Startups : boost of early stage funding in 2022 – Net24

Global uncertainties last year dampened investor appetite for venture capital. According to Crunchbase, a business information provider, global venture funding for tech firms was down 35% last year, and an EY report puts the decline in Europe at 18%. Only France and Switzerland held up well. Venture funding in our country reached CHF 4 billion in 2022, against CHF 3 billion in 2021, thanks in part to a CHF 600 million fundraising round completed by Zurich-based Climeworks. EPFL startups made a strong showing, bringing in CHF 457 million in 2022; this is in keeping with the upwards trend seen over the past five years, even after factoring out the exceptional year in 2021 when three EPFL startups went public and raised a combined CHF 367 million. Over the previous 50 years, only three other young EPFL firms had carried out an IPO.

Seed funding a sign of investor confidence

Five EPFL companies – Anokion, Distalmotion, MindMaze, Nanolive and Opna Immuno-Oncology – raised over CHF 20 million each to support their business development. But the biggest surprise last year came from the unprecedented 28 EPFL startups that attracted seed funding of between CHF 1 million and CHF 5 million. This stands these businesses in good stead for the year to come, which could be challenging. “We completed a CHF 3.85 million CHF fundraising round in the first half of last year,” says Remco van Erp, CEO of Corintis. “It is clear that the wider funding markets are more challenging at present; however, we see strong and consistent ongoing investment interest in our sector. This is being driven by the need to cool down more powerful chips used for AI applications as well as increasing concerns around sustainability”. Corintis has developed a microfluidic cooling system for computer chips that boosts their energy efficiency and performance. It’s one example of a greentech business, or a business that provides innovative, environmentally oriented technology. These firms are starting to become popular among venture capitalists.

The growth in EPFL seed funding came hand in hand with a jump in investment in the CHF 5–20 million range. This category totaled CHF 121 million in 2022, up from CHF 21 million in 2021. “That reflects the high potential of our startups at EPFL and the many opportunities investors see for their technology,” says André Catana, head of EPFL’s startup unit. “And it’s an especially encouraging trend given today’s economic climate and the decline we’ve seen in this range of venture funding elsewhere in the world.” It usually takes quite a bit of time – and several fundraising rounds – before a new company turns a profit, given the many steps involved in business development: running clinical trials, hiring workers, developing prototypes, launching production and more. In addition to large amounts of capital, navigating these steps requires robust technology to bring to market, a solid team and good relationships with investors.

Growth in new business creation by students

Overall at EPFL, fewer startups were created in 2022 than in the prior year: 21 versus 34. But if we look at the five-year average, it currently sits at 29, which is impressive for a school of EPFL’s size. Around a third of the 2022 cohort of new startups were greentech firms – the only industry where new business creation remained strong in 2022. “Last year’s drop in new startups occurred pretty much around the world, as many would-be entrepreneurs were more hesitant given the turbulent state of the economy,” says Catana. However, the termination of Switzerland’s framework agreement with the EU didn’t seem to have fazed potential founders. “We didn’t really see it as an issue,” says van Erp. “We work closely with EPFL labs, use its clean rooms and hire its highly skilled graduates. For us, this region provides an ideal ecosystem for going out and acquiring customers across the globe.”

In 2018, EPFL introduced a program enabling students to create a startup as part of their Master’s project, provided they have a solid business case. The students are coached by an expert in entrepreneurship and get assistance from EPFL’s Blaze startup accelerator. They’re generally able to get their businesses off the ground in a few months. The program seems to be paying off: six of the 21 startups created at EPFL in 2022 were done so by young graduates.