through your personal or professional network and at startup events.

Some events where you can find angel investors include:

Is an angel investor for you?

Startups that can generate significant income should approach angel investors for funding. You’ll need proof of concept or product market fit and a solid business plan.

Angel investors are ideal during seed funding. At this stage, your business should be ready to scale as soon as you receive the money.

How to win over an angel investor.

Create a convincing pitch deck and present it to the investor. Prepare information that’ll help the investor do their due diligence. That can include a business plan with critical financial data, market research, and background on yourself and previous successful businesses (if any).

The process can take a long time because the investors conduct extensive background checks to ensure the viability of the business.

8. Venture capital (VC).

When multiple investors pool their investments into a single fund, it becomes a venture capital fund. Investment banks and institutions can also be part of the investors in the VC. Firms handle these investments and offer funds to startups that fulfill the criteria set by the VC.

These are generally high-value investments of CHF 1,500,000 or more. In exchange for this financing, all the investors receive equity in your company.

Here are some VC firms for Swiss startups:

Is venture capital for you?

A startup with traction and potential for long-term growth is a great candidate for venture capital funding. You can approach a VC firm during seed funding or series A, B, C and later funding stages.

Venture capitalists prefer to fund relatively new startups far from reaching their full potential to maximize profits as the company grows.

How to get venture capital.

Every VC group supports specific types of startups only. Find out if you qualify and submit your business plan. If you make a good case and pass the due diligence interviews, you’ll soon sign the contracts and secure your funding.

The process of financing your startup through venture capital funds can take months.

Incubators and accelerators such as BaseLaunch can be a good preparation to get investor-ready.

9. Business loan.

Acquiring business loans is an excellent way to fund your established startup. Banks and non-bank lenders provide loans on interest or in exchange for equity. Each lender has its specific minimum qualification requirements. These can be the age of the businesses, profit margins and minimum annual revenue, for example, CHF 100,000 in the past 12 months.

Generally, your business should be domiciled in Switzerland if you’re applying for a loan from a Swiss bank. The Swiss government helps viable small to medium enterprises and startups secure bank loans by funding loan guarantee cooperatives.

Swisspeers is a platform that offers Swiss startup business loans from investors. KMUimpuls and UBS are other good options for business loans.

How to secure a business loan.

Check the qualification requirement for the loan and gather your documents. Apply online or in person, as specified by the lender. Wait for approval or submit more documents if required. Finally, sign the contract and you’ll have your loan in your account.

Is a business loan for you?

Banks and credit institutions require balance sheets before approving loans. This financing route is generally best for established startups with good profit history.

Loans are ideal if you want a small, one-time sum. For continuous investment, crowdfunding or VC funds are better.

10. IPO (initial public offering).

An IPO is when you offer shares in your company to the public. Founders and early investors hold the majority of shares in the startup. The rest of the shares are traded on the stock exchange and their prices fluctuate regularly.

Raising funds for your business through an IPO is a sign of success. You need millions of dollars in revenue before going public. Only about 10% of startups ever make it to an IPO.

Is an IPO for you?

Consider an IPO if your company needs more funds to grow than what the VC groups can offer. IPO allows initial investors and VC groups to exit while you can stay on as a founder. You can also cash out after the IPO.

It can make your business more stable. It’ll make raising funds in private rounds much easier as well. That’ll free up your time to focus on growing the business rather than chasing investors.

How to prepare for an IPO.

You have to set up a public offering team, compile your financial information, prepare an audit and complete the governmental IPO requirements before going public.

Need help funding your startup?

Choosing the right way to fund your startup can take time and effort. The process can be challenging for novice founders. Talk to our experts if you need help determining the best way forward for your business. And check out a comprehensive guide to the Switzerland startup ecosystem.

Switzerland's focus on deep tech and innovation, coupled with a robust startup ecosystem and a diverse funding landscape that includes government grants, angel investors, venture capital firms and corporate partnerships, provides ample support initiatives for startups to thrive and succeed in their respective industries.

Adrian SprengerManager Entrepreneurship at Basel Area Business & Innovation

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