In the first half of 2022, fintech companies in Switzerland raised a total of CHF 349 million through 23 rounds, falling behind sectors including information and communications technology (ICT) and cleantech, data from Startupticker.ch’s Swiss Venture Capital Report 2022 Update show.
The figures showcase a slowdown in fintech funding in H1 2022, during which the sector only accounted for 13% of all startup funding and 14% of deals. In comparison, Swiss fintech companies raised CHF 857.9 million out of the CHF 3 billion closed by Swiss startups in 2021, giving the sector a 28% market share in all invested capital for the year.
The downtrend in fintech funding is further apparent when considering that H1 2022 was a record period of Swiss startup financing. In the first half of the year, Swiss startups raised a total of CHF 2.6 billion through more than 160 rounds, a ~50% year-on-year (YoY) increase in volume and 31% YoY increase in deal count.
Investors favor cleantech and healthcare
Startupticker.ch’s Swiss Venture Capital Report 2022 Update shows that investors shifted away from the fintech sector in H1 2022 to dabble into other industries including cleantech, healthcare, and micro and nanotechnology.
This is evidenced by large rounds closed by startups like Climeworks (CHF 600 million), a company that specializes in carbon dioxide air capture technology; MindMaze (CHF 96.7 million), a digital neurotherapeutic platform; DistalMotion (CHF 82.6 million), a medical device company; and Immunos Therapeutics (CHF 71.4 million), a biotechnology company.
Climeworks was amongst the three Swiss startups that reached unicorn status in H1 2022, alongside SonarSource, a developer of open source software for continuous code quality and security, and Scandit, a smart data capture and barcode scanning software solutions provider.
While fintech funding stalled in the first six months of the year, three fintech companies managed nevertheless to raise some of H1 2022’s largest rounds of financing: SEBA Bank, a licensed banking institution focused on digital assets, closed a CHF 110 million Series C and H1 2022’s fourth largest round; Sygnum, another digital asset bank, secured CHF 82.4 million in period’s seventh largest round; and Yokoy Group, a spend management firm, raised a US$80 million Series B and H1 2022’s eighth largest round.
Venture funding cools off
The slowdown in fintech funding observed in Switzerland comes amid an economic downturn and global market sell-off that saw shares in recently listed fintech companies being slashed by an average of more than 50% since the start of 2022, according to an analysis by the Financial Times.
A new report by Morningstar company Pitchbook shows that the insurtech segment took the biggest hit, with the seven publicly listed companies tracked by Pitchbook plunging by a staggering 80% over the past year. Similarly, in PitchBook’s neobanking, brokerage and crypto cohort, which comprises five companies, stocks have fallen 59% over the last 90 days.
This landscape has triggered a decline in fundraising for private companies and a drop in startup valuations.
Earlier this month, Swedish buy now, pay later (BNPL) giant Klarna, closed a US$800 million round at a US$6.7 billion valuation, down 85% from US$45.6 billion a year ago. The Wall Street Journal reported just last week that Stripe had lowered its internal valuation 28% to US$74 billion, compared US$95 billion last year.
Data from CB Insights show that Q2 2022 saw the lowest amount of quarterly funding and deals since Q4 2020, standing at just US$20.4 billion and 1,225 rounds.
The deteriorating climate has led fintech companies including British digital bank Zopa and mobile banking startup Chime to put plans for initial public offerings (IPOs) on hold. Others like Klarna, Robinhood and Coinbase, meanwhile, have been forced to embark on big layoffs.
According to an analysis by Roger Lee of Layoffs.fyi, fintech startups accounted for the third largest number of layoffs, by percentage, globally in H1 2022. As of July 1, some 3,709 employees — excluding crypto companies — had been laid off across 41 “layoff events” in the second quarter of 2022, Lee estimates.
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