Handbook for Investors. Business location in Switzerland.

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9.4 Risk capital. The number of venture capital companies in Switzerland has grown considerably. The source of funds has shifted significantly away from private investors, with government agencies accounting for 24.5 %, followed by insurance companies and pension funds with 22 % and 18.7 % of the total, respectively. The federal authorities also support the creation of venture capital through the Federal Act on Venture Capital Companies (RKG), which provides two tax incentives: • Recognized venture capital companies are exempt from securities issue tax on their capital at the time the company is founded, or for any subsequent capital increase. With respect to direct federal tax, they also have a lower threshold value for claiming the equity participation deduction. • Private persons who assist in the foundation and development of new companies as business angels are entitled to relief from direct federal tax if they grant subordinated loans for the formation of start-up companies from their private assets. 9.4.1 Venture capital Some financial companies specialize in providing risk capital or venture capital. Venture capital firms contribute to the share capital of a company, with the aim of making large profits if it flourishes or goes public. They provide financial resources without requiring the traditional forms of security. Only fast-growing young companies which are likely to generate significant revenue in a short period of time and, generally speaking, have a capital requirement of several million Swiss francs will have the opportunity of benefiting from this kind of financing. Venture capitalists consider themselves to be guides during the development phase of the financing project. After their job is done, they generally withdraw and sell their investment on to new investors. Venture capital www.kmu.admin.ch Languages: German, French, Italian The availability of venture capital and similar financing may fluctuate and therefore lacks transparency. Universities, consultants and the business community jointly provide a number of platforms, some of them online, to bring entrepreneurs and investors together. Information platform and network for entrepreneurs www.swiss-venture-club.ch Languages: German, French, Italian Companies and funds providing risk capital www.swissbanking.org Search under: Risikokapital (risk capital) Languages: German, French, Italian Swiss Private Equity & Corporate Finance Association (SECA) www.seca.ch Languages: German, English, French 9.4.2 Business angels During their start-up phase, many promising young companies need seed finance of less than CHF 2 million. Although risk capital is increasingly available these days, the minimum size of a financing transaction has risen correspondingly for both risk capital providers and investment companies. Very few venture capitalists will now consider financing deals of less than CHF 2 million. More and more often it is «business angels» – individual investors – who finance start-ups. During the initial phase, at least, they often also act as advisor and mentor to the new entrepreneur, who therefore enjoys the benefit of «smart money.» Despite their name, business angels are not charitable donors. Just like venture capitalists, they want to earn a profit on their investment, so they expect to take a very close look at the entrepreneur’s business plans. In Switzerland, venture capital companies and private investors benefit from relief on direct federal tax and are exempt from securities issue tax. 86 Handbook for Investors 2010
Business angels in Switzerland www.businessangels.ch Languages: German, French 9.4.3 State support Although there is relatively little direct financial assistance available in Switzerland, where the state mainly restricts itself to creating favorable operating conditions, the country does offer a wide variety of tools to support companies, ranging from administrative assistance and tax relief to guarantees. The cantonal economic development agencies also tend not to take direct stakes in companies, although they can offer assistance in finding affordable construction sites or can provide tax relief during the start-up phase or during a planned expansion. One rare exception is the Swiss Federal Foundation for the Promotion of the Swiss Economy (Eidgenössische Stiftung zur Förderung schweizerischer Volkswirtschaft), which grants interest-free loans and, in exceptional cases, may even provide a share of the risk capital subject to a personal financial commitment on the part of the company founder. For further information see section 14. State support for financing www.kmu.admin.ch Search under: Staatliche Unterstützung (state support) Languages: German, French, Italian Fig. 44: State incentives Incentive Beneficiaries Legally defined areas Measures New regional policy Industry, manufacturing-related Areas of application • Tax relief on direct federal tax NRP service companies pursuant to the ordinance of the Federal Department of Economic Affairs Commercial guarantees SMEs, business, startup Whole of Switzerland • Guarantees for bank loans (max. CHF 500,000) companies Guarantees for mountain regions SMEs, business, startup companies Mountain regions • Guarantees for bank loans (max. CHF 500,000) • Interest cost subsidies Hotel lending Hotel industry Tourism and mountain regions • Direct loans • Guarantees • Interest cost subsidies (partial) Measures to encourage self-employment Unemployed Whole of Switzerland • Daily benefits (max. 90 days for planning phase) • Guarantees for bank loans (max. CHF 180,000) KTI/CTI Innovation Promotion Agency Joint research projects bringing universities and companies together Whole of Switzerland • Payment of researchers’ salaries Handbook for Investors 2010 87
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Handbook for Investors. Business lo
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Welcome. Dear Reader, By choosing t
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Table of contents. Advantages offer
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Fig. 9: Industry structure, percent
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2.2.2 Direct investments In additio
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Dachorganisation Informatik- und Te
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Customs information www.zoll.admin.
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Swiss Federal Institute of Intellec
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In the main, Swiss product liabilit
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Switzerland. Trade & Investment Pro
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Countries of Europe. Handbook for I
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Language regions. Handbook for Inve
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