The two sides of the pandemic and what they mean for CV VC
When the Corona pandemic hit Europe in the spring of 2020, the entire startup scene drew gloomy scenarios that have not yet materialized, at least in Crypto Valley. The launch of our inaugural Blockchain investment certificate and the establishment of our Advisory Board are just two of this year’s highlights.
The total of seven events during the World Economic Forum in Davos was behind us when we set about implementing three major milestones this spring: the appointment of former Swiss President Johann Schneider-Ammann to the Board of Directors, the launch of our Investment Certificate and the opening of our CV Labs hub in Dubai. Then the Corona pandemic hit Europe, forcing us to adjust plans. Across Europe, startup ecosystems found themselves threatened, investors kept their powder dry, and governments bridged corporate liquidity shortages with loans and guarantees.
Mandate for the Canton of Zug
For our ecosystem business CV Labs this meant that all conferences and meetups had to be held virtually. Our portfolio startups had to streamline and make sure their liquidity lasts for twelve to eighteen months. The Swiss government launched a CHF 100 million Covid-19 loan program for the local startup ecosystem. Since the canton of Zug is considered the «heart of Crypto Valley» and thus an attractive location for startups, a high number of applications for the program was to be expected. To review the applications and evaluate the business models, Zug drew on CV VC’s expertise and experience with startups and we reviewed 88 applications. 38 applications were approved by the canton of Zug and more than CHF 12.7 million in loans were issued. The Crypto Valley mastered the first wave of the pandemic well, as all indicators were positive in our CV VC Top50 Report in the first half of 2020: the number of companies (919, plus 8.4%), jobs (over 4780, plus 8.6%) and the market capitalization ($35.5B, plus 39%). In addition, several financing rounds had taken place, showing that the Crypto Valley, its Blockchain projects and business models are on solid foundations and have so far been largely spared the effects of Covid-19.
The Digitization Push from the Corona Pandemic
In Summer, the umbrella organization of the Blockchain ecosystem in Switzerland, the Swiss Blockchain Federation, has been awarded a four-year innovation promotion mandate by the federal innovation agency Innosuisse. The initiative’s goal is to generate startups and corporate projects out of its activities. As a consortium partner, CV VC will support the innovation initiative «Blockchain Nation Switzerland» through its incubation and a newly developed corporate acceleration programs.
The digitalization push from the Corona pandemic causes technology-driven markets and applications to grow over-proportionally in the future. This goes hand in hand with the legal framework in Switzerland: in the autumn session, the Swiss parliament unanimously approved the new Blockchain legislation, and Switzerland will have the world’s most advanced regulation from 2021. Along with the rapidly growing alternative asset sector and the fact that traditional asset classes have been yielding diminishing returns, institutional investors are moving toward a private equity approach, i.e., riskier investments in tangible assets over a longer period of time, such as venture capital in technology.
New Advisory Board
In September, CV VC has officially inducted Philipp Rösler, former German Federal Minister of Health (2009 to 2011) and of Economics and Technology (2011 to 2013), Vice Chancellor, FDP Federal Chairman and Managing Director of the World Economic Forum (WEF), as the new president of its Advisory Board. Philipp is committed to build a bridge to Asia and to be a door opener for CV VC and the Blockchain Nation Switzerland. He is joined by Vasily Suvorov, a global CTO and Blockchain technology expert and Kristian Bader, who has extensive experience as Chief Operations Officer in the banking, asset management and insurance industry.
Successful Launch of Blockchain Investment Certificate
Blockchain is one of the technology megatrends of the future, with independent consultants forecasting business value-add of this technology to be USD 3.1 trillion by 2030. The technology is driving future change across many industries, from finance and supply chain to healthcare and industrial applications and is being applied by large corporates and startups alike. However, aside from Bitcoin and other Crypto investments, it has remained challenging for investors to build pure-play investment portfolio exposure into startups that develop products and solutions based on this game-changing Blockchain technology.
Structured in line with a typical VC Fund approach, we make our approach to venture capital investments in Blockchain technology accessible to qualified Investors through the successful launch of our inaugural Actively Managed Certificate (AMC), a Swiss-compliant security with Swiss ISIN code and thus fully bankable and transferable.
CV VC will stay on course with its investment hypothesis to invest in early-stage startups building applications based on Blockchain technology within that space focus on what we consider «Technology for Tomorrow» (T4T). Within these parameters we will focus on diversifying our portfolio further, whilst at the same time considering follow-on investments into some of the most promising startups from within the existing portfolio. We do believe our strength lies in early stage investing, seed and incubation level (where we will run our third incubation program in 2021), at the same time we may also consider joint deals with our strong network within the venture capital investor community into startups that are a little further in their development than most of our existing portfolio. The rationale behind this to create an additional layer of diversification of risk and opportunity, namely to also build exposure to startups that may have a quicker time to full commercialization and hence exit compared to some of our very early-stage investments.
