EP #227 - Simone Riedel Riley: The Swiss Technology Fund
Timestamps:
1:33 - Studying abroad
11:28 - Why the Swiss Tech Fund doesn’t give out loans themselves
17:55 - The cost structure
28:18 - What the fund offers besides loan guarantees
36:53 - What happens after defaulting on your loan
About Simone Riedel:
Simone Riedel Riley is the general manager at the Swiss Technology Fund, which grants loan guarantees to Swiss cleantech startups. She got her MBA from UZH and also studied at Harvard and Indiana University. She then came back to Switzerland to work as a CFO for a number of companies, before joining Emerald Technology Ventures in 2010.
In 2014 Emerald Technology Ventures won a mandate by the Swiss government: as part of the passing of a CO2 law, the government wished to set up a fund which would help cleantech startups receive loans from banks, and ETV won the mandate together with South Pole. So the Swiss Technology Fund was born.
The companies the Swiss Technology Fund works with are 90% startups and 10% SMEs. Most of these startups would simply not get a bank loan without the fund’s help, and while the SMEs could eventually secure themselves a loan, they would certainly have to pay higher interest rates without the Swiss Technology Fund’s stamp of approval.
Why does the Swiss Technology Fund facilitate loans instead of equity rounds? Because the Swiss government did not wish to get too involved: with loan guarantees, the government only has to pay in the case of a default. In the case of a default, the government formally becomes that company’s new lender, and the bankruptcy administrators take a couple of years to fully dissolve the company, selling all the assets. The Swiss Technology Fund receives nothing, but that is a risk they are willing to take: out of 135 companies, only 7 have thus far defaulted on their loans.
The fund can also help companies by providing contacts from their wide cleantech network, in case of a funding round. To receive the guarantee, companies pay the fund an annual fee of 0.9% of the loan guarantee. Then of course they also pay an interest rate for the loan, which usually lands somewhere between 1 and 2% — quite cheap, compared to equity. Companies are also required to submit quarterly and annual reporting to the fund, as they would to any investor.
Memorable Quotes:
"If we only support high-flyers, then we’re not doing our job as a startup fund. We should support the startups that actually need us."
"The climate crisis won’t be solved by technological innovation alone."
Resources Mentioned:
If you would like to listen to our episode with Emerald Technology Ventures managing partner Gina Domanig, click here.
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