Equity/bootstrapping
One of the most common and direct ways to finance a start-up is to use your own funds – known as "bootstrapping".
Here, you invest your own money in the company and become a partner or shareholder. The advantage is that you keep full control of your company and all profits and increases in value go to you. However, you also carry the entire risk yourselves.
Mailchimp is a successful example of bootstrapping.
3F – family, friends, fools
The so-called 3Fs – family, friends and fools – are another popular source of funding.
This method involves raising capital from close relatives, friends or other well-wishers who believe in your idea. These backers often act as private investors and may offer interest-free or low-interest loans. The terms of such arrangements have to be negotiated individually.
Bank loans and credit
Bank loans are another form of debt financing, but they are harder to get today than they used to be.
A comprehensive, well-thought-out business plan is essential to convince the bank of your business idea. Banks are risk-averse and rarely finance creative or risky projects. A solid plan and strong evidence of your track record can help, though.
Start-up competitions
Switzerland has numerous start-up competitions where you can win seed capital. These competitions offer not only financial support but also the chance to expand your network and make valuable contacts.
You'll find an overview of the most important competitions at Jungunternehmerpreise.
Crowdfunding
Crowdfunding has become much more popular in recent years. Platforms such as Kickstarter, Indiegogo or Startnext let many small investors back your business idea. You get not only the capital you need but also valuable feedback and your first customers. Crowdfunding is particularly well suited to innovative products and services that can count on broad support.
Business angels
Business angels are usually experienced entrepreneurs or managers who invest their own capital in start-ups. Besides financial support, they often also offer valuable mentoring and access to their network.
This support can be decisive for your start-up's success. Business angels generally look for projects with high growth potential.
Venture capital
Venture capital firms invest specifically in promising start-ups. These investments often come with extensive know-how and network support. The investors' goal is a profitable exit in which they sell their stake at a higher price.
Start-ups benefit from the expertise and resources of venture capital firms but also have to give up shares and therefore part of their control. This comes with a corresponding risk.
A difficult environment with a slight recovery in 2024
Swiss VC investment fell by 54% in the first half of 2023 compared with the previous year. A total of just under CHF 1.2 billion was invested, with a slight drop in the number of funding rounds.
2024 is showing signs of recovery. In May 2024, investment reached CHF 234 million, an increase of 58% on the previous month. The most important sectors were biotech, fintech and ICT.
Most investment continues to focus on early-stage funding, which accounts for almost 96% of funding rounds.
Accelerators and incubators
Accelerators and incubators support start-ups with advice, low-cost office space, funding and training programmes.
Some well-known incubators and support programmes in Switzerland:
- Tenity: fintech and insurtech in Zurich
- Switzerland Innovation Park: various sectors & locations
- Kickstart Innovation: fintech, healthtech, edtech, smart cities
- MassChallenge Switzerland: early-stage accelerator
- Innosuisse Start-up Coaching: various technology fields, nationwide
- BaselArea.swiss: life sciences & healthtech in Basel
- Venture Kick: support for start-ups from Swiss universities
- Impact Hub Zürich: social entrepreneurs and sustainable business models
These programmes are often run by large companies or institutions and aim to scale promising start-ups quickly and effectively. Taking part in such a programme can give your start-up a decisive boost.
Internal financing (operating cash flow)
Internal financing from operating cash flow is the lowest-risk method. Here, you use the income from ongoing operations to fund new projects or expansion. This method requires your company to already be profitable and to generate enough funds to reinvest.