Tech And Impact Go Hand In Hand For Swiss SEIF
Partner Content provided by WM Nexus
A Swiss impact and angel investing network SEIF which has advised and sourced seeding for thousands of start-ups is now applying its impact and tech expertise to venture capital funding in Switzerland and across Europe.
Switzerland already has a formidable reputation in terms of start-ups topping the global innovation index for the tenth year running in 2020 and, among other things, boasting 44,000 start-ups since inception.
SEIF, which was founded in 2011, has played a significant role in directing much of this innovation towards impact having assisted more than 2,000 start-ups since its formation.
Through SEIF invest, it is now applying its expertise and connections to create a venture capital offering focusing on tech and positive impact in a growing market that still remains underserved by VCs due to lack of relevant expertise.
Professor Mariana Christen Jakob founded SEIF in 2011 with the aim of professionalising the social entrepreneurship sector and providing impact start-ups with the necessary support to grow commercially and scale successfully.
SEIF invest is thus the next logical step.
She said: “We are focused on tech start-ups which have impact at the core of their business. The financial return and the impact return are equally important for us. It is not a trade-off. We want to prove that you can have both.”
Eric Gisiger, CFA, cofounder SEIF invest, added: “There has always been a business case to use impact as a multiplier. The higher the profitability and the cashflow generated out of executing the business model driven by a positive impact the better, because you can use that multiplier to generate even more impact.”
SEIF invest’s approach translates into leading on impact and playing a co-investor role with a larger VC as lead investor.
This involves working closely with other “savvy” VCs and investors with the aim of increasing the companies’ value through active portfolio management and impact reporting done quarterly, and thus reducing the investors’ overall risks.
Gisiger said: “The standard VC crowd have a great track record in investing. We are invited to coinvest because not only the portfolio companies they invest in but also their investor base more and wants to hear about impact. We provide the bridge.”
At the centre of much of this innovation sit two Swiss research institutes, the Zurich-based ETH and Lausanne’s Swiss Federal Institute of Technology (ETFH).
Christen Jakob said: “We know the ecosystem very well. Our estimation is at least one third of tech start-ups at our universities are already impact driven. But it is not just as simple as to put an SDG in your presentation. We delve into the underlying business model, assess current impact and install a professional impact measurement system to create more value during the holding period.”
Most of the investments will be asset-light and do not need much capital. “You have software-driven opportunities for example with the potential for recurring revenue through licences which you can scale almost indefinitely. Commercially you tick the boxes, then we come in and do challenge the positive impact,” added Gisiger.
In short, SEIF invest adds its impact assessment, measurement and management framework systematically as a critical part of its VC-driven investment strategy.
It has already been collecting investment commitments and expects to do a first close in the first half of the year. Deal size will be around CHF1.5m with a portfolio of 10 to 15 companies. The minimum investment is CHF 250,000 up to CHF 2m which brings a seat on the investment advisory board – the investment is open for qualified investors only.
Investment manager Luca Christen alluded to two of the prospective investments.
Ecorobotix is a Swiss start-up that uses autonomously driven robots to precision spray herbicide with the aim of reducing the amount used by 90 per cent.
Insolite manufactures transparent solar panels for use on greenhouses.
SEIF invest is able to bring its years of experience and market knowledge with the early stage and impact field to bear to the due diligence in terms of a commercial rating and an impact rating informing the decision to invest and the ongoing portfolio management also tapping into its experienced advisory board.
SEIF invest has a database with business and impact relevant data of more than 1,500 start-ups from the last decade so it can compare potential investments to many firms in the same vertical both in business and impact terms.
As an illustrative example, it compared Insolite to 29 companies, rating it in the top 90 per cent commercially and in the top 97 per cent on impact.
Commercially, it rates the addressable market, the solution, the business model, the competitive advantage / USPs, the team and the scalability.
For the impact, among other things it looks at the positive outcome, the beneficiary, the scale, depth and duration of the solution, the contribution potential and risk management.
“The beneficiaries are at the core of the analysis - the group or society or the environment that benefits. We assess them with respect to how underserved they currently are, so we are looking at technologies that can make a difference to people that need a change in their circumstances,” said Christen.
Indeed, SEIF invest believes its impact knowledge is what allows it to be taken seriously despite being relatively small investor compared to others.
Christen Jakob added: “Compared to other investors we are small, but we are told when we do our impact measurement report, no one does it so professionally. The companies want that stamp of quality, so we have a clear competitive advantage. Our co-investors are also curious and want to know how we do it.”
John Lappin is Contributing Editor at WM Nexus
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