VC firm Founderful, previously known as Wingman Ventures, has announced that it has reached a first close of $85m for its second fund dedicated to backing founders based in Switzerland.
“We feel the startup ecosystem here is often overlooked,” says cofounder Alex Stöckl.
The Zurich-based firm hopes to reach a final close of $120m by July. It will back 40 pre-seed startups, writing cheques between $1m-1.5m, doing eight to 10 deals per year. It prefers to be the lead investor, and will reserve 50% of the capital for follow-on investments.
“There were a bunch of old dudes grumpily telling founders off for being way too ambitious”
The inspiration for a Swiss-focused fund began when Stöckl sat on the jury of a spinout competition held by technical university ETH Zurich in 2015, having just spent time working and investing in Berlin.
“I realised [Switzerland and Berlin’s ecosystems] were two different worlds — it literally could be different planets,” he says.
In Berlin, the ecosystem felt enthusiastic: “Everyone was like, ‘Hooray, we're gonna change the world!’ Every founder that was out there with a pitch deck would get a million thrown at them from some triple A business angels,” says Stöckl.
But Switzerland suffered a much more sombre environment. Stöckl’s fellow judges at that competition were “a bunch of old dudes grumpily telling founders off for being way too ambitious, [saying] they need to plan more conservatively — and then they would ruin their cap tables with a really shitty first round,” he says.
Stöckl felt this attitude was incompatible with the “groundbreaking” ideas being presented to the panel from PhD researchers.
He then met travel activity marketplace GetYourGuide cofounder Pascal Mathis and cofounder of Switzerland’s Just Eat branch EAT.ch Lukas Weder, who had both turned to angel investing in deeptech, and the three decided to set up their own VC firm with the Swiss ecosystem at its centre in 2019.
The firm, originally called Wingman Ventures, closed its first fund of CHF76m ($80m) in 2020, and has since deployed $60m into 40 startups.
Founderful is a generalist VC, although it does like B2B companies. “We really don't see ourselves as big tech experts,” says Stöckl. “We’re experts in building companies from Switzerland.”
Stöckl says that the team considered the option of investing across Europe, but decided focusing solely on Swiss startups would give them an edge.
“We make a real difference, and we stand in the first row here,” he says. “We get to discover entrepreneurial projects way before incorporation.”
Switzerland was Europe’s fifth largest ecosystem for funding in 2023, according to Dealroom. As of June 2023, ETH Zurich had produced more spinouts than any other academic institution in the continent. It’s also produced some of Europe’s startup poster children, including the world’s best-funded carbon removal startup Climeworks, gene therapy techbio CRISPR Therapeutics and insurtech wefox.
Despite that, raising the fund has been an “uphill battle”, says Stöckl. “There were definitely more conversations [with LPs] than we thought we’d need.”
European VCs just haven't looked here yet
LPs across Europe reassessed how they would be allocating funds to reduce risk after a tough couple of years for the continent's startup ecosystem — but Stöckl says that this eventually worked in the fund’s favour. “LPs look for clear-cut strategies to assemble a portfolio," he says. “And we are a clear cut solution: Switzerland and early-stage, you can label us very simply.”
“At the same time, a lot of LPs have realised that they don't have Swiss coverage in the underlying portfolio,” he adds. He spoke to European and US-based fund of funds who told him that they already had a solid coverage of German-speaking Europe, but, when prompted, realised that they were missing Swiss companies.
“European VCs just haven't looked here yet,” says Stöckl. That’s partly because many large funds have capital from state-backed LPs like British Patient Capital, EIF and Bpifrance, which focus exclusively on EU countries — of which Switzerland is not one.
Despite the continuation of a tough economic climate, Stöckl isn’t planning to tighten the purse strings like other VCs have done. “We don't let the markets discourage us: no matter whether financial markets are up or down, we think the universities here will produce outstanding innovation, and that's innovation that will be needed in the next five to 10 years,” he says.