The Swiss city of Zug, also referred to as Crypto Valley, was ranked the third city in the world in terms of startup funding volume in H1 2018, primarily driven by its growing crypto-community, according to a report by Speedinvest X and Frontline.
Among the top ten cities by deal volume, three are located in the DACH region, which comprises Germany, Austria and Switzerland. Berlin came in fourth position and Zurich in seventh.
In recent years, Switzerland has emerged a fintech powerhouse with Zug its blockchain hub. The city has been nicknamed Crypto Valley for the high concentration of blockchain and cryptocurrency startups which include the Ethereum Foundation, Tezos, Xapo, ShapeShift, and Proxeus.
In 2017, Swiss fintech and cryptocurrency ventures raised CHF 76 million through 30 rounds, doubled 2016, according to the Startup and Venture Capital Landscape in DACH 2018 report.
Notable Swiss fintech and cryptocurrency startups include Advanon, an online platform that allows businesses to sell their open invoices directly to financial investors, Bexio, a cloud-based business and accounting software, and ShapeShift, a web and API platform to provide instant bitcoin and cryptocurrency conversion.
Venture Capital Landscape in DACH
Home to 100 million affluent Internet users, the DACH region is a highly attractive economic region for startups to address and is one of the fastest growing EU economic regions with strong economic indicators. This makes DACH attractive for international venture capital (VC) firms to dedicate resources, the report says.
The DACH region has witnessed rapid growth of its tech industry in the past years. In the last 18 months, more than 10 debut funds have been launched in DACH. These are fueling upstream funding for DACH startups and contributing the growing startup ecosystem.
DACH is home to an increasing number of unicorns and unicorn-investors, including Auto1 Group, a car trading platform from Germany valued at EUR 3 billion, Biontech, a biotech company from Germany valued at EUR 2.3 billion, and Roivant Sciences, a biopharmaceutical company from Switzerland valued at EUR 2 billion.
The region also saw several successful exits and IPOs over the past months. These include German food delivery service Delivery Hero, which raised US$1.1 billion in its IPO at a US$4.8 billion valuation, German meal-kit company HelloFresh, which raised US$352 million in its IPO at a US$1.9 billion valuation, the acquisition of Swiss digital insurance broker Knip by Digital Insurance Group from the Netherlands, and the acquisition of German online payment company Billpay by Klarna, the Swedish payment company.
Berlin: an established global tech hub
The Berlin startup ecosystem, which is currently valued at US$31 billion, has attracted a lot of foreign VC capital and witnessed high interest from corporates compared to European counterparts, according to the report.
In 2017, Berlin drew 70% of total VC volume in Germany and 32% of total VC volume in the DACH region.
Four sectors in particular where German startups have succeeded are food, flying cars and air taxis, blockchain and cryptocurrency and fintech.
Fintech is big in Berlin with top players that include solarisBank, a banking platform with a full banking license that allows companies to offer their own financial products, and N26, a European mobile-only online bank. These are amongst the most well-funded fintech startups in Germany with SolarisBank raising US$112.76 million in funding from investors that include Visa, BBVA and ABN-AMRO, and N26 US$216 million from the likes of Allianz, Tencent, and Horizon Ventures.
Berlin Blockhain Startups
Berlin is also one of the largest crypto communities in the world with notable startups that include Neufund, a blockchain-based and investor-directed equity crowdfunding platform, and the IOTA Foundation, which provides blockchain technology for the Internet-of-Things (IoT) space.
In Austria, the fintech industry keeps growing, aided by the increasing number of incubators and accelerators focusing on nurturing early-stage startups.
Notable fintech startups in Austria include Cashpresso, a digital overdraft not connected to its clients’ banking account and designed for smartphones, and Wikifolio, an online platform for investment strategies of traders and asset managers.
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